Daily Market Outlook, January 19, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

Fresh Trump tariffs dominate headlines with his threat to impose 10% tariffs on European countries starting February 1 (rising to 25% in June) due to their opposition to his attempt to negotiate a deal for the U.S. to purchase Greenland from Denmark. However, the most significant movement in financial markets overnight comes from long-end JGBs, with yields climbing approximately 12bps on the 30-year bond, now exceeding 3.60%. Prime Minister Takaichi is expected to announce a snap election officially today. Meanwhile, China’s 2025 GDP growth has been confirmed at 5%.While Trump’s move to reignite the trade war and the European retaliatory tariffs worth €93 billion are undoubtedly major developments, the market reaction seems relatively muted in early trading. Gold has risen 1.7%, hitting $4,680/oz, yet the Dollar Index is only down ~0.25% compared to Friday’s close. The direction of market movements—weakening Dollar and equities, strengthening precious metals—is consistent with past examples, but the scale of the reaction appears modest. This movement could partly be attributed to the U.S. holiday for Martin Luther King Jr. Day, with U.S. Treasuries not trading overnight. It might also reflect the difficulty market participants face in efficiently interpreting erratic and unpredictable news flow in pricing. Alternatively, investors may believe the present will be another instance of "TACO" (Trump Always Chickens Out), where the eventual outcome differs from the initial threat to reopen the trade war. Notably, U.S. Treasury Secretary Bessent remarked yesterday that "Europeans project weakness; U.S. projects strength." Heading into Davos week, the macroeconomic landscape is likely to be heavily influenced by the evolution of this U.S.-European standoff.  

The December bounce in U.S. industrial production appeared solid (+0.4% m/m), and November’s figure was revised upward to +0.4% from +0.2%, contributing to a more favourable outlook. Manufacturing showed a more modest improvement, rising +0.2% m/m compared to the revised +0.3% m/m in November. This report aligns with the rebound seen in last week’s Fed surveys (Empire and Philly). A closer look at the breakdown indicates continued strong demand for computers and equipment, driven by the AI buildout. However, the boost from business equipment largely reflects a statistical correction following the Boeing strike that halted aircraft production last year. The balance of production remains mixed, with autos, in particular, acting as a drag once again. Gross value added from production continues to paint a challenging picture, with little evidence that government policy has successfully shifted the prevailing trend. While some may argue that the effects of promised investments Trump has secured from world leaders will take time to materialise, overcoming intensifying Chinese competition amid erratic U.S. policy implementation will remain a significant challenge in the near term.

European stocks are expected to experience significant declines at the market's opening following President Trump's announcement of plans to impose a broader range of tariffs on European nations in exchange for the U.S. being permitted to purchase Greenland. Euro STOXX 50 futures have dropped by 1.5%, with the French CAC 40 experiencing a 1.8% decrease. Meanwhile, FTSE futures have fallen by a smaller margin of just 0.5%, as the index's defensive traits might provide some level of stability. EU leaders are expected to convene for an emergency meeting in Brussels on Thursday to explore various options. One such option involves implementing a package of tariffs on 93 billion euros ($107.7 billion) worth of U.S. imports, which could automatically take effect on February 6 following a six-month suspension. Attention will focus on European defence stocks, which are already high, as well as those companies that may be most affected by the tariffs. Significant challenges could confront automotive stocks, which are currently nearing two-month lows. While macroeconomic and geopolitical news will dominate the headlines, it's also important to monitor ASM International, as the manufacturer of computer chip equipment reported preliminary bookings exceeding market forecasts for the fourth quarter of 2025, driven by a recovery in orders from China.

Overnight Headlines

• Trump Imposes 10% Tariffs On EU Over Greenland; EU Eyes $108B Retaliation

• China Q4 GDP Slows To 3-Year, Full-Year Growth Meets 5% Target

• China Property Investment Slides 17.2% In 2025; Retail Sales Miss

• Fed Turmoil Threatens Dollar Supremacy As China Pushes Yuan

• RBNZ Governor Under Fire For Silence On Fed Probe Support

• Japan Stocks Hit Historic High On Snap Election, Parties Mull Tax Cut

• Gold Hits Record High As Markets React To Trump’s Tariff Threats

• Bitcoin Falls Below $92,000 On Risk-Off Shift Amid Tariff Escalation

• US Natural Gas Prices Surge On Colder Weather Outlook

• UK Productivity Surge Signals Economic Turnaround, Study Shows

• UK House Prices Jump After Budget, London IPO Reform Defended

• Airbus Humanoid Deal Boosts Chinese Robot Maker Shares

• TSMC Charts Strategy Beyond Taiwan As Geopolitics Reshape Supply Chains

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.1500 (6BLN), 1.1570-80 (777M), 1.1600-10 (1.1BLN), 1.1615 (1.4BLN)

• 1.1650 (200M), 1.1675 (882M), 1.1690 (220M), 1.1710 (250M), 1.1730 (1BLN)

• GBP/USD: 1.3300 (380M). USD/CAD: 1.3930-35 (260M)

• AUD/USD: 0.6685-95 (1.4BLN). NZD/USD: 0.5735-45 (451M)

• USD/JPY: 157.00 (422M), 158.00 (360M), 158.75-85 (601M), 159.00 (1.8BLN)

• EUR/JPY: 184.00 (610M)

CFTC Positions as of January 16th:  

• Speculators have reduced their net short positions in CBOT US Treasury futures as follows: 5-year Treasury futures by 43,633 contracts to 2,269,120, 10-year Treasury futures by 45,047 contracts to 870,505, 2-year Treasury futures by 41,774 contracts to 1,304,880, and UltraBond Treasury futures by 10,650 contracts to 235,097. Additionally, speculators have shifted to a net long position of 13,835 contracts in CBOT US Treasury bonds futures, compared to 6,832 net shorts the previous week. 

• Bitcoin net long position stands at 69 contracts. The Swiss franc shows a net short position of -43,392 contracts, the British pound at -25,270 contracts, the euro with a net long position of 132,656 contracts, and the Japanese yen at -45,164 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 4600 Target 4720

• Below 4550 Target 4490

BTCUSD 

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 98.5k Target 101k

• Below 95k Target 90k