Manufacturing activity in Kansas improved slightly from -3 to -2 in January. This indicates a small recovery in the sector compared to last month. In other economic news, Australia’s S&P Global Manufacturing PMI rose to 52.4 in January. Meanwhile, New Zealand’s CPI inflation reached 3.1% year-on-year in Q4, surpassing the expected 3.0%.

Currency Markets React

Currency markets saw some changes as the EUR/USD climbed above 1.1740 after tariff threats were reduced. At the same time, USD/JPY fell due to a weaker US dollar, while the market watched the Bank of Japan’s decisions and Japan’s CPI data closely. In commodity markets, gold hit a record high of over $4,900. This jump occurred even with a generally positive market mood. For traders, there were articles offering a detailed guide on the best brokers for 2026. They covered brokers with low spreads, those that provide high leverage, and those ideal for trading EUR/USD and gold. FXStreet points out that all information is for informational purposes only. They recommend conducting thorough research before making any investment decisions due to the risks involved.

US Dollar Trends

The US dollar is showing clear signs of weakness as tensions with the EU ease. This trend is pushing pairs like EUR/USD above 1.1740 and seems likely to continue. Derivative traders might want to consider strategies that benefit from a falling dollar, such as buying call options on the euro or other major currencies against the US dollar. The ongoing weakness in US manufacturing, highlighted by the Kansas Fed activity index at -2, is a major concern. This trend has persisted throughout 2025, with the national ISM Manufacturing PMI often below 50, which indicates contraction. Caution is advised regarding the strength of the US economic recovery, making protective put options on US equity indices a smart hedge. Gold reaching a record high of over $4,900 per ounce, even during a risk-on environment, is an important signal. This unusual behavior points to deep concerns about inflation, especially after the US CPI averaged 3.4% in the last quarter of 2025. Traders should view gold not just as a safe haven but as a key asset, considering futures or long-dated call options to keep benefiting from its strong momentum. The difference between a growing Australian economy, with its manufacturing PMI at 52.4, and the weak US data creates opportunities in currency pairs. The Aussie dollar is likely to gain strength against the US dollar. Traders should look for derivative plays that make the most of this, like buying AUD/USD call spreads to profit from a potential rise while keeping initial costs lower. Create your live VT Markets account and start trading now.

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