Happy Monday. Markets began 2026 in a quiet, subdued manner as holiday-thinned volumes masked underlying pressure for a return to volatility. While the economic calendar was light to start the year, the "smart money" is already positioning for a high-stakes week of labor and inflation data.
1. Last Week’s Market Close: A Tentative Rebound
The first trading days of 2026 saw the US Dollar Index (DXY) attempt a positive bounce after suffering its steepest annual decline since 2017—a loss of roughly 9.4% in 2025.1
DXY (Dollar Index): Closed the week tentatively higher near 98.43, snapping last year’s slump as investors braced for critical Fed-related data.
EUR/USD: Slipped to approximately 1.1716 on Friday after Eurozone manufacturing activity hit a nine-month low in December.
GBP/USD: Regained much of its weekly losses to trade above 1.3450, following a strong 2025 where it surged 7.7%.
USD/JPY: Trending higher toward 157.00, close to 10-month highs that previously drew warnings of Bank of Japan intervention.
Precious Metals: Gold rebounded to trade near $4,380, while Silver climbed above $74 to recover from its end-of-year dip.
2. Institutional Crypto: "The Suits Have Arrived"
While Bitcoin ended 2025 "tactically bruised"—down roughly 6% for the year and 30% off its October peak—the institutional narrative for 2026 is one of full-scale execution.
Corporate Strategy: Coinbase Institutional indicates that every major company now requires a blockchain and AI strategy to scale effectively in 2026.
Mass Allocation: Approximately 76% of global investors plan to expand their digital asset exposure this year.
New Standards: The implementation of the FASB fair-value standard (ASU 2023-08) officially allows corporations to record crypto at market value this month, removing a major accounting barrier for CFOs.
Strategic Maturity: Institutional focus has shifted toward Ethereum as a settlement "engine" and tokenized real-world assets (RWAs), which are projected to reach trillions in the coming years.
3. The Week Ahead: Big Announcements
Buckle up—this is a "full slate" week where liquidity returns and the data will steer global policy for Q1.
Date | Time | Currency | Impact | Event | Forecast | Previous |
Mon Jan 5 | 10:00pm | USD | 🔴 | ISM Manufacturing PMI | 48.3 | 48.2 |
Tue Jan 6 | All Day | EUR | 🟠 | German Prelim CPI m/m | 0.3% | -0.2% |
Wed Jan 7 | 7:30am | AUD | 🔴 | CPI y/y | 3.7% | 3.8% |
8:15pm | USD | 🔴 | ADP Non-Farm Employment Change | 47K | -32K | |
10:00pm | USD | 🔴 | ISM Services PMI | 52.3 | 52.6 | |
10:00pm | USD | 🔴 | JOLTS Job Openings | 7.65M | 7.67M | |
Thu Jan 8 | 8:30pm | USD | 🔴 | Unemployment Claims | 216K | 199K |
Fri Jan 9 | 8:30pm | CAD | 🔴 | Employment Change / Unemp. Rate | -5.4K / 6.7% | 53.6K / 6.5% |
8:30pm | USD | 🔴 | Non-Farm Employment Change (NFP) | 57K | 64K | |
8:30pm | USD | 🔴 | Unemployment Rate | 4.5% | 4.6% | |
10:00pm | USD | 🔴 | Prelim UoM Consumer Sentiment | 53.5 | 52.9 |
4. The "Why" Behind the Moves: The Fed Leadership Pivot
The single biggest shadow looming over January is the impending succession battle for the Federal Reserve Chair. Jerome Powell’s term expires in May 2026, and the race to replace him is already rattling markets.
Front-runner: Kevin Hassett, Director of the National Economic Council, is the current favourite. He is widely perceived as a "Trump-aligned" candidate who would favour aggressive rate cuts even if inflation remains above target.
The Conflict: Markets are bracing for potential friction between a dovish new Chair and more hawkish FOMC members, which could spark a "leadership premium" of extreme volatility in the first half of the year.
Market Impact: A confirmed move toward a politically-influenced, dovish Fed could trigger a massive sell-off of U.S. bonds and further depreciation of the dollar later in 2026.
AUD/USD - Daily Chart
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