In December, Canada’s Consumer Price Index (CPI) decreased by 0.2% from the previous month, which was better than the expected decrease of 0.3%. This means consumer prices fell less than predicted. Gold prices approached a record high of $4,700 per troy ounce due to rising concerns about a US–EU trade war, which increased demand for safe-haven assets. This spike followed President Trump’s threats of tariffs against countries that opposed his Greenland plans.

Eur Usd Reaches Daily Highs

The EUR/USD pair rose to daily highs, crossing 1.1640, as the US Dollar weakened amid low trading volumes. This movement is linked to ongoing international trade tensions that were further affected by US holiday market closures. The GBP/USD pair also climbed, surpassing 1.3400. The British Pound’s gains were connected to the fragile US Dollar, which was influenced by geopolitical tensions from President Trump’s tariff announcements. At the same time, meme coins like Dogecoin, Shiba Inu, and Pepe saw a 3% decline, mirroring Bitcoin’s recent performance. These cryptocurrencies are trading below important moving averages, suggesting a possible change in momentum. With new US tariff threats creating a risk-averse market, we can expect stocks to continue struggling. Derivative traders can respond by buying put options on major US indices such as the S&P 500 for protection against losses. This approach resembles strategies used during the 2018-2019 US-China trade disputes when tariff news led to sharp market sell-offs.

Trade War Rhetoric Fuels Market Volatility

The rising tensions from the trade war are driving increased market volatility that we can trade on directly. We should consider purchasing call options on the CBOE Volatility Index (VIX), also known as the “fear gauge”. Historically, the VIX has surged above 30 during times of geopolitical uncertainty, and current trends suggest this could happen again. Gold reaching close to $4,700 is a strong indicator of a move to safety, and this trend is likely to persist. We can take advantage by buying call options on gold futures or ETFs like GLD. This demand for safety echoes previous crises; for instance, gold surged after the 2008 financial crisis when central banks worldwide implemented monetary easing. The US dollar is weakening, making foreign currencies more appealing amid the trade dispute. We can capitalize on this by buying call options on currency pairs like EUR/USD and GBP/USD. The recent movement of EUR/USD towards 1.1650 signals that the dollar may decline further. The slightly better-than-expected Canadian inflation data is giving the Canadian dollar a boost against the US dollar. The recent deflation rate of -0.2% stands in stark contrast to the ongoing 3-4% inflation we experienced in much of 2025. This scenario makes USD/CAD put options an attractive choice to benefit from both US dollar weakness and stable Canadian economic conditions. Lastly, the significant drop in speculative assets like meme coins indicates a wider market shift away from risk. This serves as a warning to avoid leveraged long positions in cryptocurrencies right now. Until the primary driver of fear—the threats of a trade war—subsides, it’s wise to steer clear of the most volatile investments. Create your live VT Markets account and start trading now.

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