Foreign investment in Japan stocks has reached ¥1141.4 billion as of January 9, a rise from ¥124.9 billion previously. This growth represents a notable increase in interest from foreign markets in Japanese equities.
The current economic climate also affects currency pairs, with NZD/USD moving near 0.5750 amid softer rhetoric from Iran. Meanwhile, GBP/USD stays below 1.3400 as the US dollar benefits from Federal Reserve caution bets.
People’s Bank Of China Activity
The People’s Bank of China has set the USD/CNY reference rate at 7.0078, up from 7.0064. The Australian dollar maintains around 0.6700 due to a cautious tone from the Reserve Bank of Australia.
Spot market movements continue to influence Ethereum, now above $3,300 from the backing of US purchases. Ethereum’s estimated leverage ratio has dropped from 0.79 to 0.66, signalling a trend towards less leverage and a more spot-driven market.
Ripple faces pressure, with XRP declining consecutively. Despite this, Ripple has secured preliminary approval for an Electronic Money Institution licence from Luxembourg’s financial regulator.
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Japanese Stock Market Surge
We are seeing a huge rush of foreign money into Japanese stocks, with over ¥1.1 trillion flowing in last week. This is the largest weekly inflow we have seen since the market surge in late 2024, confirming a major shift in global capital allocation. This follows a strong 2025 for the Nikkei 225, which gained over 18% as the Bank of Japan finally moved away from its negative interest rate policy.
This heavy buying of Japanese equities requires investors to sell dollars and buy yen, which should put downward pressure on the USD/JPY currency pair. We should consider positioning for a stronger yen in the coming weeks by buying puts on USD/JPY. This move aligns with the broader trend of investors diversifying away from the crowded US mega-cap trade that dominated the last few years.
At the same time, the US dollar remains strong against other major currencies like the Euro and Pound Sterling. US inflation data for December 2025 came in at a stubborn 3.5%, well above the Federal Reserve’s target, reinforcing the view that the Fed will not be cutting rates soon. This environment makes it attractive to continue holding bearish derivative positions on EUR/USD.
Gold is falling back toward $4,600 after a sharp rally in late 2025 that was driven by tensions in Iran. We saw a similar pattern during the geopolitical flare-ups of 2022, where a significant risk premium was quickly priced out of the market once tensions eased. With the immediate threat appearing to subside, selling gold futures could be a sound strategy to capture the continued decline from its recent all-time highs above $4,800.
In the crypto space, we see a clear split in performance, with Ethereum’s rise being driven by spot market investors rather than risky leverage. This suggests a more sustainable rally and indicates strong underlying demand, contrasting with the weakness seen in assets like XRP. A pairs trade, going long on Ethereum futures while shorting XRP futures, could effectively play this divergence.
