* Wall Street ends lower amid global selloff on tariff threats

* Dollar slides as investors reignite “Sell America” trade

* No Supreme Court ruling on anniversary of President Trump’s inauguration

* Netflix tanks on disappointing guidance, stock buyback pause

FX: USD tumbled through the 50-day and 200-day SMAs at 98.81 and 98.72 to a low of 99.00, though it closed well off its lows. It’s tempting, but maybe tough to call it a ‘Sell America’ day accurately, as US Treasury yields were likely pushed higher by the historic move in Japanese Government Bonds (JGBs). “Weaponisation” of tariffs, even capital, are being talked about if Europe retaliates by selling some of its $1 trillion of US investments. That seems like a very far stretch – ultimately the more markets get volatile, the more the chance of a stand down and resolution. There was much jawboning from US and especially European officials, with French President Macron leading the continent’s ‘stand firm’ stance. All eyes are on Davos.

EUR spiked higher to 1.1768 before pulling back into the US session. Sentiment is dominating with pressure building heading into Davos, President Trump’s speech and the meeting of EU leaders. Do Europe’s political leaders actually this time stand firm? Who blinks first? Natural gas has soared in recent days due to colder weather reports. CHF was again the leading major with its haven characteristics to the fore. Prices in USD/CHF are close to long-term support around 07871.

GBP moved higher though lagged many of its major peers. The November jobs report showed a tick higher in the unemployment rate to 5.1%, which is up from 4.4% early last year. The jobs market is cooling and surveys point to that continuing, whilst the wage components remained elevated but is also easing. Private-sector pay rose 3.6%, down from 6% at the start of last year. Rate cuts are currently coming in the first half of 2025; focus turns to today’s CPI.

JPY was once again the underperformer, this time driven by scrutiny of the fiscal plans of both the government and the combined opposition, as they outline plans to postpone/remove various tax measures ahead of the February snap election. It has intensified the focus on Friday’s BoJ decision, where a widely anticipated hold is likely to be paired with a hawkish tone as policymakers will seek to push back on expectations for a less independent, cooperative central bank. Intervention risk remains elevated if we decisively get above 159.

US stocks: S&P 500 lost 2.06% at 6,797, the Nasdaq was down 2.12% at 24,988 and the Dow Jones off 1.76% at 48,489. It was the biggest one-day point and % drop for the benchmark S&P 500 since October 10. Losses were led by megacap Technology (-2.94%) and all Mag 7 stocks in the red, Consumer Discretionary (-2.82%) and Financials (-2.23%). Consumer Staples was the only sector in the green (+0.12%), with Energy and Health very mildly negative.3M, IBM and Nivida led the losers, off 7%, 5% and 4.4% respectively. The former reported softer than expected EPS guidance. Netflix reported after the closing bell and was trading down 4.4%. Lower than forecast earnings guidance was not received well, even though revenue and profits rose as subscriptions topped 325 million.

Asian stocks: Futures are mixed. APAC stocks were mostly in the red after Trump’s tariff threat. The ASX 200 slid even though BHP upgraded this year’s copper production guidance. The Nikkei 225 slipped below 53,000 with election uncertainty high around party policies. The Hang Seng and Shanghai Comp both traded with modest losses.

Gold soared to new highs after recent consolidation. It closed near its peak at $,4751, adding over 3.2%. Haven buying has driven bullion into overbought territory on the daily RSI, though it is not excessive.

Day Ahead – UK CPI, Trump Davos Speech

The marquee UK data point this week is the inflation report. Headline and core rates are both expected to rise one-tenth to 3.3%. December services inflation is predicted to rise two-tenths to 4.6%, though higher airfares and when the data was collected will impact these figures.  Inflation is expected to ease through 2026 with some economists expecting the headline to hit the BoE’s 2% target in the first half. Money markets currently price in a BoE rate cut in June with around 27bps predicted. Soft data would bring April’s odds nearer, with around 21bps priced in at the moment. 

President Trump will appear at the World Economic Forum at Davos, bringing with him the biggest ever delegation from the US. Themed “The Spirit of Dialogue”, the annual gathering of the world’s top finance and businesspeople will focus attention on the POTUS’ speech. Any hints on change in Greenland policy will obviously be key. The ‘Sell America ‘ theme is being floated as reasons for recent price action but whether Europe can go through with this is a completely different question. There is very little the EU could do to force European private sector investors to sell USD assets; it could only try to incentivise investments in EUR assets.

Chart of the Day – Cable above 200-day SMA

The pound tends to underperform in big risk-off periods and so far this week, it is only above CAD, JPY and USD. Domestic drivers have been thin too over recent weeks, with broader sentiment the main catalyst. GBP/USD formed a decent bull channel and series of higher highs and higher lows after the bottom seen in November at 1.3010. Since then, prices topped out at 1.3567 earlier this month before drifting lower towards the 50-day SMA at 1.3330. The midpoint of the July to November 2025 move is at 1.3397. Prices have moved above the 200-day SMA at 1.3402 with the major Fib level (61.8%) at 1.3488.