Global markets remain on edge as internal unrest in Iran persists, fueling ongoing geopolitical anxiety. This instability is compounded by the opaque situation in Venezuela and a lack of substantive progress toward peace in Ukraine. Such flashpoints traditionally trigger heightened volatility in crude oil markets. However, investor focus is increasingly bifurcated between geopolitics and Wall Street; following the bank earnings season, the spotlight is shifting to the technology sector, with Netflix and Intel scheduled to report this week. While the macroeconomic calendar is dense, it lacks top-tier data releases. Nonetheless, the upcoming Bank of Japan policy decision remains a critical focal point, as any shift in tone could have profound implications for the yen. Key instruments to monitor in the coming days include USDJPY, US100, and OIL.WTI.
USDJPY
The USDJPY pair continues to trade near its 2024 peaks, levels not seen since the late 1980s and early 1990s. The yen’s protracted weakness is driven by a confluence of factors: persistent inflationary pressure, rising national debt, a lack of robust economic recovery, and the perceived inertia of the central bank. Japan's finance minister has hinted at the possibility of a coordinated intervention with the United States to support the embattled currency. While a weak yen benefits Japan's export-oriented economy, it simultaneously erodes domestic purchasing power through imported inflation. The Bank of Japan is widely expected to hold rates steady this Friday, but markets are alert for any signals regarding the timing of a first hike or further verbal intervention.
US100
US equity indices responded favourably to a slight de-escalation in geopolitical tensions last week and were further bolstered by stellar results from Taiwan Semiconductor Manufacturing Co. (TSMC). The semiconductor giant reported a net income of NT$505.7bn ($16bn), signalling a healthy sector and raising expectations for upcoming reports from American tech leaders. Although no members of the "Magnificent Seven" report this week, investor attention is fixed on Netflix and Intel, the latter of which is showing signs of recovery, aided by government support and fresh corporate orders. The US100 (Nasdaq 100) sits a mere 2% below the record highs established in October, while the US500 (S&P 500) has been consistently setting fresh benchmarks since the start of the year.
OIL.WTI
Crude oil prices remain subject to extreme volatility, having posted gains of up to 9% at various points this year. This year's rally is intrinsically linked to geopolitical uncertainty surrounding Venezuela, Russia, and Iran. Speculation regarding US intervention in Tehran has kept prices at multi-week highs, despite fundamental forecasts suggesting a significant global oversupply. Should geopolitical risk premiums begin to fade, the market may face substantial downward pressure. For now, however, expectations remain that prices will hold at these elevated levels.
US OPEN: Bank and fund earnings support valuations.
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Chart of the day: USD/JPY under pressure from BoJ and Japanese policy (January 16, 2026)
