The US January Nonfarm Payrolls report showed a gain of 130K jobs. The Unemployment Rate fell to 4.3%. Average Hourly Earnings were unchanged at 3.7% over the past 12 months.
The US Dollar Index (DXY) traded near 96.80 and was slightly lower on the day. USD/JPY was near 152.80 and slipped toward a two-week low after Prime Minister Sanae Takaichi won an election.
Key Moves Across Major Markets
AUD/USD traded near 0.7130 after hitting a three-year high, following China’s CPI release. EUR/USD was around 1.1880, down from a one-week high. GBP/USD was near 1.3640 ahead of the UK flash GDP report for Q4.
Gold traded near $5,092 and edged higher. Next up: UK flash GDP (Q4) on Thursday 12. On Friday 13, markets will watch RBNZ Inflation Expectations (Q1), Swiss January CPI, Eurozone flash GDP (Q4), and US January CPI.
Central banks were the biggest gold buyers in 2022, adding 1,136 tonnes worth about $70 billion, according to the World Gold Council. Gold often moves in the opposite direction to the US Dollar and US Treasury yields. Its price can also react to interest rates and geopolitical risk.
A year ago (February 2025), the market would not buy the US Dollar even after a solid jobs report. Traders expected the Federal Reserve to turn dovish later in the year. Today the setup looks very different: the January 2026 jobs report showed a huge gain of 353,000 jobs and sticky wage growth of 4.5%. That forced traders to price out near-term rate cuts and pushed the Dollar Index up to around 104.00.
Gold’s behavior has also changed. A year ago it was rising toward an unusual $5,092 level, ignoring economic data and trading mainly as a safe haven. Now, with the US Dollar and Treasury yields firm, gold is under pressure and trading in a more typical range near $2,030. Because of this, options strategies that bet against a big upside breakout—such as selling out-of-the-money calls—may work as long as the Fed stays credibly hawkish.
Trading Implications And Event Risk
In early 2025, the Australian Dollar was near multi-year highs around 0.7130, supported by strong data from China. Today, AUD/USD is struggling near 0.6530, weighed down by a strong US Dollar and weaker conditions in China. This suggests that any near-term strength in the Aussie could be a chance to look for bearish entries.
Last year’s gap between strong data and weak Dollar demand is a reminder that expectations matter. With US CPI due this Friday, volatility could rise sharply. Given how sensitive the market is to inflation, buying options such as straddles on major pairs like EUR/USD can be a practical way to trade the event, since it can profit from a large move in either direction.
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