You’ve Been Served: Markets React as ‘Sell America’ Theme Pressures USD and US Assets

Key Highlight

Markets have returned to a broad “Sell America” narrative.

Market Recap

The US dollar ended the week on a firmer footing, extending gains after the Supreme Court stopped short of issuing a ruling on Trump-era tariffs. Earlier in the session, the greenback briefly softened following a weaker-than-expected US jobs report, with nonfarm payrolls rising by just 50,000 versus forecasts of 70,000, alongside downward revisions to the prior month. Despite the softer headline data, the unemployment rate edged lower to 4.4%.

Elsewhere, GBP/JPY surged to its highest level in 18 years, driven by reports that Prime Minister Sanae Takaichi may dissolve Japan’s lower house of the National Diet, adding a fresh layer of political uncertainty.

Market Overview:

Markets opened the day under pressure as investors moved back into a broad “Sell America” trade. The shift followed renewed criticism of the Federal Reserve from the Trump administration, which has raised concerns around the independence of US monetary policy. As a result, the US dollar, Treasury bonds and equity futures all came under pressure, reflecting fears that political influence could weaken policy credibility and reduce the appeal of US assets versus alternatives overseas.

Looking ahead, upcoming UK GDP figures are expected to confirm a subdued finish to 2025. Economic activity is likely to show little momentum in the final quarter, with only marginal growth anticipated in November following disruption late in the year. In contrast, Germany appears to have avoided a third consecutive year of contraction, with modest growth estimated at around 0.3%, helped by gradually improving conditions. Eurozone trade data will be closely watched to assess whether US demand is cooling further and whether Chinese exports are increasingly being redirected toward European markets.

In the US, attention turns to inflation and consumer activity. December CPI is forecast to edge higher on a year-on-year basis, though the rise is largely technical and does not signal a renewed inflation problem. Underlying price pressures remain broadly aligned with the Federal Reserve’s 2% target. Retail sales data is also expected to show a rebound, supported by a recovery in car sales and continued strength in higher-income and online spending, suggesting the US consumer remains resilient despite growing market uncertainty.

12th January 2026

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