Market focuses on US non-farm data, Asia-Pacific markets continue to reach new highs, US dollar falls for four consecutive days, gold holds firm above the $5,000 mark.

Weak US economic data has intensified expectations of Fed rate cuts, pushing Asian stock markets to historic highs. The US dollar weakened against all G10 currencies as investors adjusted positions ahead of a key employment report.

The MSCI Asia Pacific Index rose 1% to a record high on Tuesday, further expanding its lead over European and US stocks this year. US Treasury futures extended gains, with the yield on the 10-year Treasury dropping to its lowest in about a month. Gold, which usually benefits from rate cuts, rose 0.4%, with spot prices holding above $5,000.

US December retail sales unexpectedly stagnated, showing diminished consumer support for the economy at year-end and strengthening expectations of a rate cut by the Fed later this year. The swap market has priced in a third rate cut this year, with two cuts almost fully priced in before the September meeting. The US dollar spot index fell for the fourth straight day, down 0.2%.

Market focus has now shifted to Wednesday's employment report and inflation data later this week for more policy outlook signals. Economists expect 65,000 new jobs in January, the best performance in four months, with unemployment expected to remain at 4.4%. The employment report will also include annual revisions, expected to show a downward adjustment in annual employment numbers through March 2025.

S&P 500 futures up 0.3%.Korea's Seoul Composite Index expanded intraday gains to 1%.Australia S&P/ASX 200 Index closed up 1.7% at 9,014.80.Indonesia’s benchmark stock index rose 1% intraday to 8211.28.USD/JPY fell below 153, with intraday decline expanding to 1%, now at 152.85.Euro up 0.1% to $1.1908.Australian 10-year government bond yield fell 7 basis points to 4.76%.Bitcoin down 1.6% at $67,531.27.Brent crude rose 0.8% to $69.36 a barrel; WTI up 0.9% to $64.52.Spot gold rose 0.4% to $5,044.53 an ounce.

Employment Data Becomes Key for Markets

"The jobs report will be critical," said Bret Kenwell of eToro. "Weak data may push market sentiment further towards risk aversion as growth concerns mount, but robust data may ease some of those worries."

Lorraine Tan, Morningstar Director of Asian Equity Research, said: "After recent mixed economic data, the market may focus even more on tonight's US employment report. If the data is weak, it should boost expectations for Fed rate cuts."

Currency market data shows traders now see the probability of three rate cuts this year rising slightly, more than a week ago, as Tuesday's weaker-than-expected retail sales data adds to the dovish outlook. Data from the US Department of Commerce shows December retail sales unexpectedly stagnated, signaling reduced consumer support for the economy at year-end.

Asian Markets Lead Global Gains

Asia's markets are seeing another breakout year, outperforming US and European peers. Most stock benchmark indices in the region have risen in 2026, and currencies have shown resilience under external pressure, with credit demand pushing spreads near historical lows.

Despite still being early in the year and Asia not fully immune from global volatility, the region has several favorable forces. Artificial intelligence is one theme, as global investors confront billions of dollars in spending and its disruptive impact.

On Tuesday, the S&P 500 declined 0.3% due to weakness in several tech stocks, though the index remains near last month’s record high. S&P 500 and Nasdaq 100 futures continue to rise, and momentum appears set to continue on Wall Street.

US Dollar Under Pressure Across the Board

The US dollar fell against all major currencies as investors, reacting to fresh signs of US economic weakness, increased bets on Fed rate cuts. David Forrester, strategist at Crédit Agricole in Singapore, said: "Relative rates are again in play, and weak US economic data encourages investors to price in a higher possibility of further Fed rate cuts."

The Australian dollar led gains after RBA Deputy Governor Andrew Hauser said inflation remains "too high," paving the way for further rate hikes. The yen strengthened for a third straight day after Prime Minister Sanae Takaichi won the weekend election.

Hedge funds are preparing for US employment data by buying USD/JPY options structures, which will gain value if the pair continues to fall. They are also buying spot AUD against the dollar. Calvin Yeoh, fund manager at Blue Edge Advisors, holds a long yen position, stating: "Tonight's nonfarm payrolls and CPI data will be key to see if this rate divergence continues."

Gold Holds Above $5,000

Gold posted moderate gains, consolidating above $5,000 after weak US retail sales data supported the case for Fed rate cuts. Spot gold rose 0.6% to $5,059.53 an ounce.

Manav Modi, analyst at Mumbai’s Motilal Oswal Financial Services, said falling yields helped boost gold prices. Gold does not pay interest and typically rises when yields elsewhere become less attractive. US 10-year Treasury yields fell to their lowest in nearly a month.

Gold surged above $5,595 an ounce in late January due to geopolitical tensions, attacks on Fed independence, and flows from currency and sovereign bonds to traditional assets. But speculative buying made the rally overheated, and gold plunged about 13% in two trading days. It has since recovered about half the loss, trading around $5,000 this week.

Many banks believe the rally will resume as the supporting reasons persist. BNP Paribas expects gold to hit $6,000 by year-end, and Deutsche Bank and Goldman Sachs also have bullish forecasts. Silver rose 2% to $82.4272 an ounce, with platinum and palladium both up over 1.5%.

Other Market Moves

Oil prices rose as Middle East tensions around Iran offset the impact of a significant increase in US inventories reported by the industry. Brent crude rose 0.8% to $69.36 a barrel, and WTI rose 0.9% to $64.52. There are reports that the US is considering seizing tankers carrying Iranian oil, and if nuclear talks with Iran fail, it may send another aircraft carrier strike group to the region.

On Bitcoin, despite so-called "whales" buying after the price crash, the return of demand remains limited, casting doubt on whether this signals a true recovery. According to crypto tracking firm Glassnode data, wallets holding over 1,000 bitcoin accumulated about 53,000 coins in a week, the most since November. Bitcoin traded at $67,443 on Wednesday morning, down 1.7% from the previous night.

Glassnode’s Sales Director Brett Singer said: "This has slowed the downward trend, but the market still needs more inflows."

Risk DisclaimerMarkets have risks, and investments require caution. This article does not constitute personal investment advice, nor does it take into account users’ specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable to their circumstances. Investments made accordingly are at personal risk.