MNI EUROPEAN OPEN: Precious Metals Up On Fed Concerns

Jan-12 05:47By: Jonathan Cavenagh

Europe

EXECUTIVE SUMMARY

POWELL SAYS FED RECEIVED JUSTICE DEPT. SUBPOENAS - MNI BRIEF
FED’S BARKIN SEES ENCOURAGING JOB MARKET CONTINUING - MNI BRIEF
TRUMP SAYS US CONSIDERING IRAN OPTIONS AS PROTEST DEATHS MOUNT - BBG
JAPAN RULING COALITION PARTNER SEES ' NEW STAGE' ON SNAP ELECTION - BBG

Fig 1: Gold & Silver Strong Uptrends Continue

Source: Bloomberg Finance L.P./MNI

JOBS (BBG): “UK employers cut back their hiring again in December, according to a closely watched survey that is likely to add to the Bank of England’s concerns about a weakening jobs market.”

GREENLAND (BBG): “A group of European countries, led by the UK and Germany, is discussing plans for a military presence in Greenland to show US President Donald Trump that the continent is serious about Arctic security and to try to tamp down American threats to take over the self-ruling Danish territory.”

FRANCE (BBG): " France’s budget minister warned that the adoption of a finance bill for 2026 risks being pushed back until after municipal elections in March if lawmakers topple the government in confidence votes next week."

FED (MNI BRIEF): Federal Reserve Chair Jerome Powell said Sunday the central bank has received grand jury subpoenas from the U.S. Justice Department that threatened a criminal indictment, but argued the move is a pretext aimed at clipping the institution's independence.

FED (NYT): “The U.S. attorney’s office in the District of Columbia has opened a criminal investigation into Jerome H. Powell, the Federal Reserve chair, over the central bank’s renovation of its Washington headquarters and whether Mr. Powell lied to Congress about the scope of the project, according to officials briefed on the situation.”

FED (MNI BRIEF): The December U.S. jobs report adds to evidence that labor supply and demand growth remain both modest and balanced, Federal Reserve Bank of Richmond President Tom Barkin said Friday.

JOBS (MNI BRIEF): The U.S. unemployment rate unexpectedly fell back to 4.375% in December, from a downwardly revised 4.54% in November, while hiring slowed to 50,000 and previous months totals were revised down by a large 76,000 payrolls, the Bureau of Labor Statistics said Friday. Wall Street had expected 70,000 jobs and a 4.5% jobless rate.

BANKING (BBG): "President Donald Trump’s demand that credit-card lenders cap interest rates at 10% for a year takes aim at one of the banking industry’s crown jewels — a business line they guard doggedly."

IRAN (BBG): “President Donald Trump said that the US is mulling potential options in response to reports of deadly crackdowns in Iran in the third week of nationwide protests, but added that Tehran’s leadership also reached out to seek talks.”

US/JAPAN (BBG): "The US will host a gathering of G-7 ministers to discuss rare earths this week, underscoring the shared push to develop alternative supplies in an industry dominated by China."

JAPAN

POLITICS (BBG): " Speculation that Japanese Prime Minister Sanae Takaichi will call for a snap election continues to rise as the leader of a partner in her party’s coalition cited a shift to “a new stage.”"

OTHER

AUSTRALIA (BBG): "Australia’s household spending rose at a faster-than-expected pace in November, indicating consumers are feeling confident about their finances even as inflation and borrowing costs remain elevated."

AUSTRALIA (BBG): “ Australia plans to buy and stockpile minerals essential for defense and advanced technologies from domestic mining companies to help strengthen global supply chains.”

CHINA

PBOC (SHANGHAI SECURITIES NEWS): "Sheng Songcheng, a former director of the People’s Bank of China’s statistics and analysis department, expects the central bank to take “small steps” toward monetary easing in near future, Shanghai Securities News reported, citing Sheng’s speech at a forum on Saturday."

PRICES (YICAI): "China’s polysilicon market sentiment has weakened sharply after authorities fully scrapped value-added tax export rebates for photovoltaic products and reportedly tightened self-discipline mechanisms following regulatory talks, Yicai reports. Sources said regulators have recently warned major firms of potential antitrust risks, laid out explicit rectification requirements and demanded concrete corrective actions. "

SMES (STATE COUNCIL): "China will prioritise support for private investment by optimising an interest subsidy program for loans to small, medium, and micro enterprises, aimed at reducing corporate financing thresholds and costs, according to a recent State Council executive meeting. "

MNI: PBOC Net Injects CNY36.1 Bln via OMO Monday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY86.1 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY36.1 billion after offsetting the maturity of CNY50 billion today, according to Wind Information.

The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4505% at 09:34 am local time from the close of 1.4727% on Friday.
The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 48 on Friday, compared with the close of 49 on Thursday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Lower At 7.0108 Mon; +5.01% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.0108 on Monday, compared with 7.0128 set on Friday. The fixing was estimated at 6.9846 by Bloomberg survey today.

MNI: China CFETS Yuan Index Up 0.55% In Week of Jan 9

The CFETS Weekly RMB Index was 98.54 on Jan 9, up 0.55% from 97.99 on Dec 31.

MARKET DATA

AUSTRALIA NOV HOUSEHOLD SPENDING M/M 1.0%; MEDIAN 0.6%; PRIOR 1.4%
AUSTRALIA NOV HOUSEHOLD SPENDING Y/Y 6.3%; MEDIAN 5.5%; PRIOR 5.7%
AUSTRALIA DEC ANZ-INDEED JOB ADVERTISEMENTS M/M -0.5%; PRIOR -1.5%

SOUTH KOREA JAN EXPORTS 10 DAYS Y/Y -2.3%; PRIOR 17.3%
SOUTH KOREA JAN IMPORTS 10 DAYS Y/Y -4.5%; PRIOR 8.0%

MARKETS

US TSYS: Cash Trading Closed, Long End Futures Down

With cash trading closed in Asia due to a Japan holiday, the only price action for US treasuries was in futures, with major maturities mostly down though exacerbated by illiquidity.
Long end futures fell early as several key sell blocks went through weighing heavy on prices. The US ultra bond WNH6 is currently down -21 at 117-19
The 10-Yr is flat Monday at 112-06+ having touched 112-11 before settling back to flat.
TYH6 remains near to the mid point of the topside resistance from the 100-day EMA at 112-14+ and downside resistance from the 200-day EMA of 112-00
News hit of the US central bank being served with grand jury subpoenas from the Justice Department relating to the renovations of the Fed's headquarters and saw USD weakness Monday with the threat of criminal charges looming and will challenge FED independence in the US trading day.
Markets will also face a US$77bn 26-week and a US$58bn 3-Year bond auction tonight whilst trying to decipher the latest attack on the FED.

AUSSIE BONDS: Slightly Cheaper After Stronger Than Expected HH Spend

ACGBs (YM -1.0 & XM -0.5) are slightly weaker after today’s household spending data.

MNI Techs: Prices bounced Thursday. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.480 as the next major support (see chart).
Earlier data showed stronger than expected Nov household spending figures. This series has replaced the retail sales print as the main monthly indicator for household spending trends in Australia.
The spending data may add a little to the RBA hike case for 2026, although inflation data is likely to remain the key swing factor.
Cash US tsys have traded in today’s Asia-Pac session due to Japan being out on holiday.
Cash ACGBs are 1bp cheaper with the AU-US 10-year yield differential at +53bps.
The bills strip is little changed.
RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 32% for February to 93% by June and 138% by December 2026.
Tomorrow, the local calendar will see Westpac Consumer Confidence.
The AOFM plans to sell A$300mn 4.75% 2054 bond on Tuesday, A$1bn 4.25% 2036 bond on Wednesday and A$700mn 3.25% 2029 bond on Friday.

Bloomberg Finance LP

BONDS: NZGBS: Subdued Session With No Cash US Tsys

NZGBs closed a subdued session, with benchmark yields flat to 1bp richer.

Cash US tsys have traded in today’s Asia-Pac session due to Japan being out on holiday.
The AU–NZ 10-year yield differential currently closed at +29bps, around 10bps below its recent peak of approximately +40bps, the widest since October 2020.
The widening in the long-end spread has been mirrored by shifts in market expectations for the policy rate differential over the next year, as reflected in the AU–NZ 1-year forward 3-month swap (1Y3M) spread.
Markets are presently pricing a further widening of the AU–NZ 3-month rate spread of around 10bps over the next 12 months.
A simple regression analysis of the AU-NZ 10-year yield differential against the AU-NZ 1Y3M spread over the past two years shows that the 10-year differential is around fair value based on the regression model.
Swap rates closed unchanged.
RBNZ-dated OIS pricing is little changed across meetings. No tightening is priced for February, while October 2026 assigns 19bps.
Tomorrow, the local calendar will see NZIER Business Opinion Survey data
On Thursday, the NZ Treasury plans to sell NZ$250 Million 4.5% 2035 bond, NZ$200 Million 4.5% 2030 bond and NZ$25 Million 3.25% 2050 Linkers.

Figure 1: AU-NZ: 10-Year Yield Differential Vs. FV

Source: Bloomberg Finance LP / MNI

FOREX: USD - BBDXY Slides Lower On FED Independence Concerns

The BBDXY has had a range today of 1208.84 - 1212.76 in the Asia-Pac session; it is currently trading around {BBDXY Index}. The USD was looking like it was reestablishing some upward momentum to start the year, but this morning's news of possible indictments on the FED have put a dent in that for now. This market's perception is that this is clear political pressure being brought to bear on the FED and so has worrying implications for its so-called independence. The USD has understandably had a knee-jerk lower in Asia, the question is if that move is enough considering what's at stake. On the day, I suspect rallies could remain heavy in the short-term as the market tries to work through what this means. First support is back between 1205-1207, the USD has lacked any clear direction for at least 6 months now and the wider 1185-1230 range looks set to continue for now. This lack of a trend is being reflected in the CFTC data which shows very little positioning in the USD to start the year.

EUR/USD - Asian range 1.1622-1.1671, Asia is currently trading {EURUSD Curncy}. The pair has bounced nicely in early Asia as the USD reacts to the FED news. On the day look for sellers to reemerge in EUR/USD back toward the 1.1665-1.1695 area.
GBP/USD - Asian range 1.3391-1.3441, Asia is currently dealing around {GBPUSD Curncy}. The pair had the look of potentially topping out above 1.3500 but it will be important to see how it reacts over the day to the USD headwinds. On the day, I am looking for a rally back toward the 1.3460-1.3490 to find sellers initially.
Cross asset : SPX -0.55%, Gold $4570, BBDXY 1211, Crude Oil $59.15
Data/Events : Germany Current Account Balance, EZ Sentix Investor Confidence

Fig 1: GBP/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

JPY: USD/JPY - Tries Lower But Demand Returns Around 157.50

The USD/JPY range today has been 157.52 - 158.20 in the Asia-Pac session, it is currently trading around {USDJPY Curncy}. USD/JPY tried lower in our session but again found solid demand on the dips back toward 157.50. The BOJ is in a tough spot, and they are going to need to do something significant to turn around the market's perception of a weak Yen. A test of the BOJ/MOF resolve looks inevitable at the moment as the market moves its focus back toward the important 160.00 area. USD/JPY remains in an uptrend and while the support back toward the 154.00-155.00 area is intact it remains a buy on dips. On the day, I suspect dips back toward the 157.00 area could now continue to be supported initially as the market looks to build on this momentum. I suspect we get more official jaw-boning as we approach 160 and any move above there would dramatically increase the chances of them getting involved.

"TRUMP DENIES INVOLVEMENT IN DOJ'S FED SUBPOENAS, TRUMP SAYS DOJ SUBPOENAS NOTHING TO DO WITH INTEREST RATES: NBC”
"JAPAN TAKAICHI CABINET APPROVAL RATING UP 2.3PT TO 78.1%: JNN" : BBG
CFTC Data of last week shows Asset Managers continue to pare back their JPY longs, +47852(Last +54818). The Leveraged community reduced their own shorts that had started to become quite large, -68117(Last -79265).
Options : Close significant option expiries for NY cut, based on DTCC data: 156.70($609m), 157.00($872m), 158.00($1.45b). Upcoming Close Strikes : 159.00($949m Jan 15) - BBG.
The USD/JPY Average True Range(ATR) for the last 10 Trading days: 72 Points

Fig 1 : JPY CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

AUD/USD - Has A Look Back Above 0.6700

The AUD/USD has had a range today of 0.6678 - 0.6707 in the Asia- Pac session, it is currently trading around {AUDUSD Curncy}. The AUD poked its head above 0.6700 in Asia as the USD had a knee-jerk lower on the FED news. The AUD price action had been lagging the general bounce seen in the USD to start the year, the 0.6650 area continues to provide support and has seen the AUD outperform in the crosses. A break below this area is needed to see it play catch up in the short-term. Technically though while the AUD remains above 0.6550-0.6600 it should continue to find support on dips. On the day, I will be watching to see if this slide lower in the USD has more to go, a sustained push back above 0.5710-0.5730 could see the upward momentum reestablished.

MNI AU -- Nov Spending Above Forecasts, Reflecting Broad Based Strength: Earlier data showed stronger than expected Nov household spending figures. This series has replaced the retail sales print as the main monthly indicator for household spending trends in Australia. We were up 1.0%m/m (0.6% forecast), while the Oct outcome is now +1.4% (versus the initial 1.3% reported). In y/y terms, spending rose 6.3% (versus 5.5% forecast and 5.7% prior).The spending data may add a little to the RBA hike case for 2026, although inflation data is likely to remain the key swing factor. Other data for ANZ job ads showed a -0.5%m/m for Dec, after a revised -1.5% fall in Oct.
"AUSTRALIA RESOURCES MINISTER KING: CRITICAL MINERALS RESERVE WILL BE OPERATIONAL BY END OF THIS YEAR - [RTRS]"
CFTC Data last week shows Asset managers slightly reduced their shorts, -31901(Last -33138). The Leveraged community has been building a decent long coming into the new year and continues to add to it, +33775(Last +32268).
Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6660(AUD360m), 0.6725(AUD597m), 0.6580(AUD578m). Upcoming Close Strikes : 0.6700(AUD962m Jan13), 0.6700(AUD625m Jan14), 0.6750(AUD911m Jan14) - BBG
The AUD/USD Average True Range for the last 10 Trading days: 35 Points

Fig 1: AUD CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

NZD/USD-Rises Toward 0.5750, Look For Sellers To Fade Back Toward 0.5800

The NZD/USD had a range today of 0.5723-0.5750 in the Asia-Pac session, it is currently trading around {NZD Curncy}. The NZD has bounced in Asia on the FED headlines. The NZD has put in what looks like a top around 0.5850 and while this continues to cap I suspect the short-term could see bounces faded. On the day, I suspect a bounce back toward the 0.5755-0.5780 area should now find sellers initially as the market reacts to the failure to gain momentum above 0.5800 and is now looking for the down trend to be reengaged. The caveat being that the market does not over react to the potential FED indictments.

MNI BRIEF: Powell Says Fed Received Justice Dept. Subpoenas. Federal Reserve Chair Jerome Powell said Sunday the central bank has received grand jury subpoenas from the U.S. Justice Department that threatened a criminal indictment, but argued the move is a pretext aimed at clipping the institution's independence. {NSN T8Q8X46QRTHC <GO>}
CFTC Data of last week shows Asset Managers slightly increasing their short positions in the NZD, -40649(Last -37981). The Leveraged community reduced their own shorts that they had just begun to build quite aggressively, -10605(Last -14480).
Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5800(NZD400m Jan 13), 0.5830(NZD373m Jan 13) - BBG
The NZD/USD Average True Range for the last 10 Trading days: 33 Points

Fig 1: NZD CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

ASIA STOCKS: Equities Strong, Key Onshore China Bourse Reaches Overbought

A strong day across Asia's major equity markets today, despite growing geopolitical risks globally. Equities shrugged off the protests in Iran, the ongoing Venezuela situation and Ukraine bombing Russian drilling platforms to post solid gains. Markets took the lead from the US close Friday and the ever present AI / tech led support remained with key names up Monday. Further news from the EV battery sector in China as Beijing announced a plan to reduce export tax rebates on batteries saw CATS down -2.8% in Hong Kong whilst giving Korean battery company Ecopro got a boost as it jumped by almost 6%.

The NIKKEI is closed today with the KOSPI taking the lead on AI / tech, rising +.45% today whilst the TAIEX in Taiwan was up +1.00% with TSMC gaining +1.2%.
China's bourses have started the week with a rally with the Hang Seng recovering Friday's falls to rise +0.80%, with Shenzhen up strongly by +1.4%. The CSI 300 rose +0.55. Gains for Shenzhen sees it enter overbought territory for the first time since August.
SE Asia's major bourses were mixed with the SE Thai down -0.50%, the FSTE Malay KLCI up +0.45% and the Jakarta Composite up just +0.13%.
India's NIFTY 50 continues to decline, down for a sixth consecutive day. Down -0.45% today, it takes the index down almost 3% year to date on valuations concerns, further tariff threats from the US and concerns about corporate earnings.

Oil Posts Further Gains as Brent Nears Key Resistance Level

Oil was up again Monday as geopolitical tensions escalate, with Iran in focus for oil markets.
The protests in Iran which began over soaring inflation are now calling for an end to the clerical rule of Iran's Supreme Leader Ayatollah Ali Khamenei, the first challenge to his leadership since the uprising in 2022. Iran's attorney general said anyone protesting would be considered an "enemy of God" - an offence that carries the death penalty - while Khamenei has dismissed demonstrators as a "bunch of vandals" seeking to "please" Trump. The US has threatened to strike Iran over the killing of protesters, and President Donald Trump said on Saturday that the US "stands ready to help" as Iran "is looking at FREEDOM" (as per BBG). With Iran a producer of more than 3 million barrels per day, this has put upward pressure on prices.
WTI is up +.80% today to US$59.24 bbl and is wedged between topside resistance via the 100-day EMA of $60.14 and downside resistance from the 50-day EMA of $58.62
Brent is up +.60% today to USD63.45 bbl and is near the topside resistance from the 100-day EMA of $63.89.
Iran's protests have overshadowed the Venezuela situation following President Trump's comments that 'further attacks were cancelled' suggesting that the country is cooperating with the US. This comes as key US oil executives met with the President Friday to map out an investment program to tap the country's vast reserves.
Ukraine over the weekend attacked three Russian drilling platforms in the Caspian Sea owned by Russian oil major Lukoil in the latest move to weaken Russia's economic capacity to fund its war effort. (source BBG)

Gold Spikes on US Fed Reserve Headlines

Gold has started the week off strongly as geopolitical risks remain in focus for investors.
Gold is up +1.3% in Monday trading in Asia at US$4,568 to reach a new all time high for the precious metal.
News hit of the US central bank being served with grand jury subpoenas from the Justice Department relating to the renovations of the Fed's headquarters and saw USD weakness Monday with the threat of criminal charges looming. The news again challenges FED independence, driving investors to safe haven assets like gold.
Escalating geopolitical tensions in Iran and Venezuela and the ongoing conflict in Ukraine were the key focus for gold this week, now adding the FED issues to that list.
The US President repeatedly attacked the FED chairman last year, undermining the independence of the Central Bank and those attacks have escalated today.
The move higher Monday sees gold near to overbought on the relative strength index, where it spent much of September and October last year.

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Country	Event
12/01/2026	0850/0950		EU	ECB de Guindos Fireside Chat at Instituto Español de Analistas
12/01/2026	-	***	CN	Money Supply
12/01/2026	-	***	CN	Social Financing
12/01/2026	-	***	CN	New Loans
12/01/2026	1630/1130	***	US	US Note 03 Year Treasury Auction Result
12/01/2026	1630/1130	*	US	US Treasury Auction Result for 26 Week Bill
12/01/2026	1700/1200	***	US	USDA Crop Estimates - WASDE
12/01/2026	1730/1230		US	Atlanta Fed's Raphael Bostic
12/01/2026	1745/1245		US	Richond Fed's Tom Barkin
12/01/2026	1800/1300	*	US	US Treasury Auction Result for 13 Week Bill
12/01/2026	1800/1300	**	US	US Note 10 Year Treasury Auction Result
12/01/2026	2300/1800		US	New York Fed's John Williams
13/01/2026	2350/0850		JP	Balance of Payments
13/01/2026	0001/0001	*	GB	BRC-KPMG Shop Sales Monitor
13/01/2026	0500/1400		JP	Economy Watcher's Survey
13/01/2026	0745/0845		FR	Budget Balance
13/01/2026	0900/1000	**	EU	EZ Current Account
13/01/2026	1000/1000	*	GB	Index Linked Gilt Outright Auction Result
13/01/2026	1100/0600	**	US	NFIB Small Business Optimism Index
13/01/2026	1330/0830	*	CA	Building Permits
13/01/2026	1330/0830	***	US	CPI
13/01/2026	1330/0830	***	US	CPI
13/01/2026	1330/0830	***	US	CPI
13/01/2026	1330/0830	**	US	US CPI Annual Revised
13/01/2026	1330/0830	***	US	CPI
13/01/2026	1355/0855	**	US	Redbook Retail Sales Index