* Oil rises as Iran plans live-fire drill in Strait of Hormuz

* Fed Chair decision coming next week say President Trump

* Wall Street slips as Microsoft shock rekindles AI valuation fears

* Gold hits high near $5,600 before violent selloff on profit taking

FX: USD hovered around the key low from last year at 96.21. The key weekly close is being eyed by many with more Big Tech earnings, central bank meetings and the monthly NFP release next week. Mixed messaging from Trump and his Treasury Secretary are perhaps not helping the greenback as policy uncertainty and rotation away from USD assets remain as key themes. Fed independence too is crucial, with Trump stating he expected to announce his nominee next week. Rick Reider is now the frontrunner, who is market-savvy and modestly dovish, though he has defended the Fed’s autonomy.

EUR printed a doji after moving lower off its four and half year high at 1.2082 from Tuesday. But prices did remain above the September 2025 high at 1.1918. A long-term major Fib level (38.2% of the July 2008 to September 2022 high to low) resides at 1.2019. We’ve had a few doves comment on soft inflation issues if the euro remains above 1.20. A hold is expected by the ECB at next week’s meeting with policy still generally in a ‘good place’.

GBP just about stayed above the 2025 top from June at 1.3784. The recent multi-year peak is at 1.3868. Next week’s BoE meeting will bring attention back to the UK, though no rate cuts are expected. We’ve seen modest tightening in policy easing bets with now roughly 35bps predicted for this year versus around 50bps just a week ago.

JPY consolidated recent gains with the major remaining below the 100-day SMA at 153.71. Recent lows this week sit at 152.09/14. The yen’s safe haven qualities helped it outperform on punchy rhetoric from both Iran and the US. Domestically, a Nikkei poll showed that Japanese PM Takaichi’s party is expected to gain a Lower House majority in the election next Sunday. That means fiscal expansion and focus on fundamentals after the intervention headline noise.

AUD posted a fresh cycle high at 0.7093, a level last seen in February 2023 but gave back gains through the session with the commodity sell-off. Prices settled some way above the 100-month SMA at 0.6946 and the September and October 2024 high at 0.6942/34.

US stocks: S&P 500 lost 0.13% to close at 6,969, the Nasdaq was off 0.53% at 25,884 and the Dow Jones was higher by 0.11% at 49,072. Tech was the big laggard with three other sectors in the red, while Communication Services, Real Estate and Financials led the gainers. Microsoft closed down 10% as Azure, its cloud business, and next quarter guidance underwhelmed. Communications were buoyed by stellar Meta, up over 10%, on a quarterly metrics beat and revenue growth offsetting capex increase concerns. Tesla closed down 3.5% as its earnings beat but there was a doubling in capex as Elon Musk pivoted to physical AI. Other earnings releases included Lockhead Martin which beat on Q4 metrics and gave strong guidance helping the stock to close 4.2% higher. IBM jumped 5.1% as it issued a Q4 and outlook beat but SAP saw its cloud revenue miss which caused the stock to plunge 16%. Apple reported blockbuster record iPhone 17 sales after the closing bell, with a strong holiday season and China boost. The stock was trading up around 1%.

Asian stocks: Futures are red. APAC stocks were muted with the Fed and Big Tech earnings to digest. The ASX 200 eased with miners and telecoms lower and eyes on next week’s likely RBA rate hike. The Nikkei 225 swung green and red with earnings and yen volatility front and centre. The Hang Seng and Shanghai Comp were mixed although property names were supported.

Gold was hugely volatile as it hit fresh record highs first thing in the Asian session at $5,598 before seeing aggressive selling after the US open. All the precious metals complex got hit with silver posting another all-time top at $121.63 before its intraday low at $106.59. Copper too pared strong gains of near 10%. Is a near-term top in place? The recent parabolic rally has been FOMO debt-driven retail buying which as we said yesterday, is prone to sharp pullbacks. That said, the underlying drivers are still solid so healthy corrections should be expected in the long-term trend.

Chart of the Day – Nasdaq lags with more Big Tech #s to come

Tech has been underperfoming in recent months with high valuations and quesiton marks about AI spend clouding some areas of the market. A broadening out has taken place with small caps doing well, though less so more recently. A bid to the index had been seen since bouncing off support at the 100-day SMA, now at 25,131, in the run-up to recent Big Tech earnings. They have highlighted that the monetisation of AI and those capex plans remain front and centre. For the tech-heavy index, support sits at the 50-day SMA at 25,371 with the all-time high at 26,182. Prices had dipped close to the 50-day SMA but encouragingly, bulls stepped in and the index settled not far off the intraday high.