Trump withdraws tariff threat, analysis of short-term trend of spot gold, silver, crude oil and foreign exchange on January 22

Global market overview

1. European and American market conditions

The three major U.S. stock index futures all rose, with the Dow futures rising 0.35%, the S&P 500 futures rising 0.56%, and the Nasdaq futures rising 0.83%. Germany's DAX index rose by 1.16%, Britain's FTSE 100 index rose by 0.45%, France's CAC40 index rose by 1.19%, and Europe's Stoxx 50 index rose by 1.33%.

2. Interpretation of market news

European stock markets breathed a sigh of relief as Trump withdrew his tariff threat, but the alarm is far from over

⑴ European stock markets generally rose on Thursday as investors welcomed President Trump's withdrawal of tariff threats against eight European countries. Previously, after Trump met with the Secretary-General of NATO in Davos, he said that a "framework for a future agreement" had been reached on the Greenland issue and announced that the 10% tariff originally scheduled to take effect on February 1 would no longer be implemented. ⑵This news pushed European stock markets higher. The Stoxx 600 index rose 1.1% in the afternoon, and the major stock indexes in Germany, France and Italy all rose more than 1%. However, gains have not fully recovered all losses this week, with Germany's DAX index, for example, still about 1.7% below last Friday's closing price. ⑶ Sectors that had been the most heavily sold due to potential tariff risks, such as luxury goods manufacturers, automakers and chip www.xmtraders.companies, rebounded strongly. Volkswagen led gains in the European auto sector, rising 4.5%. Semiconductor stocks extended a rally that began in U.S. markets. However, many stock prices are still below levels before Trump's weekend threats, indicating that investor uncertainty remains due to the lack of details of the Greenland framework agreement. ⑷ Analysts pointed out that this week is the “TrumpA perfect example of a Trump-back-always-back deal. But it also warned that Europe is not www.xmtraders.completely out of danger, the existential threat to NATO remains, and Trump may still turn against allies in the future. For now, the risks are just postponed, and the high price of gold shows that there is still demand for safe-haven assets. The lack of clarity on the structure of the agreement It may also limit the sustainability of market gains.

The U.S. debt repurchase market calmly responded to the $21 billion capital outflow, and the short-term interest rate outlook was stable

⑴ The U.S. Treasury bond general collateral repurchase rate opened at 3.69%, despite the 21% increase in Treasury settlement funds. The outflow of USD 0.0 billion has not exerted upward pressure on overnight interest rates. The recent stock market sell-off and the Fed's Treasury bond purchase operations have played a supporting role in raising the level of excess cash in the financial system, so the impact of capital outflows is limited. (2) The current trading rate of overnight collateral is still higher than that of one week and shorter. Treasury money market rates are about 10 basis points higher, making them an attractive alternative for investors who don't need to hold fixed-maturity instruments. The 10-day average opening level is currently at 3.69%, and the intraday trading range is expected to be between 3.69% and 3.65%. In terms of specific bond repurchase rates, 2-year, 5-year and 20-year Treasury bonds have the largest discounts relative to general collateral, at 11, 24 and 36 basis points respectively. With the U.S. Treasury Department announcing today that it will auction 2-year, 5-year and 7-year Treasury bonds next week, bonds of these maturities may face more. Selling pressure, short positions may expand. (4) Federal funds futures pricing shows that the market believes that the probability of the Federal Reserve cutting interest rates by 25 basis points at the January and March FOMC meetings is low, which leads to a flattening of the short-term collateral repurchase interest rate curve. Pricing shows that the market believes that the probability of a 25 basis point interest rate cut in the next 90 days is about 9%. Overall, the money market reflects a solid expectation that the Federal Reserve will keep interest rates unchanged in the near future.

Trump talks about Greenland again in Davos: details are being negotiated, seeking "full and indefinite" access.

⑴ U.S. President Trump said on Thursday that the details of the U.S. agreement on Greenland were still being worked out. The remarks came a day after he withdrew his threat of tariffs and ruled out using force to seize the Danish territory. ⑵ Trump said in an interview in Davos that "the details are now being negotiated." But essentially it will be full access. There is no end point, no time limit. "He also emphasized, "I will not pay anything for this." This shows that the United States is seeking an arrangement that does not involve changes in sovereignty but enjoys broad and permanent strategic authority.

The ECB meeting minutes released www.xmtraders.complex signals: confidence and uncertainty are intertwined, patience and autonomy Becoming the core of policy

⑴ The minutes of the meeting released by the European Central Bank showed that the December staff forecasts increased policymakers' confidence in the medium-term outlook. Economic activity in the euro area showed more resilience than previously expected, and the new forecast for inflation still shows that the outlook for the next two years is still good.Inflation will continue to be below target. ⑵The minutes pointed out that the current environment remains more uncertain than usual. Members differed in their risk judgments on the inflation outlook: most members believed that the risk was two-way, with some members believing that the risk distribution had shifted upward, while others believed that the risk was biased to the downside. This suggests there is no internal consensus on which direction the risk balance is tilted. ⑶ All members agreed that it is important for the Management www.xmtraders.committee to maintain www.xmtraders.complete autonomy in future meetings. Monitoring whether services sector inflation and wage growth slow as expected is seen as key. Some people believe that maintaining the current interest rate level is a fairly stable path under the baseline outlook. ⑷The minutes also revealed a series of concerns: all parties are generally worried about financial stability risks; some believe that the economic recovery is still fragile; some are worried that continued lower-than-expected inflation may cause inflation expectations to fall off the anchor. In addition, external risks include the risk of dollar depreciation caused by the possibility that U.S. monetary policy will be looser than expected, and the overall fiscal policy of the Eurozone may be looser than expected. ⑸The European Central Bank clearly stated that export-oriented expansion is no longer feasible and strong domestic demand is crucial for the euro area to cope with external challenges. This statement clarified its policy tendency to shift growth momentum to domestic demand. Overall, the minutes paint a picture of a central bank that remains highly vigilant amid cautious optimism and emphasizes policy flexibility.

U.S. Energy Secretary Wright said in Davos: Global oil production needs to double, attacking the EU and California's green policies

⑴ U.S. Energy Secretary Wright said in Davos on Thursday that the world needs to more than double oil production. He also criticized the European Union and the US state of California for wasting money on what he called inefficient green energy. ⑵ Wright pointed out that the European Union's corporate environmental regulations pose risks to U.S.-European energy cooperation. These regulations may expose U.S. producers to liability risks when delivering natural gas to Europe. He claims to be working with his European counterparts to remove these obstacles. Previously, the EU had been under pressure to significantly scale back two key sustainable development regulations. ⑶Wright also pointed the finger at California and questioned its energy policy. Occidental Petroleum CEO Holub confirmed that the www.xmtraders.company was withdrawing from the California market because of the state's regulations. Data show that California's crude oil production has dropped from nearly 600,000 barrels per day a decade ago to 300,000 barrels per day in 2024, far below the peak of 1.1 million barrels per day in 1985. ⑷Although energy discussions in Davos have focused on low-carbon policies in recent years, Wright and Holub emphasized at the forum that the world will still rely on oil in the www.xmtraders.coming decades. Growth in U.S. natural gas production and investment in LNG export terminals has allowed it to replace European gas imports from Russia that have been cut since the conflict in Ukraine in 2022. The current global oil supply is about 107.4 million barrels per day. To meet its "doubling" vision, it means more than doubling production capacity, which will inevitably trigger fierce debates on energy security, climate change and geopolitics.

The downward trend in UK retail sales has been suspended, but the gloom has only partially dissipated, and consumer confidence is still constrained

⑴ A survey released by the Confederation of British Industry on Thursday showed that the sharp decline in the British retail industry has eased this month, but store chains remain pessimistic about the overall outlook. ⑵The agency’s monthly retail sales differential (compared to the same period last year) rose to -17 from -44 in December, the highest reading since April 2025. Its sales forecast spread for next month also improved to -30 from -57. ⑶ However, the agency's chief economist warned that this improvement is expected to be short-lived, with sales expected to decline at a faster rate next month. Retailers generally report that household spending is being weighed down by a lack of confidence and cautious consumer behavior. ⑷Official data also show that retail sales have been weak in recent months, and economists expect December data to be released on Friday to continue this trend. Although UK business confidence recovered slightly after the Chancellor's Budget, data showed that consumer confidence fell to a nine-month low in January, indicating that the foundation for a recovery in end demand remains fragile.

U.S. Treasury yields fell slightly, the market held its breath waiting for GDP and inflation data, and interest rate cut expectations once again dominated sentiment

⑴ U.S. Treasury yields fell slightly during the European trading session. Although the market has been significantly calmer than in previous days, investor sentiment remains cautious. Market analysis pointed out that attention has now turned to the US GDP data to be released at 21:30 Beijing time and the PCE inflation data to be released at 23:00. These two data are likely to drive short-term fluctuations in the foreign exchange market and bond yields. ⑵ Analysts said that if the data shows that economic growth is slowing or inflation is under control, it will strengthen market expectations for the Federal Reserve to adopt a more accommodative stance later this year. The Fed is currently widely expected to keep interest rates unchanged in January, followed by about two rate cuts before the end of the year. ⑶ Specific data shows that the two-year U.S. Treasury bond yield fell 0.6 basis points to 3.589%, and the 10-year U.S. Treasury bond yield fell 1.2 basis points to 4.240%. Before the release of key data, the market showed a typical wait-and-see and position adjustment trend.

The British fiscal deficit is lower than expected, and the Finance Minister is temporarily relieved, but political pressure remains high

⑴ The latest data shows that the British government’s public sector net borrowing in December was 11.578 billion pounds, a year-on-year decrease of 7.1%, and lower than the market consensus of 13 billion pounds. The result gives Chancellor Reeves reason for optimism at the start of 2026, although domestic and international political risks still cloud the long-term outlook. ⑵ In the first nine months of this fiscal year, the UK’s cumulative borrowings were 140.4 billion pounds, basically the same level as the same period last year. The official forecaster said the current level of borrowing was about 4 billion pounds lower than its forecast in November. Government revenue increased by 8.9% year-on-year, which is the key to narrowing the deficit. ⑶ Reeves was forced to increase taxes again in November's budget to expand the buffer space of his fiscal rules and aim to maintain investor confidence. Current data trends provide cautious reassurance. However, analysts warn that with political uncertainty over a Labor government lagging in the pollsPressure has intensified this year, with large back-loaded tax increases and tough real-term spending cuts planned in the budget still likely to be reversed. ⑷ High levels of long-term political uncertainty, including a potential leadership battle triggered by poor performance in local elections in May, could trigger a correction in British government bond prices and push up borrowing costs. An unstable geopolitical situation could also harm the UK economy. However, unlike January 2025, when the global bond market sell-off sent Treasury yields soaring, several auctions of British gilts in January 2026 recorded one of the strongest demand in history.

The European Central Bank liquidity data is released, the banking system has zero borrowings, and deposits exceed 2.4 trillion euros

⑴ Daily liquidity data released by the European Central Bank on Thursday showed that www.xmtraders.commercial banks’ use of the central bank’s overnight lending facilities was zero, while funds deposited in the central bank’s overnight deposit facilities were as high as 2,457.18 billion euros. ⑵ www.xmtraders.compared with the previous day, www.xmtraders.commercial banks no longer used overnight loans, and the total overnight deposits decreased slightly from the previous day's 2,474.754 billion euros. www.xmtraders.commercial banks' current account deposits with the central bank were 152.667 billion euros, an increase from the previous day. ⑶ This data shows that the current Eurozone banking system has extremely abundant liquidity, and financial institutions have no need to obtain emergency liquidity from the central bank. Instead, they deposit large amounts of excess reserves with the central bank. This reflects that under the current monetary policy environment, the interbank market has sufficient capital supply and low financing pressure.

Middle East crude oil ends its streak of gains, seasonal demand is weak, and active trading by giants reveals market differences

⑴ The benchmark price of Middle East crude oil fell on Thursday, with Murban crude oil prices falling from a two-month high. Weak seasonal demand posed a major pressure, but market trading activities remained active. ⑵ Oil prices have turned lower after rising in previous trading days, and investors are reassessing the supply and demand outlook. Reports of rising U.S. crude and gasoline stockpiles last week also weighed on prices. Dubai crude oil spot's discount to swaps widened 11 cents to -31 cents a barrel. ⑶In terms of specific transactions, Shell and Total Energy will each deliver a batch of Upper Zakum crude oil to Mercuria for shipment in March. Meanwhile, the chief executive of Saudi Aramco, the world's largest oil producer, reiterated that forecasts of a global oil supply glut are grossly exaggerated as demand growth remains strong and global oil inventories are low. ⑷ Other industry trends show that Azerbaijan State Oil www.xmtraders.company signed an agreement with Italy's Eni Group to acquire 10% of the equity in the Baleine offshore oil and gas field in Cote d'Ivoire. Chevron is in final talks with Japanese refiners Eneos and Glencore to sell its refining and distribution assets in Singapore in the first quarter of this year. Separately, Valero has reportedly purchased a cargo of Venezuelan crude, one of the first transactions by a U.S. Gulf of Mexico refiner under the Washington-Caracas agreement.

Trump’s Greenland crisis has temporarily eased, and the market is relieved, but the road ahead is still foggy

⑴ U.S. President Trump suddenly withdrew the use of tariffs as a weapon on ThursdayThe move brought relief to markets over the threat from Greenland, but prospects for ending a standoff that has threatened the deepest rift in transatlantic relations in decades remain unclear. ⑵ After weeks of threats, Trump ruled out the use of force and said he was hopeful of reaching a framework agreement on the Arctic island. He said the agreement could satisfy his desire to deploy missile defense systems and acquire critical minerals while curbing what he called Russian and Chinese ambitions in the Arctic. ⑶The Danish Prime Minister emphasized that Denmark and Greenland are willing to continue constructive dialogue as long as their territorial integrity is respected. The Danish Defense Minister then clearly drew a red line, saying that he would never cede sovereignty. ⑷The European market rebounded in response, but the German Vice Chancellor warned against premature optimism about solving the problem. Local residents in Greenland also expressed a mixture of relief and vigilance. ⑸ German Chancellor Mertz welcomed this in Davos and called on all countries not to give up on NATO, emphasizing that the transatlantic partnership should not be dismissed too quickly. However, this turmoil has exposed deep rifts within the alliance, and its long-term impact and the future evolution of the Arctic geostrategic landscape still need to be continuously observed.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 21:20 Beijing time, EUR/USD rose and is now at 1.1715, an increase of 0.26%. Before the New York session, the price of EURUSD rose on the last trading day, supported by its continuous trading above the EMA50, which provided a base of support and provided bullish impetus, especially in the case of positive divergence in the relative strength indicator, which after reaching oversold levels was exaggerated www.xmtraders.compared to the price action, from where positive signals emerged, strengthening the opportunity to expand its intraday gains.

GBP/USD: As of 21:20 Beijing time, GBP/USD has risen and is now at 1.3426, an increase of 0.01%. Before the New York market opened, GBPUSD fell in the last session and continued to www.xmtraders.come under negative pressure as it traded below the EMA50, which prevented the recovery of the previous session, especially as it traded within the range of the bearish correction channel, limiting its previous short-term trading. Furthermore, after unloading its oversold levels, a negative overlapping signal appeared on the relative strength indicator, opening the way for recording new losses in the near future.

Spot gold: As of 21:20 Beijing time, spot gold fell, now trading at 4828.70, a decrease of 0.05%. Gold prices rose in the final trading session before the New York session, settling above the major resistance at $4800, using the dynamic support it represented on exchanges above the EMA50, reinforcing the stability and dominance of the short-term primary bullish trend, especially as it traded along the secondary trendline, noting negative signals from the relative strength indicator, in the phaseAfter unloading its overbought conditions on the Strength indicator, the pair has opened the way for more gains in the near term.

Spot silver: As of 21:20 Beijing time, spot silver has risen, now trading at 93.310, an increase of 0.26%. Prices maintained their early gains in the last intraday session in New York, gaining bullish momentum as they relied on the EMA50, trading along the trend's support trendline amid the dominance of the short-term main bullish trend as positive signals from the relative strength indicator emerged.

Crude oil market: As of 21:20 Beijing time, U.S. oil fell, now trading at 59.520, a decrease of 1.80%. Before the New York session, (crude oil) prices fell on the last trading day as stubborn resistance settled at $60.50 and the relative strength indicator showed negative signals, after reaching overbought levels, above the support of EMA50, putting it under negative pressure unless it rebounds quickly in the www.xmtraders.coming period, relying on the small bullish trend line on a short-term basis as the last chance to gain the bullish momentum needed for recovery.

4. Institutional view

Institution: Japan's core inflation is expected to remain above 2%, laying the foundation for the central bank to raise interest rates in 2026.

According to predictions by ING analysts, Japan's December CPI data to be released on Friday is expected to show a sharp decline in the inflation rate. If the data falls as expected, it may prompt the Bank of Japan to review its future interest rate hike plans. Analysts pointed out that strong wage growth and government aid measures are expected to keep core inflation above 2%. They believe that once the Bank of Japan confirms that the core inflation rate can continue to stabilize above 2% and is higher than the overall inflation rate, the Bank of Japan is likely to take the next step in raising interest rates at some point in the second half of 2026. The data was released before the Bank of Japan's interest rate decision meeting and attracted much market attention.

JPMorgan Chase: Semiconductor www.xmtraders.companies are expected to have optimistic quarterly reports and have a constructive attitude towards the outlook for 2026

JPMorgan Chase issued a report stating that as the semiconductor and semiconductor equipment industry enters the fourth quarter performance period, it is expected that the results announced by relevant www.xmtraders.companies will be in line with or better than market expectations. At the same time, the bank expects www.xmtraders.companies to give constructive www.xmtraders.comments on their outlook for the first quarter and the full year of 2026, which will promote the continuation of the positive earnings revision trend that has occurred in recent quarters. In terms of investment choices, JPMorgan Chase continues to favor its preferred targets, including Broadcom, McWalcoTechnology, Nvidia, Analog Devices, Micron Technology, Kelei and Synopsys Technologies, and gave these www.xmtraders.companies an "overweight" rating.

Capital Economics: South Korea’s economic recovery is forecast to be weak, and the central bank may cut interest rates twice more this year to support growth

Gareth Lesser, senior Asia economist at Capital Economics, said that following the quarter-on-quarter contraction in the previous quarter, South Korea’s economy is expected to resume growth in the first quarter of 2026. However, he also pointed out that the expected recovery may be weak, and strong export growth may be offset by weak domestic demand. Lesser added that while the Bank of Korea signaled last week that its monetary easing cycle may be nearing an end, it is still likely to cut interest rates two more times this year in response to what is likely to be continued weak growth. Capital Economics currently maintains its forecast for South Korea's economy to grow by 2.0% in 2026 and 1.0% in 2025.

The above content is all about "[XM Foreign Exchange Decision Analysis]: Trump's tariff threat withdrawal, short-term trend analysis of spot gold, silver, crude oil, and foreign exchange on January 22". It was carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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