The China Ratingdog Services Purchasing Managers’ Index hit 52.3 in January, beating the forecasted 51.8. This index shows that China’s service sector is growing. In the currency market, the EUR/USD stayed steady above 1.1800, influenced by uncertainty over US monetary policies. The GBP/USD stayed up above 1.3700, waiting for US economic data and feedback on indicators.

Commodities Market Overview

In the commodities market, gold prices rose as investors sought safe-haven assets amidst rising tensions between the US and Iran due to a recent drone incident. Meanwhile, Bitcoin, Ethereum, and Ripple saw their values drop. Bitcoin fell to $72,945, the lowest price since November 2024, while Ethereum and Ripple also suffered major losses. The decline in tech stocks hit US equity markets, with the Nasdaq down 1.7% and the S&P 500 down 1.1%. Despite this, Solana’s price dropped below $100 as demand fell, even though it hit a record 150 million daily transactions. The better-than-expected services data from China at 52.3 signals strength in the economy. This bodes well for commodities heavily used by China, like copper and iron ore. We noticed this trend during several quarters in 2025, where similar data surprises led to higher commodity futures for weeks.

US Tech Stock Sell-Off

The sudden sell-off in US tech stocks is increasing market fear and volatility. This situation makes protective put options on indices like the Nasdaq 100 appealing for hedging or speculating on further declines. The VIX index, which measures market fear, has jumped above 25 this week, indicating traders are preparing for more turbulence. Investors are seeking safety, driving gold prices above $5,050 as the US Dollar weakens. Rising geopolitical risks along with dovish Fed expectations are boosting precious metals. This situation is reminiscent of the rally in early 2025 when the market first anticipated an end to the Fed’s tightening cycle. The crypto market is in decline, with Bitcoin dropping below the crucial $73,000 support level for the first time in three months. We’re seeing Bitcoin options’ implied volatility rise above 80%, showing extreme uncertainty and the chance for significant price swings soon. Solana’s fall below the $100 threshold confirms widespread bearish trends across altcoins. Major currency pairs are tightening as we await important inflation and employment reports from the Eurozone and the US later this week. Reflecting on the Q4 2025 inflation reactions, a surprise increase of just 0.2% was enough to move the EUR/USD by over 150 pips in one session. This suggests that using options to trade the expected volatility may be wiser than holding a direct position. Create your live VT Markets account and start trading now.

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