Dollar Plummets, Consumer Confidence, Indonesian Stocks

As he deliberately pursues a weaker dollar and lower interest rate policy. EURUSD breaks above key ECB level 1.20000, gold up another 2% (+3.5% yesterday), S&P 500 back at new all-time highs. The Fed meeting tonight will be interesting, no change expected, but Powell will surely comment on recent economic strength, impacting the dollar’s slide. (Chart 1, Dollar Index, Bloomberg)

Despite Q4 GDP estimates running at > 5%, Consumer confidence falls to 12-year lows. Conference board’s jobs plentiful index falls to cycle lows, in complete contrast to the very low weekly jobless claims (AI anyone?). (Chart 2, Bloomberg)

Indonesian stocks have one of their worst days on record gapping lower 7% on the open.

Australian inflation jumps +3.8% YoY, surprising the market which now expects and RBA hike next week. OIS prices 18bp hikes on 3rd Feb and +44bp in total for 2026.

Weaker dollar and higher crude will raise inflation concerns and drag rates higher. (Chart 3, Brent-white vs 2yr bond yield-orange)

HSBC: STAY ALL-IN ON RISK HSBC urges investors to remain aggressively risk-on, staying overweight equities, high-yield credit, emerging-market debt, and gold, while underweighting sovereign bonds, investment-grade credit, and oil. The bank says markets are driven by U.S. rates and growth - not geopolitics - and sees earnings expectations as too low.

Equities like the weaker dollar (Chart 4, Bloomberg, FactSet, Morgan Stanley Research)

Daily Iran News: The Iranian Parliament has approved the closure of the Strait of Hormuz now, and the decision is left to the security authorities, according to Iranian media right now.

Data today – US FOMC & Bk of Canade rate decisions, no changes expected but possible impact on the recent dollar move.