Forecasts were met as the US core consumer price index held steady at 2.5% year on year
The US Consumer Price Index (CPI) excluding food and energy rose 2.5% year over year in January. This matched the 2.5% forecast.
The data shows that underlying inflation stayed steady at the expected rate. There was no gap between the actual result and the market estimate.
U.S. monthly Consumer Price Index rose 0.2% in January, below the 0.3% forecast, report says
The U.S. Consumer Price Index (CPI) rose 0.2% month over month in January. This was below the expected 0.3%.
The data shows inflation is rising more slowly than forecast. The report compares the actual monthly change in prices with what the market expected.
Rising Rate Cut Expectations
Because January inflation was cooler than expected, the odds of a Federal Reserve rate cut have risen sharply. Market pricing in the CME FedWatch tool now shows a 75% chance of a rate cut by the March meeting, up from 40% last week. This suggests the disinflation trend may be returning after a stretch of stubborn price pressures. We should consider increasing exposure to long-dated call options on rate-sensitive growth assets, especially technology. Looking back at 2025, high interest rates weighed on tech valuations for much of the year. This new inflation print could be a catalyst for further gains in indices like the Nasdaq 100, which has already risen more than 3% this week. This backdrop is also supportive for fixed income, which makes long positions in Treasury futures more appealing. The 10-year Treasury yield has already fallen below the key 3.8% level after the release. We expect yields could keep drifting lower, which would support bond prices. Implied volatility may decline as the Fed’s path becomes clearer, which can make selling premium more attractive. The VIX is already below 15, a big change from much of 2025, when inflation uncertainty drove higher volatility. Strategies such as selling puts or using iron condors on major indices could perform well in this setting.Dollar Weakness Outlook
A more dovish Fed would likely weaken the U.S. dollar versus other major currencies. As U.S. rates fall relative to overseas rates, the interest-rate advantage that supported the dollar may shrink. This view can be expressed by shorting U.S. dollar index futures or buying put options on dollar-tracking ETFs. Create your live VT Markets account and start trading now.In January, US core CPI (excluding food and energy) rose 0.3%, matching market expectations
The U.S. Consumer Price Index (CPI) excluding food and energy rose **0.3% month over month** in January. This matched the **0.3%** forecast.
This measure is known as **core inflation**. It removes food and energy prices and tracks monthly price changes across a broad basket of goods and services.
With January core inflation coming in at **0.3%**, exactly as expected, a key source of market uncertainty is now off the table. This supports our view that disinflation is continuing in a slow, steady way—but not fast enough to force the Federal Reserve to act. In the near term, this should ease bond market swings and support a “business as usual” backdrop.
This in-line result also makes a **March rate cut** very unlikely. Fed funds futures now price **less than a 20%** chance of a cut next month. We think this strengthens the Fed’s post-meeting message to **wait and see**, and it likely pushes the first cut to **May or June at the earliest**. That is a meaningful shift from the more optimistic timing we were pricing in during **Q4 2025**.
For derivatives traders, the near-term effect is likely **lower short-dated implied volatility**, especially with the **CBOE VIX Index** already trading below **15** this morning. That creates an opening to **sell premium** on broad equity indices, since the odds of a major policy surprise in the next few weeks have fallen. Expect more **range-bound trading** in the S&P 500, which makes strategies like **iron condors** more appealing.
In context, this steady print is a welcome contrast to the inflation scares we saw in **fall 2025**, when a couple of hotter-than-expected reports briefly pushed yields sharply higher. Today’s data supports the idea that the underlying trend is still moving down—just not in the straight line some investors hoped for. Getting to **2% inflation** will likely remain a slow grind.
Next, our attention shifts to upcoming **labor market** and **retail sales** data to judge the economy’s underlying strength. If the unemployment rate—last reported at **4.1%**—holds steady, the Fed has even more room to stay patient. Positioning should still allow for a **higher-for-longer** rate environment, potentially through options on **interest-rate-sensitive ETFs**.
US CPI (non-seasonally adjusted) came in at 325.25 in January, below the 325.41 forecast
The United States Consumer Price Index (CPI), not seasonally adjusted, rose to 325.25 in January on a month-on-month basis.
This was below the expected level of 325.41.
Because January’s inflation data came in cooler than expected, we expect markets to adjust their view of Federal Reserve policy. Softer price pressure increases the odds of an earlier interest rate cut. Markets are already pricing this in: Fed funds futures now show a 70% chance of a rate cut by the June 2026 meeting, up from 50% yesterday.
For equity index traders, this points to lower market volatility in the weeks ahead. The CBOE Volatility Index (VIX) has already dropped below 14 on the news, and it may fall further toward 12. Selling premium with strategies like iron condors or cash-secured puts on the SPX could benefit from both time decay and a further drop in implied volatility.
This setup is similar to the second half of 2025, when softer inflation reports often led to rallies that lasted for weeks, especially in growth sectors. In that period, each downside CPI surprise triggered a strong rally in the Nasdaq 100. If yields keep falling, technology and other long-duration assets may outperform.
Rate traders should watch the U.S. 2-year Treasury yield for the fastest reaction. It will likely move lower from its recent 4.1% area. That would signal the market is bringing forward its expected timeline for monetary easing. Futures tied to short-term rates should rise in this environment.
Next, attention will turn to the upcoming employment report. If the labor market shows weakness along with cooling inflation, the case for a rate cut as early as the May meeting will strengthen. Any positions taken now should be reviewed after that key data release.
U.S. annual CPI came in below forecasts, with inflation at 2.4% versus the expected 2.5% in January
The US Consumer Price Index (CPI) rose 2.4% year-on-year in January, below the 2.5% forecast.
Because January CPI came in slightly under consensus, we believe the Federal Reserve now has a clearer path to start easing monetary policy sooner than expected. This is the fourth straight month of disinflation, supporting a clear cooling trend in the economy. Markets now price in more than an 85% chance of a 25-basis point rate cut by the June 2026 meeting, up from about 60% just last week.
Equity Upside From Lower Rates
This backdrop is supportive for equities, which makes bullish index-derivative positions attractive in the coming weeks. Since lower interest rates tend to help growth stocks the most, we should consider buying April and May call options on the Nasdaq 100 (NDX). A similar setup appeared in fall 2024, when early signs of a Fed pivot were followed by a 12% rally in the tech-heavy index into year-end. A more direct way to express this view is through interest rate futures, which have already responded positively. We see an opportunity in buying September 2026 Secured Overnight Financing Rate (SOFR) futures contracts. These positions should gain value as expectations for a more dovish Fed strengthen and the market begins pricing in multiple rate cuts for the second half of the year. As the odds of further aggressive rate hikes fall, implied volatility across asset classes should also decline. The VIX has already dropped more than 10% to 14.50 on this news, its lowest level this year. We can try to benefit from this by selling out-of-the-money VIX call options, or by using put spreads on major indices to collect premium as market anxiety fades.Dollar Weakness And Commodity Tailwinds
A less aggressive Federal Reserve is typically bearish for the U.S. dollar, so the recent slide may continue. The U.S. Dollar Index (DXY) has fallen 0.8% to a three-month low of 101.50, breaking a key technical support level. This supports long positions in currency derivatives such as EUR/USD call options and can also lift commodities like gold, which are priced in dollars. Create your live VT Markets account and start trading now.Danske Bank says Norway’s Q1 survey shows 2026–27 oil investment volumes stronger than Norges Bank expected
Norway’s Q1 oil investment survey shows expected spending of NOK 255.3 billion in 2026 and NOK 201.1 billion in 2027. This implies nominal growth of 0.6% in 2026 and 2.0% in 2027.
After adjusting for cost inflation, the implied investment volumes are stronger than Norges Bank’s December MPR projections. Norges Bank’s volume estimates were -3% for 2026 and -6% for 2027.
Oil Investment Outlook And Policy Signal Read Through
Norges Bank Governor Ida Wolden Bache’s annual address did not include any new monetary policy signals. Norges Bank also said it will start publishing a summary of the Monetary Policy Committee’s discussions later this year. The goal is to improve guidance and reduce volatility on MPC meeting days. The article notes it was produced using an artificial intelligence tool and reviewed by an editor. The new oil investment survey points to higher spending than Norges Bank expected. This suggests the Norwegian economy is stronger than the central bank forecast in December 2025. Because of this, we should question market pricing that assumes the bank will need to cut interest rates soon. This strong survey is not a one-off. Other data also points to a resilient economy. January unemployment came in at a solid 3.4%. Brent crude has also stayed firm, trading above $85 a barrel. Together, these factors support the view that the economy is on a stronger footing than previously expected.Krone Positioning And Volatility Implications
With this backdrop, traders should rethink bearish positions in the Norwegian Krone. There may be value in buying NOK call options versus the euro, or selling out-of-the-money puts on pairs like EUR/NOK. Stronger fundamentals could give the currency steady support over the next quarter. Separately, Norges Bank’s plan to publish summaries of its policy discussions is an important change. More transparency should reduce market surprises on meeting days. As a result, we may see fewer sharp and unpredictable moves like those that sometimes followed policy announcements in 2025. This also means implied krone volatility—especially for options that expire around future policy meetings—may be too high. Volatility-selling strategies, such as shorting straddles on EUR/NOK, could become more attractive. The risk of a surprise announcement from the central bank appears to be falling. In the coming weeks, the focus should be on a gradual, less volatile strengthening of the krone. The economic data supports NOK gains. The central bank’s new communication approach supports a smoother path for that move. Create your live VT Markets account and start trading now.Ahead of US inflation data, the euro drifts near recent lows against the dollar for a fourth straight day
The euro fell against the US dollar for a fourth straight day. It traded below 1.1860 after hitting a weekly high of 1.1928. Even though Eurozone data was strong, risk-off trading took over.
Eurozone GDP rose 0.3% in Q4 and was up 1.4% year-on-year, beating the 1.3% forecast. Employment increased 0.2% versus 0.1% expected, with jobs up 0.6% year-on-year.
Sentiment stayed weak after comments about AI and white-collar jobs. This came after another drop on Wall Street. The cautious tone carried into Asia and supported the US dollar.
In the US, Initial Jobless Claims fell by 5K to 227K, but that was still above the 222K forecast. Existing Home Sales fell 8.4% in January.
Trading was quiet ahead of US January CPI data. Headline CPI is expected at 2.5% year-on-year versus 2.7% in December. Core CPI is seen at 2.5% versus 2.6%.
We saw a similar setup in February 2025. The euro was stuck below 1.1860 even as Eurozone GDP surprised to the upside. Markets were in a risk-off mood, driven largely by fears about AI replacing white-collar jobs. Just like today, the main focus was the upcoming US inflation report.
Those AI fears have eased. Over the past year, investors have focused more on productivity gains than on immediate, large-scale job losses. Instead, attention has shifted back to a key driver: the different paths of the Federal Reserve and the European Central Bank. This policy gap is now the main force behind currency moves.
Recent data shows US inflation is still sticky. The January 2026 CPI came in at 2.9%, above the Fed’s 2% target, which has slowed expectations for rate cuts. In contrast, Eurozone inflation has cooled faster and is now 2.2%, giving the ECB more room to cut sooner. This helps explain why EUR/USD is trading near 1.0750, well below levels from a year ago.
Because the Fed remains cautious while the ECB sounds more dovish, the US dollar may stay stronger versus the euro. Higher US rates for longer continue to support the dollar. For now, EUR/USD still looks biased to the downside.
With that view, it makes sense to consider ways to profit from, or hedge against, a falling EUR/USD. Buying euro put options can limit risk while protecting against further declines. Another approach is to short EUR/USD futures, aiming for more downside ahead of the next central bank meetings.
Silver trades near $77.35 after rebounding from $74.00 lows but struggles to break above $79.00, heading for a third weekly drop
Silver (XAG/USD) traded at $77.35 on Friday, rebounding from Thursday’s lows near $74.00. It stayed capped below $79.00 and was on track for a third straight weekly decline.
Precious metals held within earlier ranges in a quiet session. Risk-off sentiment supported prices, but a firmer US Dollar Index limited gains.
Markets were waiting for the January US Consumer Price Index (CPI) report. The data could shift expectations for when the Federal Reserve may deliver its next rate cut.
Silver was consolidating around the middle of February’s range and remained below a declining 50-period simple moving average (SMA). The 50 SMA was near $81.00. MACD stayed below zero, and the RSI hovered around 40.
Resistance was near $79.00, with further levels at $81.00 and around $86.30. Support was near $74.00, followed by the February 6 low near $64.00.
The technical analysis section was produced with help from an AI tool.
With silver stuck between $74 and $79, the market appears to be waiting for the next US inflation data. This lack of direction suggests traders do not want to take big positions until the Fed’s next move is clearer. Current price action shows a familiar tug-of-war: risk-off demand is helping metals, while a strong dollar is keeping gains in check.
We are watching the January CPI release closely, especially after December 2025 printed a stubborn 3.4%. If CPI comes in hotter than expected, rate cuts may be pushed back. That could lift the dollar and send silver down toward the $64 support area. In that case, buying put options with a strike near $74 could be a sensible way to position for downside.
If inflation surprises on the low side, the dollar could weaken. That may be the trigger needed for silver to break above $79 and test the 50-period moving average near $81. In this scenario, call options could offer strong upside. If you expect prices to stay range-bound, selling strangles outside the $74–$81 band could collect premium from the current indecision.
Industrial demand is another factor, and it is not helping the bullish case right now. Global manufacturing PMI data from January 2026 showed a mild contraction. This points to softer industrial use of silver in the near term and supports the idea that $79 remains a tough ceiling.
This consolidation looks similar to the choppy trading seen through much of 2025, before the Fed clarified its policy stance. These quiet periods ahead of major data often end with sharp moves. That is why defined-risk options strategies may be more attractive than holding outright futures. The key is to be ready for volatility once the inflation numbers are released.
Ahead of CPI, the US dollar strengthens after robust payrolls, outperforming the Australian dollar and Norwegian krone
The US Dollar ended the week higher after a stronger-than-expected nonfarm payrolls report. It gained the most against the Australian Dollar and the Norwegian Krone.
Attention then shifted to the January US Consumer Price Index (CPI) report. After the payrolls release, the Dollar did not build on its early gains.
Fed Policy And Inflation Outlook
The report said January CPI could shape market expectations for the Federal Reserve’s next move. It noted that a softer CPI reading could signal that core inflation is still easing. The article also listed reasons the Fed could still cut rates later this year. These included stronger productivity growth, smaller pass-through from earlier tariff hikes, and slower wage growth and inflation. It added that rolling back some tariff increases could lower inflation pressure. That, in turn, could give the Fed more room to cut rates, which would likely weigh on the US Dollar. In early 2025, the Dollar strengthened on a solid labor market, even as markets expected Fed rate cuts. The main view was that falling inflation would weaken the Dollar over the year. That largely played out, as the Fed began cutting rates in the second half of 2025.Derivative Trading And Volatility
Now, as we move through February 2026, the backdrop has changed. Last month’s jobs report showed the labor market remains firm, with 195,000 jobs added versus expectations of 170,000. More importantly, this week’s January CPI report showed core inflation steady at 2.8%, which makes the Fed’s next steps less clear. This points to more upside for the Dollar as markets reduce expectations for further rate cuts this year. Derivatives traders may want to consider short-term positions that benefit from a stronger Dollar. For now, the easiest path for the US Dollar looks higher, unless inflation or labor data weakens clearly. Uncertainty about the Fed’s next move is also pushing implied volatility higher. The CVOL index for major currency pairs has risen from 6.5 to 7.8 over the past month. That makes option strategies such as long straddles or strangles on pairs like EUR/USD more attractive, as they are designed to benefit from large moves in either direction. It may also be wise to hedge against renewed Dollar strength. It also makes sense to focus on the Dollar against currencies backed by more dovish central banks, such as the Australian Dollar. The Reserve Bank of Australia is signaling more willingness to cut rates than the Fed is right now. That makes call options on USD/AUD, or put options on AUD/USD, relevant strategies for the weeks ahead. The disinflationary lift expected from tariff rollbacks in 2025 did not fully arrive, leaving inflation stickier than forecast. That history supports today’s view that the Fed may keep rates unchanged for longer than markets expected late last year. As a result, positioning for a period of continued Dollar strength is a reasonable approach. Create your live VT Markets account and start trading now.Pesole says NOK surged after CPI but may weaken as inflation eases and rate cuts return by summer
The Norwegian krone strengthened after Norway’s CPI jumped in January. The data was released on Tuesday. After the release, markets removed expectations for any Norges Bank rate cut in 2026.
Some called the move premature. Inflation in Norway has been volatile. If inflation falls back toward 3.0% in the coming months, markets may again price in a rate cut by summer.
EUR/NOK was seen as fairly valued in the short term after markets repriced Norwegian rate expectations in a more hawkish direction. Under this view, the krone would likely need a more dovish shift to lose momentum.
Attractive domestic rates could support the krone if overall risk sentiment stabilizes. In the near term, NOK was preferred over SEK.
The article says it was produced using an Artificial Intelligence tool and reviewed by an editor.
The Norwegian krone surged after Tuesday’s surprise January inflation report. Core CPI rose to 4.2%. This led markets to fully price out any Norges Bank rate cuts for the rest of 2026. EUR/NOK fell toward 11.35.
We think the market reaction is too strong. In 2025, inflation was often volatile: big monthly jumps were followed by softer readings as energy prices normalized. We expect a similar pattern now. Inflation could return toward 3.0% by summer, which would put rate cuts back on the table.
For now, it is hard to fight the krone’s momentum. Norges Bank’s policy rate is still a strong 4.5%, giving NOK a clear yield advantage. Unless we get a dovish trigger—such as a much weaker inflation print next month—the krone should stay supported. That is even more likely if global equities stabilize after this week’s dip.
Derivative traders could consider selling short-dated EUR/NOK calls to collect premium while the krone is strong. If you expect a reversal in summer, you could buy longer-dated EUR/NOK call options with June or July expiry. This aims to benefit from a possible dovish repricing without betting against the near-term trend.
