The Consumer Price Index Core in Canada fell from 2.9% to 2.8% year-on-year in December. This suggests a slight slowdown in inflation. Gold prices approached a record of $4,700 per troy ounce as fears of a US-EU trade war increased the demand for safe investments. Investors are on edge due to President Trump’s threats of tariffs on European nations.

Meme Coins Drop

Meme coins such as Dogecoin, Shiba Inu, and Pepe fell about 3% on Monday. These cryptocurrencies are now trading below their important moving averages and may be looking for immediate support. FXStreet offers expert insights into the fast-changing market. This content is for informational purposes only and does not suggest buying or selling the mentioned assets. FXStreet also cautions that markets carry risks and uncertainties. It is crucial to conduct thorough research before any investment decisions. FXStreet is not responsible for any financial losses. Please note that the opinions in these articles reflect the views of the authors. There is no personalized investment advice provided, nor guarantees of information accuracy. FXStreet and the authors are not registered investment advisors.

Trade War Tensions and Market Volatility

As US and EU trade war tensions escalate, markets are becoming more cautious. We see money moving out of stocks and into traditional safe-haven assets. This shift is clear, with gold rising to record highs near $4,700, while the Dow Jones Industrial Average drops. This situation has led to significant market volatility, which could benefit derivative traders. The VIX, a key indicator of stock market volatility, spiked over 40% during similar trade tensions in 2025. Given the uncertainty now, buying options to anticipate future market swings might work better than trying to predict specific movements in stocks. The US Dollar is weakening broadly due to the ongoing geopolitical tensions, helping currencies like the Euro and Canadian Dollar rise. The EUR/USD pair is nearing 1.1650, a level not seen in over a year. Traders may consider buying call options on the Euro or selling futures on the US Dollar Index to take advantage of this trend. However, the recent Canadian inflation data adds complexity. The drop in core CPI to 2.8% means the Bank of Canada faces less urgency to raise interest rates. Overnight index swaps are reflecting a lower chance of a rate hike in the first quarter, which could limit the Canadian dollar’s strength against currencies other than the US dollar. Gold remains the clearest investment choice, serving as a primary defense against geopolitical risks. This price rally has gone far beyond the momentum seen when gold surpassed $2,500 in 2024. Using call options on gold futures or related ETFs is a cost-effective way to stay invested as long as trade tensions remain high. Create your live VT Markets account and start trading now.

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