A1 TRADING | Indices, Commodities, Forex, Futures

USD Shaken as Fed Independence Questioned The dollar came under pressure as safe-haven flows rotated into the Swiss franc, euro, and gold after reports that the Trump administration threatened Fed Chair Jerome Powell with a criminal indictment, raising fresh concerns around Federal Reserve independence. DXY snapped a multi-day rally as markets began pricing a higher risk premium on the U.S. currency. Currently trading in between the 50 & 200 Daily moving averages. While markets aren’t fully pricing a loss of Fed independence yet, the episode has added uncertainty at a sensitive moment, with policymakers already navigating a slowing labor market and an active rate-cut cycle. Some argue pressure on the Fed could even push officials to lean slightly more hawkish to defend institutional credibility. Looking ahead, Tuesday’s U.S. CPI is a key test for inflation expectations and the Fed’s path, while a potential Supreme Court ruling on Trump’s tariffs this week is another volatility risk. - Alan

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Russell trade signal is on fire! Slowing (but not crashing) jobs data means a sweet spot for small caps. Rate cuts + an economy that seems to be holding up well = a great spot for small companies to flourish... for now! Happy Friday. - Nick

Japan's Takaichi Considers Dissolving Lower House Reports suggest Prime Minister Sanae Takaichi is considering dissolving Japan’s lower house and calling a snap election as early as mid-February, aiming to capitalize on strong approval ratings and consolidate power. Takaichi currently leads a minority government, limiting her ability to pass legislation. A fresh mandate would strengthen her position and validate her leadership as she pushes an ambitious agenda. From a market perspective, snap elections typically weigh on currencies, especially with the yen already weak and Japanese bond yields at multi-decade highs. If an election leads to higher spending, pressure on Japanese bonds and the yen could intensify, with potential spillover beyond Japan. This is a story worth monitoring closely in 2026. - Alan

Dollar Rises so Far, No Supreme Court Ruling The dollar caught a bid today after U.S. jobs data came in softer than expected. The Supreme Court is deferring the ruling on Trumps tariffs. Nonfarm payrolls rose by 50K in December, below the 60K forecast, confirming that job growth is slowing. That said, the unemployment rate dipped to 4.4%, helping reinforce the view that the Fed can hold rates steady for now rather than rush to cut. Under the hood, participation fell and recent payroll momentum has turned negative on a three-month basis — a sign the labor market is losing traction. Markets are reading this as not hot, not cold: weak enough to keep future rate cuts on the table, but not weak enough to force immediate action. The jobs report gives the Fed flexibility, supports a near-term hold, and keeps rate cuts in play later this year — a mix that helped stabilize the dollar today. - Alan

🚨 UPDATE: The US Supreme Court will not rule in the Trump tariffs case today.

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🇺🇸COMING UP: Must Read Before Big News Federal Reserve policymakers are balancing a softening labor market against inflation that remains elevated. While the Fed cut rates last month, the decision was narrowly split and officials signaled further easing is unlikely near term as they await clarity on jobs, inflation, and an economy they see regaining momentum. Today’s jobs report should offer a cleaner read after recent data was distorted by the government shutdown. Economists expect ~60-70k jobs added and the unemployment rate to dip to 4.5%, following November’s surprise rise to 4.6%. Rate markets see only a small chance of a cut this month and about 45% odds of a March cut. Markets are also watching for President Trump’s pick for the next Fed Chair, with Jerome Powell’s term ending in May. Adding uncertainty, the Supreme Court is set to issue rulings today, raising speculation around the legality of Trump-era tariffs and the potential risk of tariff refunds, which could carry market implications.

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