(Jan 28): The dollar sank to the lowest level in almost four years, reflecting investor caution toward the world’s reserve currency amid unpredictable policymaking from Washington. The weakness spurred a rally in the yen, gold and US stocks.
The Bloomberg Dollar Spot Index slid to its lowest since February 2022 as signs of US support to boost the yen reinforced the argument about potential coordinated intervention to guide the greenback lower against key trading partners. The decline accelerated after President Donald Trump said he was not concerned about the weakening.
The yen touched its strongest level against the greenback since October in Tuesday’s session to trade around 152 per dollar. Gold, silver and crude oil — all priced in dollars — rose and the S&P 500 Index closed at an all-time high. While equity-index futures for several Asian gauges advanced, those for Japan retreated as a stronger yen is typically a headwind for the country’s equities.
The dollar has weakened amid uncertainty over policy from the Trump administration, including threats to take over Greenland and comments that have raised concerns about the Federal Reserve’s independence. Investors face a pivotal week, with the central bank due to announce its interest-rate decision on Wednesday and megacap technology companies beginning to report earnings.
“The Trump administration is taking a calculated risk,” said Win Thin, chief economist at Bank of Nassau 1982 Ltd. “Foreign exchange typically is the leader in terms of showing market discomfort with a country’s policies and economic outlook, so this dollar weakness bears watching.”
The latest decline also follows signs of US support to boost the yen, reopening speculation around the potential for coordinated currency intervention to guide the greenback lower against key trading partners.
See also: World stocks primed to extend rally, yen edges lower
Reports from traders Friday indicated that the Federal Reserve Bank of New York contacted financial institutions to check on the yen’s exchange rate — a preliminary step that’s often taken before interventions.
Meanwhile, Trump’s dollar comments added to an earlier slide in the greenback, which reflected a lack of confidence in the US economy partly due to his erratic tariff policy.
Speaking to reporters in Iowa, Trump said “the dollar is doing great.” When asked if he wants to see the currency decline more, he replied that he could have it go up or down “like a yo-yo.”
See also: Dollar drops while gold tops US$5,000, stocks rise
Elsewhere, the US 10-year Treasury yield rose three basis points ahead of the Fed’s meeting. The central bank is projected to halt its rate-cutting cycle as a steadier jobs market restores a degree of consensus among officials after months of growing division.
With the economy still displaying exceptional strength, the Fed’s messaging is likely to emphasise a data‑driven approach to future policy decisions, according to Chris Brigati at SWBC. Meantime, he said the tone from this week’s Magnificent Seven earnings should be solid, and upward revisions from analysts signal confidence is building.
“This week is pivotal in setting the market’s near‑term tone as 2026 progresses,” Brigati noted. “History shows that a strong January often frames the narrative for the rest of the year, with investor psychology playing an outsized role.”
Around a third of S&P 500 companies by market capitalisation report results this week. Roughly 81% of the firms in the US equity benchmark that have reported already have beaten analyst earnings estimates, according to data compiled by Bloomberg.
Microsoft Corp, Meta Platforms Inc and Tesla Inc report earnings on Wednesday, followed by Apple Inc. on Thursday. Alphabet Inc, by far the best performer among megacaps last year, reports on Feb 4. Results from Amazon.com Inc land on Feb 5 and Nvidia Corp’s on Feb. 25.
US stocks edged higher with mega-cap tech outperforming. The S&P 500 rose 0.4% to a new closing high Tuesday. The Nasdaq 100 and Magnificent Seven both rose 0.9% as investors prepare for a wave of tech earnings later this week. UnitedHealth Group Inc led losses in insurers on a disappointing forecast and as the US proposed holding payments to private Medicare plans flat next year.
The moves underscored broad optimism for stocks despite pockets of uncertainty from tech earnings forecasts, geopolitical tensions and the path ahead of interest rates.
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“We expect tech earnings to be strong,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “But we also expect earnings growth to broaden across sectors, with cyclical areas of the economy poised to benefit from supportive fiscal and monetary policies.”
Corporate highlights:
- China Vanke Co won more breathing room as it prepares what would be one of the country’s biggest-ever restructurings, after holders of two yuan bonds accepted the developer’s plan to delay the bulk of those payments by a year.
- Texas Instruments Inc, the biggest maker of analog chips, gave a strong revenue forecast for the current period, indicating that demand for industrial equipment and vehicles is beginning to rebound.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 8.26am Tokyo time
- Hang Seng futures rose 0.4%
- Australia’s S&P/ASX 200 rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 1.1%
- The euro fell 0.1% to US$1.2024
- The Japanese yen fell 0.2% to 152.51 per dollar
- The offshore yuan was little changed at 6.9356 per dollar
- The Australian dollar fell 0.2% to US$0.7000
Cryptocurrencies
- Bitcoin rose 0.4% to US$89,307.73
- Ether rose 0.2% to US$3,018.97
Bonds
- Australia’s 10-year yield advanced two basis points to 4.87%
Commodities
- West Texas Intermediate crude rose 0.3% to US$62.59 a barrel
- Spot gold fell 0.3% to US$5,165.80 an ounce
Uploaded by Jason Ng
