China’s industrial production in December rose by 5.2% compared to a year ago, exceeding the expected 5% growth. This strong performance is significant for global markets, impacting both currencies and commodities. In currency markets, the Australian dollar strengthened due to China’s industrial growth. At the same time, the USD/CAD exchange rate fell to around 1.3900, driven by rising oil prices affecting the Canadian dollar.

Geopolitical Tensions Affect Markets

Geopolitical tensions are causing fluctuations in other assets. Gold prices soared to a record high of about $4,700, driven by trade concerns with the US. Meanwhile, cryptocurrencies like Bitcoin and Ethereum faced corrections due to worries about a potential trade conflict between the EU and the US. Overall, the financial landscape remains unstable, shaped by these economic trends and geopolitical issues. This information is meant for educational purposes, and readers should research thoroughly before making financial choices. China’s stronger-than-expected industrial output of 5.2% signals positive global growth. This marks an improvement from the average growth of 4.6% we experienced in 2025, indicating higher demand for raw materials that supports commodity-related currencies. However, the major concern for markets is the growing dispute over Greenland, leading to increased uncertainty. New tariff threats signal more market volatility ahead. It may be wise to enhance long volatility positions, as the CBOE VIX Index has already risen to 24, significantly higher than the average of 17 from the last quarter of 2025.

Gold’s Rise and Market Opportunities

Gold’s surge to a historic high near $4,700 suggests investors are seeking safety. This trend is likely to persist. Buying call options on gold futures could be a smart move for capitalizing on further gains, especially with ongoing geopolitical tensions. We previously saw a similar 20% increase in gold during the height of the US-China trade tensions in 2019. There’s a noticeable divergence in the market, as shown by the gains in the Australian dollar. The Aussie is benefiting from robust Chinese data, with Australia’s raw material exports to China climbing over 10% in 2025. Traders can take advantage of this by setting up long AUD/USD positions and using options to safeguard against broader market uncertainty. At the same time, US tariff threats are putting downward pressure on the US dollar against major European currencies. We are witnessing strength in both EUR/USD and GBP/USD as capital moves away from the dollar due to increasing trade risks. This trend of weakening the aggressor’s currency makes going long on euro and sterling positions against the dollar a compelling short-term strategy. Create your live VT Markets account and start trading now.

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