Daily Market Outlook, January 12, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

U.S. stock futures took a hit, and the Dollar tumbled as concerns over the Federal Reserve's independence surfaced. This followed Fed Chair Jerome Powell's revelation that threats of criminal prosecution stemmed from the central bank's interest rate policies. The S&P 500 futures dropped by as much as 0.6% after Powell disclosed that the Fed had received grand jury subpoenas from the Justice Department regarding renovations at its headquarters. Meanwhile, gold surged by up to 2%, reaching a new record high, and the Swiss Franc, often seen as a safe haven, climbed by 0.5%. Since Japanese markets were closed on Monday, there was no cash trading in Treasuries during Asian hours. Attention will shift to the Treasury market when London begins trading. The potential for a criminal indictment by the Trump administration has intensified the ongoing feud between President Trump and the Fed over the pace of interest rate cuts. Trump has been a vocal critic of Powell, repeatedly pushing for aggressive rate reductions and even suggesting he might remove Powell from his position. In other markets, oil prices experienced their largest two-day rally since October, fuelled by escalating protests in Iran that raised concerns about potential disruptions to supply from OPEC’s fourth-largest producer. Brent crude surpassed $63 per barrel after surging nearly 6% over Thursday and Friday, while West Texas Intermediate hovered near $59. President Trump announced that the U.S. is closely monitoring the situation in Iran and weighing possible responses as the country faces its most significant wave of protests since 2022, now entering its third week.

The non-farm payrolls report fell short of expectations, with 50k jobs added versus the 70k expected, and prior months' revisions subtracting 76k. The 3-month average is now -22k. Private sector job creation was weak at 37k, missing the 75k forecast. Job gains were concentrated in leisure, hospitality, education, and health, while wholesale, retail, and others declined or stagnated. Powell noted the data may overstate monthly gains by ~60k, suggesting employment is shrinking. The unemployment rate dropped slightly to 4.4%, but migration restrictions and reduced demand for workers continue to strain labour supply. Despite weak data, the Fed is unlikely to shift policy due to lingering inflation concerns and upbeat survey signals (e.g., ISM services). Hawks may interpret confidence from rate cuts positively, but labour market risks remain worrisome. Faster inflation improvement this year makes current 2026 Fed cut projections appear conservative.

Domestically the UK KPMG/REC Report on Jobs for December indicates continued weakness in the labour market. The index for permanent placements declined to 44.3 from 45.2, signalling contraction, while the vacancy index softened further, and staff availability remained high. Despite these signs of reduced demand for labour, the permanent salaries index rose slightly to 53.1 from 52.7. This divergence suggests that weaker labour demand is not yet translating into lower wages, complicating efforts to resolve the Monetary Policy Committee’s internal divisions. For context, the REC survey remains a reliable indicator of overall labour market trends, aligning closely with broader employment data tracked by HMRC.

The key events on the US calendar this week include December inflation data (Tuesday) and retail sales figures (Wednesday), both returning to their usual rhythm following the resolution of the government shutdown. However, there is a possibility that last month’s unexpected drop in the headline CPI rate from 3.0% year-on-year to 2.7% year-on-year could partially reverse. This could result from a return to standard price collection methods or the unwinding of seasonal sales effects. Additionally, a busier lineup of Fed speakers kicks off with Williams and others on Monday, alongside regional Fed surveys like the Empire State Manufacturing Index (Thursday) and housing data such as the NAHB index (Friday).

In the UK, November GDP data (Thursday) may lead to a downward revision of expectations for overall Q4 growth (currently forecasted at 0.2% quarter-on-quarter by Bloomberg), given that October already showed a contraction. The Bank of England’s credit conditions survey is also due Thursday, with MPC members Taylor and Ramsden scheduled to speak on Wednesday.

In the Eurozone, the agenda is relatively light, with final December CPI figures starting to roll in, including Germany’s data on Friday. ECB speakers this week include Guindos and Villeroy, both speaking on Monday. Elsewhere, China’s trade data (Wednesday) will reveal the full impact of US tariffs for 2025. However, if the first week of 2026 is any indication, unexpected events and political developments could overshadow these scheduled releases..

Overnight Headlines

  • Japan Plans To Dissolve Parliament With Possible Snap Election In Feb

  • Powell Under DoJ Criminal Investigation Over Fed HQ Revamp

  • Trump To Meet Advisers Tuesday On Iran As US Mulls Action

  • Gold Flirts With Record High Amid Iran Tensions, Soft US Jobs

  • US Launches New Strikes On ISIS Targets In Syria

  • Iran Threatens US And Israel As Protests Enter Third Week

  • Ukraine Hits Russian Oil Platforms In Caspian Sea

  • Rare Earths Back In Focus As China Curbs Exports To Japan

  • US To Host Meeting On Rare Earths As China-Japan Spat Simmers

  • Qatar, UAE Join US Tech Supply Chain Initiative

  • Meta Deletes 550K Accounts Under Australia’s Kids Ban

  • Von Der Leyen To Sign EU–Mercosur Deal In Paraguay

  • Defence Jobs Boom As Germany’s Arms Companies Go On Hiring Spree

  • Trump Eyes Credit Card Rate Cap At 10%, Threatens Legal Action

  • Anthropic Expands Health AI Offering For Doctors, Patients

  • Google Bets On AI-Based Shopping With New AI Agents For Retailers

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.1620 (868M), 1.1630-40 (2.2BLN), 1.1650 (1.5BLN)

  • 1.1680-90 (1.8BLN), 1.1700-05 (2.3BLN), 1.1750 (427M), 1.1765 (486M)

  • USD/CHF: 0.7950 (604M). EUR/CHF: 0.9255 (232M)

  • EUR/GBP: 0.8725 (520M). GBP/USD: 1.3465 (246M)

  • AUD/USD: 0.6680 (300M), 0.6725-35 (718M)

  • NZD/USD: 0.5760 (507M), 0.5770-80 (350M)

  • USD/CAD: 1.3840-45 (702M), 1.3950-65 (580M)

  • USD/JPY: 157.00 (902M), 157.85 (500M), 158.00 (1.4BLN)

  • AUD/JPY: 104.00 (1BLN), 105.00 (509M), 107.00 (200M)

CFTC Positions as of January 9th:  

  • Speculators have reduced their net short position in CBOT US 5-year Treasury futures by 90,044 contracts, bringing it down to 2,312,753.

  • The net short position in CBOT US 10-year Treasury futures has been decreased by 24,106 contracts, resulting in a total of 915,552.

  • Speculators have cut their net short position in CBOT US 2-year Treasury futures by 52,953 contracts, now totaling 1,346,654.

  • There has been a reduction of 9,392 contracts in CBOT US UltraBond Treasury futures, resulting in a net short position of 245,747.

  • Speculators switched their position in CBOT US Treasury bonds to a net short of 6,832 contracts, compared to 14,222 net long contracts the previous week.

  • The net short position in Bitcoin stands at 734 contracts.

  • The Swiss franc reflects a net short position of 40,266 contracts.

  • The British pound has a net short position of 30,538 contracts.

  • The Euro has a net long position of 162,812 contracts.

  • The Japanese yen holds a net long position of 8,815 contracts.

Technical & Trade Views

SP500

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 6890 Target 7040

  • Below 6860 Target 6820

EURUSD 

  • Daily VWAP Bearish

  • Weekly VWAP Bearish

  • Above 1.1710 Target 1.1780

  • Below 1.1685 Target 1.1580

GBPUSD 

  • Daily VWAP Bearish

  • Weekly VWAP Bearish

  • Above 1.3490 Target 1.36

  • Below 1.3390 Target 1.3290

USDJPY 

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 157.40 Target 160

  • Below 157 Target 155

XAUUSD

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 4500 Target 4687

  • Below 4460 Target 4380

BTCUSD 

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 91.8k Target 98.17k

  • Below 91.2k Target 88.7k