Most major indices ended the session in the green, but gains in the US were questionable due to the underwhelming set of earnings from big companies including Google, AMD and Ford, and a better than expected ADP report that showed that the US economy added 183’000 new private jobs in January, comfortably more than around 148’000 pencilled in by analysts, meanwhile the S&P’s services and composite PMI numbers hinted at a faster-than-expected growth in the US activity in January.

Happily, for the Federal Reserve (Fed) doves, the ISM numbers looked softer-than-expected and along with the US Treasury’s announcement that it does not anticipate increasing auction sizes for nominal coupon and floating-rate notes ‘for at least the next several quarters’ gave relief to bond traders and sent the US 10-year yield 12bp lower, the 2-year yield eased as well.

As such, the S&P500 gained 0.39% with around 350 companies eking out gains, Nasdaq 100 extended gains despite disappointment in Google. Nvidia jumped 5% given that Big Tech companies like Meta and Google - that made up to 50% of its revenue in Q3 - insisted that they will spend more on AI this year. Collectively, Alphabet, Meta, and Microsoft are projected to spend around $228 billion on capital expenditures in 2025 – that’s around 75% more than they spent last year, and a part of that cash will flow directly into the pockets of Nvidia.

Elsewhere, Qualcomm topped expectations yesterday after the bell but the stock fell nearly 5% AH due to a slight miss in intellectual property licensing revenue and lower-than-expected licensing revenue guidance. And Amazon is due to report its holiday season earnings today after the bell, with all eyes on its cloud revenue – expected to post a nearly 20% year-over-year increase, which would be the largest growth in two years.

Speaking of AI and tech, Chinese AI and robot companies are doing well due to the DeepSeek push. The CSI’s Artificial Intelligence index rallied 2.40% yesterday and is up by more than 13% since January 13, while the CSI Robot index jumped more than 5% yesterday to the highest since last July. Chinese AI has potential to attract more gains on the convergence narrative with the highly-valued US peers. After all, if the European stocks are good to buy due to convergence, why not the Chinese AI?

That brings me to Europe – where the picture didn’t change much yesterday after a set of weaker-than-expected PMI numbers mostly confirmed the gloomy economic outlook in the old continent and reinforced the idea that the European Central Bank (ECB) should to more to support the underlying economies. Good news is that France has a budget and a PM. It doesn’t change the reality of instable politics of France but it does contribute to narrowing the spread between the German and French yields, and that’s positive for sentiment.

As such, the Stoxx 600 gained while the EURUSD rebounded yesterday. But the rebound in euro versus the US dollar was more due to a broad-based weakness in the US dollar following a sharp fall in the US yields than the French political news. The EURUSD tested the 50-DMA offers but couldn’t clear it, Cable tested its own 50-DMA but attracted top sellers above this level. If the US dollar eases more this week on the back of waning trade tensions and ideally soft jobs data (that would support the Fed doves), both euro and sterling could find room to extend recovery without necessarily damaging their medium-term bearish trend.

On Friday, the US jobs data should give a clearer short-term direction. A softer-than-expected report could lead to a further dollar weakness in the immediate future. As such, short-term tactical traders could take advantage of a potential temporary relief in euro and sterling against the dollar, while medium-term traders will seek topselling opportunities to strengthen their bearish positions. Note that the EURUSD will remain in the medium-term bearish trend below 1.06, and Cable should remain downbeat below 1.2650. After all, the Bank of England  BoE) is expected to lower its rates by 25bp today, as Rachel Reeves growth plans are clouded by the country’s restricted finances and the economy calls for BoE support.

In Japan, the yen got a nice energy boost after the Bank of Japan’s (BoJ) Tamura said that Japan's neutral rate is at least 1% and added that rates must reach that level by the second half of this fiscal, ‘when the outcome of annual wage negotiations will likely confirm broad-based pay increases including for small firms’. His comments strengthened the hawkish BoJ expectations and pulled the USDJPY to below 152 level shortly.

Provided the way the things look at the BoJ, the way – this time – is certainly open for a sustainable slide below the 150 level. Note that the USDJPY will step into the medium-term bearish consolidation zone if it slides below 151.20 – the major 38.2% Fibonacci retracement on September to January rebound.

Elsewhere, recovery in AUD and CAD remain particularly vulnerable to Trump trade news. And despite waning tensions, UPS decided yesterday to halt deliveries from mainland China and Hong Kong due to tariff delays... China pointed its finger at Apple and its app store as the continuation of the escalation of the trade war, gold extended gains while crude oil tanked more than 2% to below its 100-DMA after the EIA data showed that the US crude inventories popped almost 9mio barrels last week. The outlook for oil remains negative, price rallies should see resistance within the 73/75pb range, including two Fibonacci retracements and the 200-DMA.