Forexlive Americas FX news wrap: Nvidia’s market cap loss is the worst in history

• US December new home sales 698K vs 675K expected
• US sells 5-year notes at 4.330% vs 4.336% WI
• Bloomberg: OPEC+ is likely to stick with its current supply policy at a review meeting
• Reuters poll: Gold to average $2756 per ounce in 2025 and $2700 per ounce in 2026
• DeepSeek says it was suject to a large-scale malicious attack
• Dallas Fed manufacturing business index +14.1 vs +3.4 prior
• US December Chicago Fed national activity index +0.15 vs -0.12 prior

Markets:

• Gold down $29 to $2743
• US 10-year yields down 10 bps to 4.52%
• WTI crude oil down $1.47 to $73.19
• S&P 500 down 1.5%, Nasdaq down 3%
• JPY leads, AUD lags

In a record-setting day, Nvidia shares plummeted 18%, marking the largest single-day market cap loss ever. The catalyst was the emergence of a cheaper, more efficient AI model from DeepSeek, which threatens Nvidia’s dominance. This shift led to a broader market reevaluation of AI economics, impacting various sectors.

The initial market reaction saw a flight to safety, with Treasury yields falling 8-10 bps and the Japanese yen gaining strength. However, as the day progressed, certain sectors, particularly those in the real economy, started to rebound on the prospect of more accessible AI. This shift buoyed risk sentiment, leading to gains in commodity currencies and a positive close for the Dow, which recovered from a significant early decline.

The creep in optimism led to a bounce in USD/JPY to 154.66 from the low at 153.72. The rebounds were much smaller in trades like AUD/AUD, which rose to 0.6282 from a low of 0.6276 but it’s clear we’re in some kind of re-evaluation phase.

Please see:

• 5 winners and losers: How DeepSeek’s reshapes the investing landscape

• If AI is cheap, there are many winners

• Big bluff: The real reason behind Trump’s 25% Mexico-Canada tariff push

This article was written by Adam Button at www.forexlive.com.