US Stocks Drive Higher on Positive AI Sentiment – Nasdaq up 1.26%
Wall Street returned to form overnight, with US equities pushing higher as technology stocks led the charge and investor concerns around the AI sector continued to fade. A strong session was further bolstered after the closing bell, with Nvidia reporting better-than-expected fourth-quarter earnings. The Dow Jones rose 0.63% to close at 49,482, while the S&P 500 gained 0.81% to finish at 6,946. The Nasdaq Composite outperformed once again, rallying 1.26% to 23,152. In currency markets, the US dollar softened despite rising Treasury yields, although notably performed strongly against the yen. The DXY slipped 0.21% to 97.68 on the day. Bond markets saw modest selling pressure as equities advanced, with the US 2-year Treasury yield climbing 1.6 basis points to 3.471%, while the benchmark 10-year yield added 2.3 basis points to 4.052%. Commodity markets were comparatively subdued. Brent edged 0.41% higher to $71.06 per barrel, while WTI dipped slightly by 0.08% to $65.58 as traders continued to monitor developments between the US and Iran. Gold prices pushed 0.40% higher to $5,164.78, supported by ongoing haven demand.
Aussie Dollar to Drive Higher in 2026
The Aussie dollar has been one of the standout currencies of the year so far, as underlying fundamentals have combined to push the Reserve Bank of Australia into a tightening cycle. Once again, data out of Australia came in stronger than expected yesterday, with inflation numbers beating estimates. The month-on-month CPI number came in at +0.4% vs the expected +0.2%, while the year-on-year number pushed back up to 3.8%, having been expected to drop to 3.7%. The annual numbers are clearly much higher than the RBA’s preferred 2–3% band, and traders are now looking at more rate hikes in the coming months. The Aussie has reacted by pushing higher against the dollar and on the crosses. It is now sitting at or near multi-year highs against the USD, GBP, EUR, and JPY, and if we see strong breaks from a technical perspective, these moves could continue throughout 2026.
Quieter Calendar Day Ahead for Traders
With a relatively light economic calendar ahead, market participants expect positive sentiment to carry through today’s sessions. That said, geopolitical headlines remain a key wildcard, and traders will continue to monitor news flow closely for any developments that could shift momentum. The Asian session has very little on the event calendar today; however, the market is expecting to see good moves higher on the back of the strong day on Wall Street. It’s a similar situation on the calendar in the London session today; however, euro traders will be paying close attention to updates from the ECB president’s testimony in front of the European Parliament earlier in the session, with any new hints on rate moves likely to see volatility in the currency. The US session will see some major data in the form of the Weekly Unemployment Claims numbers (exp. 217k), and we will hear from the Fed’s Michelle Bowman; however, expect that positive sentiment from yesterday’s session to at least start the market on a positive footing.
