The USD is modestly higher as markets react to lower inflation and PMI data in Europe.

The USD is modestly higher as the NA session begins. The biggest movers are the GBPUSD and USDCHF with the USD showing gains of about 0.17% vs each. The EURUSD is lower after weaker inflation and Service PMI data.

In the video above, I take a look at the 3 major currency pairs from a technical perspective and outline the key levels in play for your trading today and explain why they are important.

What happened in Europe economically this morning.

On the economic front in Europe today the CPI data today out of Germany and France showed that inflation is cooling faster than economists anticipated, which generally puts less pressure on the European Central Bank (ECB) to maintain high interest rates.

• German Prelim CPI (m/m): Worse than expectations (Lower inflation). The actual came in at 0.0%, missing the estimate of 0.3%.

• French Prelim CPI (m/m): Worse than expectations (Lower inflation). The actual was 0.1%, coming in under the 0.2% estimate.

Purchasing Managers' Index (PMI) Summary

The Services PMI data was mixed. While Spain saw a massive surge, the heavyweights (Italy, France, and the UK) saw their services sectors either lose momentum or perform worse than expected. Despite the slowdown all were still above the 50 level indicative of expansion. However, like the CPI, the data is congruent with the ECB tilting easier.

Key Takeaways

• Spain is the outlier: With a reading of 57.1, Spain is seeing robust growth in its services sector, far outstripping its neighbors.

• Widespread Momentum Loss: Excluding Spain and Germany, most of Europe saw service activity slow down more than forecasted, with Italy seeing the largest drop relative to expectations.

• Disinflation Trend: The lower-than-expected CPI figures in Germany and France suggest that the "inflation fight" is progressing well, which may shift market focus toward economic growth concerns rather than rising prices.

Stocks are mixed to start the new day in the US.

Yesterday’s trading session kicked off 2026 with a bang, and as we look at today's pre-market activity, the momentum is showing a slight divergence between the blue-chips and tech heavyweights.

Morning Market Snapshot

Following yesterday's record-breaking performance, the futures are currently signaling a mixed open:

• Dow Jones: Implied down -10 points (Consolidating after yesterday's record close).

• S&P 500: Implied up +4.5 points (Chasing a new milestone).

• Nasdaq: Implied up +57 points (Leading the morning gains).

The Quest for Records

Wall Street is currently "record-hunting." Here is where the major indices stand relative to their all-time highs:

While the Dow is sitting in uncharted territory, the Nasdaq still has the most ground to cover. It needs a rally of roughly 2.4% to reclaim its October 2025 peak.

Market Movers & Trends

Yesterday’s rally was largely fueled by Energy and Banking sectors, sparked by geopolitical shifts in Venezuela and optimism surrounding U.S. oil majors. Today, the focus seems to be shifting back toward Tech and AI.

Pre-Market Gainers (Jan 6)

• Vistra Energy (VST): Up +4.49% as power demands for AI data centers continue to drive utility plays.

• Microchip (MCHP): Up +4.24% following positive sentiment in the semiconductor space.

• Alumis (ALMS): A massive standout, surging +81% after announcing successful Phase 3 trial results for its psoriasis drug.

• Micron (MU), Nvidia, AMD are all higher: Chip stocks are rebounding today with MU up 1.45%, Nvidia shares are up 0.80% helped by Jensen Huang's keynote address at CES 2026 announced that NVIDIA's next-generation "Vera Rubin" AI platform is in full production, promising five times the AI computing performance of the previous Blackwell chips. He also emphasized a shift toward "Physical AI," unveiling the Alpamayo open-source software and models designed to help autonomous vehicles and robots reason through complex, real-world situations. AMD is up 0.75% in premarket trading.

Yesterday’s Leaders (Jan 5)

In comparison, yesterday was all about "Old Economy" giants:

• Energy: Chevron (CVX +5.10%) and Halliburton (HAL +7.84%) saw significant gains following news of U.S. operations in Venezuela.

• Small Caps: The Russell 2000 outperformed the majors yesterday, jumping 1.6%, signaling a broad-based appetite for risk.

Bond yields are modestly higher.

Bond yields are broadly edging higher this morning as the market reacts to cooling European inflation and geopolitical headlines from Venezuela. The current moves reflect a bear-steepening of the yield curve, where longer-dated yields are rising slightly faster than short-term ones.

Treasury Yield Summary (Jan 6, 2026)

Yields are up across the board, with the 10-year and 30-year leading the modest climb.

Market Context & Observations

• The "Steepening" Curve: The spread between the 10-year and 2-year yield remains in positive territory at approximately 0.71%. This upward-sloping curve is generally seen as a sign of confidence in long-term economic resilience, despite immediate volatility.

• Impact of Geopolitics: Yields faced some downward pressure yesterday as the capture of Venezuelan leaders sparked a "safe-haven" bid for Treasuries, but that trend has reversed this morning as focus shifts back to domestic data.

• Rate Cut Odds: While yields are rising today, the market is still pricing in a roughly 25% probability of three quarter-point rate cuts by the Fed in 2026, though some analysts expect a pause at the first meeting of the year.