China’s fixed asset investment dropped by 3.8% year-on-year in December, falling short of the 3% decline that was expected. This highlights a continued drop in investments in key areas such as infrastructure, real estate, and manufacturing. At the same time, the Australian Dollar gained strength as China’s industrial production increased in December. In the currency markets, the USD/CAD pair fell to around 1.3900 as the Canadian Dollar appreciated due to rising oil prices.

Currency And Commodity Trends

The Japanese Yen slipped from a one-week high against the USD, but positive trends are still strong. Silver prices surged past $92.50 as demand for safe-haven assets grew, reflecting market reactions to uncertainty. China’s economy showed a quarter-on-quarter growth of 1.2% in Q4 2025, beating the forecast of a 1.0% rise. After this Chinese data release, the NZD/USD pair maintained gains above the mid-0.5700s but showed little additional momentum. In the financial markets, various factors like tariff threats and geopolitical disputes are shaping currency and commodity trends. For example, Trump’s tariff warnings targeting Europe impacted GBP/USD, while gold reached new heights due to increased safe-haven buying during times of geopolitical tension. The disappointing investment figures from China indicate a slowdown in the construction and infrastructure sectors. We noticed a similar trend in late 2024, which led to a two-quarter decline in prices of industrial metals like copper and steel. This suggests that traders might want to adopt bearish positions on commodities related to Chinese industrial growth.

Trade Disputes And Market Volatility

The rising US-Europe trade dispute over Greenland is driving a classic flight to safety, pushing gold to an all-time high. The VIX, a gauge of expected market volatility, has jumped over 15% in the last week, echoing the spikes seen during past trade tensions. Instead of chasing gold’s spot price, traders might consider using call options or call spreads on gold futures to gain upside exposure while managing their risks. US tariff threats are putting pressure on the Dollar, creating opportunities in major currency pairs. We are looking at bullish positions on the Euro and Pound against the Dollar, which can be utilized through leveraged futures contracts. The strength of the Australian Dollar is significant but might not last long due to the mixed signals from China’s economy. Crypto markets are acting like traditional risk assets, experiencing sell-offs as geopolitical tensions escalate. This highlights their sensitivity to global risk sentiment, a trend that has strengthened over the last two years. In the upcoming weeks, bearish strategies, such as purchasing puts on Bitcoin and Ethereum, could be wise hedges against intensified trade disputes. Create your live VT Markets account and start trading now.

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