US data showed the four-week average ADP Employment Change rose to 10.3K private-sector jobs, up from 7.8K. Canada’s January CPI slowed to 2.3% year-on-year, below the 2.4% forecast and the previous reading. The US Dollar Index traded near 97.20 after hitting a one-week high of 97.54. EUR/USD held around 1.1850 after Germany’s January HICP came in as expected at 2.1%. However, February ZEW sentiment fell in both Germany and the Eurozone.

Major Fx Moves And Key Drivers

GBP/USD traded near 1.3560 and dipped after UK claimant count, employment change, and the December ILO unemployment rate signaled weaker labour market conditions. AUD/USD hovered near 0.7080 after bouncing from a five-day low following the RBA minutes. USD/CAD traded near 1.3640 after giving up earlier gains ahead of Canada’s softer CPI result. USD/JPY traded around 153.20 and was still lower on the day. Traders stayed focused on Japan’s pro-stimulus plans and the Bank of Japan’s hawkish tone. Gold traded near $4,877 and stayed below $5,000. Key upcoming events include the RBNZ rate decision, UK January CPI, and FOMC minutes (18 Feb), Australia jobs data (19 Feb), and UK retail sales, PMIs, and US December core PCE (20 Feb). Central banks bought 1,136 tonnes of gold in 2022, worth about $70 billion. This was the largest yearly purchase on record. Gold often moves in the opposite direction to the US Dollar and US Treasuries, and it is priced in dollars (XAU/USD).

One Year Later Market Context

One year ago, the US Dollar Index was near 97.20 (February 2025). Now, with DXY trading around 104.50, dollar strength is the main trend traders need to respect. With January 2026 US inflation still sticky at 2.8%, options strategies that do not rely on a quick drop in the dollar may make more sense. In early 2025, markets focused on Canada’s CPI dipping to 2.3%. Since then, the bigger theme has been ongoing global price pressure. The upcoming FOMC minutes matter for the same reason they did last year: they may show how patient the Fed is willing to be. Traders may want to use derivatives to hedge volatility, because any sign of a longer “higher for longer” stance can lead to sharp moves. In February 2025, USD/JPY was near 153.20 as traders discussed a more hawkish BoJ. The BoJ later moved away from negative rates, but the wide rate gap versus the US has still pushed the pair higher, recently near 158.00. The yen carry trade remains a major driver. As a result, selling yen call options or buying USD/JPY call spreads may still appeal to some strategies. In early 2025, there were already signs the UK labour market was weakening while GBP/USD traded near 1.3560. That softness, together with sustained dollar strength, has pulled GBP/USD down to about 1.2550 today. Given this steady trend, traders may want to be careful with long pound positions and consider put options to hedge further downside. Gold struggled to regain $5,000 a year ago. Even with ongoing geopolitical risks, it has remained capped by high interest rates and a strong dollar. Central banks have kept buying, with the World Gold Council reporting another 800 tonnes added in 2025. Still, this buying has mainly provided support rather than a strong catalyst. As a result, gold derivatives depend heavily on whether a trader expects a shift in US monetary policy. Create your live VT Markets account and start trading now.

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