The first full-fledged business week of 2026 has turned out to be anything but a smooth return to normal trading. While investors are attempting to find a bottom in the British pound and the Japanese yen, the US dollar is showing signs of resilience against the backdrop of strong services sector data. The broader market is holding its breath ahead of today’s NFP release, which will either confirm dollar strength or spark broad-based profit-taking.
The British pound remains under dual pressure, driven by weak domestic indicators and a strengthening US dollar.
Key factor: The Halifax report pointed to a sharp drop in house prices in December (-0.6%), marking the steepest decline in 2.5 years.
Insider view: The housing market has reacted negatively to Chancellor Rachel Reeves’ tax policies. Higher stamp duty on high-value properties has effectively frozen buyer activity. If consumer demand fails to recover, Labour risks facing a £40 billion budget gap.
Technical outlook: Buyers are urgently trying to reclaim the 1.3460 level to avoid a slide toward 1.3387. The pound has declined for the third consecutive session.
The dollar is holding firm after an unexpected surge in the services PMI to 54.4 from 52.6 in November.
Statistical trap: While the services sector continues to flourish, both the ADP report and JOLTS data signal a cooling labor market. This contrast adds tension ahead of today’s NFP release.
Expectations: Markets are looking for a clear signal from the Fed. If employment data turns out to be lower-than-expected, the dollar may struggle to maintain its weekly gains despite solid non-manufacturing data.
The European regulator can take a cautious breath, as consumer inflation expectations have stabilized at 2.8% for the year ahead.
Why this matters: Stable expectations enable the ECB to make informed rate decisions with patience. Markets are not anticipating any immediate action from Christine Lagarde, positioning the euro as a relatively safe-haven currency compared to the volatile pound.
Risk: Elevated wage growth continues to pressure service-sector prices, preventing inflation from falling below the 2% target.
🇯🇵 Japanese Yen (JPY): Caught between stimulus and trade tensions
The yen closed 2025 on a weak note, and the start of 2026 has hardly brought any improvement.
The China factor: Beijing’s export restrictions on Japan have brutally hit an already fragile economy.
Verdict: Disappointing wage data makes a near-term rate hike highly unlikely. For now, the yen can only rely on verbal intervention from authorities, with no concrete action in sight.
Gold is undergoing a correction; however, the move remains hesitant. The primary driver of the pullback is profit-taking ahead of key US data releases.
Geopolitics acting as a catalyst: Recent developments around Greenland, rising tensions involving Venezuela, and uncertainty in Eastern Europe are limiting downside pressure.
Strategy: Gold continues to function as a defensive asset. Attention remains on the NFP report. If the figures are lower-than-expected, gold may quickly resume its upward move amid falling US Treasury yields.
The cryptocurrency market remains trapped in a downward channel. Analysts, including Matt Hougan at Bitwise Asset Management, emphasize that smooth growth is unlikely.
Conditions for bulls: Bitcoin requires an absence of fresh liquidation waves (similar to the October selloff) and greater regulatory clarity in the US.
Key observation: BTC is increasingly moving in tandem with stock markets. If the S&P 500 declines on weak macroeconomic data, Bitcoin is likely to follow with a sharp downturn.
Bottom line: Today, January 9, is shaping up to be a decisive session. The release of Non-Farm Payrolls at 3:30 PM (GMT+2) is expected to give volatility a massive boost.
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