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China’s yuan stayed notably strong after Beijing rolled out additional late-December support aimed at boosting consumption, including an upfront 62.5 billion yuan (~$8.94bn) allocation to extend its consumer goods trade-in/subsidy program into 2026 (covering items such as consumer electronics). The advance persisted despite only middling services momentum, as markets also pointed to a run of stronger-than-expected daily midpoint fixings from the PBoC—seen as an effort to anchor FX expectations and lean against excessive depreciation pressure.

Market impact: Near-term supportive for CNY/CNH and China sentiment at the margin—firmer FX can help curb imported inflation and improve confidence, but it can also tighten financial conditions for exporters if appreciation accelerates. For broader Asia FX, a steadier yuan can reduce regional tail risks, though spillovers remain sensitive to U.S. rates and China growth follow-through.

The dollar rose 0.2% to 157.08 yen on Monday after touching 157.255 for the first time since December 22, even as Japan’s rates repriced higher on expectations of further BOJ tightening. Benchmark 10-year JGB yields briefly hit 2.125%, a 27-year high, reflecting markets’ growing conviction that the BOJ will keep raising rates if inflation and activity track its projections.

Market impact: Near term, the mix is JPY-supportive on rates (higher JGB yields) but USD-supportive on FX momentum—keeping USD/JPY elevated and volatility sensitive to BOJ communication and U.S. data surprises.

Videos shared in soclial media show a nighttime gathering in Tehranpars (east Tehran) on Friday, January 2, 2026 (12 Dey), with crowds chanting “Neither Gaza nor Lebanon, my life for Iran.” The slogan underscores a nationalist framing that rejects regional spending priorities and signals how street messaging is expanding beyond purely economic grievances into sharper political and foreign-policy criticism.

Several Central and Eastern European and emerging-market currencies have posted strong gains, with Poland’s zloty, the Czech crown, and the Hungarian forint all up between 15% and 20%. Taiwan’s dollar surged 8% in just two days in May, while Mexico’s peso and Brazil’s currency delivered double-digit gains, largely brushing aside trade-war volatility and benefiting from resilient capital inflows and relative policy credibility.

Market impact: Broad EM FX strength reflects reduced dollar pressure and sustained carry appeal, supporting local asset performance while increasing sensitivity to shifts in global risk sentiment.

Renewed engagement between U.S. President Donald Trump and Russian President Vladimir Putin has helped drive a sharp rebound in the rouble, which has surged about 40%. Despite the strong move, the currency remains heavily constrained by international sanctions and capital controls, and its performance has been eclipsed by Ghana’s cedi, which has rallied roughly 34% alongside gains in gold-related revenues.

Market impact: Rouble strength may improve near-term domestic sentiment but remains fragile under sanctions, while broader EM FX performance continues to be shaped by commodity prices and geopolitical shifts.

The U.S. dollar’s broad decline has driven sizable gains across major currencies in 2025, with the euro up nearly 14% and the Swiss franc stronger by about 14.5%. China’s yuan has broken through the key 7-per-dollar level, signaling renewed confidence and policy support, while the Japanese yen—despite sharp December weakness—has returned to roughly flat on the year, highlighting divergent FX dynamics amid shifting rate expectations.

Market impact: Dollar weakness supports EUR, CHF, and CNY sentiment, while FX volatility remains elevated as markets reassess global rate paths and relative growth outlooks.

The Australian dollar traded around $0.66965, on track for an over 8% gain this year, marking its strongest annual performance since 2020. The New Zealand dollar eased slightly to $0.57875, but remains set for a 3.4% yearly rise, ending a four-year losing streak, supported by improved risk sentiment and a softer U.S. dollar.

Market impact: Supportive for AUD and NZD—strong annual gains reflect improved risk appetite and dollar weakness, though near-term direction remains sensitive to global growth signals and commodity price dynamics.

China’s yuan strengthened past the key 7-per-dollar level on Tuesday for the first time in 2½ years, defying softer central bank guidance. The move puts the currency on track for a ~4% gain this year, marking its strongest annual performance since 2020, supported by improved sentiment, policy backing, and a weaker U.S. dollar.

Market impact: Supportive for CNY and China-linked assets—currency strength can boost confidence and capital flows, though sustained gains will depend on PBoC tolerance, growth follow-through, and global risk conditions.

The euro was steady at $1.1747, while sterling traded at $1.3463 on the final trading day of the year. Both currencies are on track for their largest annual gains in eight years, reflecting sustained dollar weakness, shifting rate expectations, and improved relative outlooks in Europe and the UK.

Market impact: Supportive for EUR and GBP—strong annual performance underscores positive momentum into year-end, though near-term moves remain sensitive to Fed, ECB, and BoE policy signals.

The Australian dollar traded at $0.6693, just below the 14-month high hit on Monday, and remained on track for an 8% annual gain—its strongest year since 2020. The New Zealand dollar was around $0.5806, set for a 3.7% yearly rise, snapping a four-year losing streak. The pricing points to sustained USD softness and improved risk appetite into year-end, with high-beta currencies holding firm.

Market impact: Mildly bullish for risk FX and Asia-Pacific assets; a firmer AUD/NZD can support commodity-linked sentiment, while any reversal risk rises if U.S. rates reprice higher or risk sentiment deteriorates.

The yen traded around 156.07 per dollar, edging away from levels that previously triggered strong official warnings and renewed intervention concerns. Adding to the rates-driven backdrop, the Bank of Japan’s latest Summary of Opinions showed policymakers still debating the need to keep raising interest rates even after December’s hike, with one member arguing for increases every few months—underscoring persistent focus on inflation pressures and keeping the policy outlook tilted toward further tightening.

Market impact: Supportive for JPY on policy divergence—hawkish BOJ signaling can help stabilize the yen and lift JGB yields, though USD/JPY remains sensitive to U.S. rate expectations and any renewed intervention rhetoric.

The U.S. dollar index was on track for a 9.6% annual decline, described as its steepest fall in eight years, as markets leaned into Fed rate-cut expectations, narrower interest-rate differentials versus peers, and persistent concerns around fiscal deficits and political uncertainty. The index traded near 98.033 in early dealings, close to a three-month low, highlighting how quickly sentiment has shifted against the dollar into year-end.

Market impact: Bearish for USD—supports EUR/GBP and other major FX on the margin, and can provide a tailwind for USD-priced commodities; near-term volatility likely remains elevated around rates repricing and fiscal headlines.