Annual TD-MI Inflation Gauge in Australia increases to 3.6%, up from 3.5%
Australia’s TD-MI inflation gauge rose to 3.6% in January, slightly up from 3.5%. Meanwhile, OPEC+ decided to maintain oil production levels for March, and members of the BOJ expect more rate hikes if forecasts hold true.
The EUR/USD pair reached a multi-year high of 1.2082 before dropping back to around 1.1900. The US Dollar initially weakened as speculation arose about potential US intervention in the Japanese Yen.
The month-on-month inflation gauge in Australia fell from 1% to 0.2%, according to TD-MI.
Australia’s TD-MI inflation gauge dropped from 1% in December to 0.2% in January. This change may indicate shifts in market trends or consumer habits, along with other factors at play.
In the foreign exchange market, the EUR/USD pair hit a multi-year high of 1.2082 but ended around 1.1900. The GBP/USD also faced selling pressure, falling to three-day lows as currency movements reacted to comments on the US Federal Reserve.
Gold Prices And Market Influences
Gold prices fell to about $4,780, impacted by growing political stability in the United States. Traders are looking forward to the US ISM Manufacturing Purchasing Managers Index report for more insights. Central banks in the G10 and emerging markets are mostly holding their current policy rates steady. The Eurozone’s strong GDP growth in Q4 supports the expectation of stable rates from the ECB. The crypto market faced big losses, with Bitcoin down nearly 6%, Ethereum down 3%, and Ripple losing 5%, as selling pressure increased. Bitcoin approached its November lows, and Ethereum dipped below $2,800. Australia’s monthly inflation drop to 0.2% indicates that the Reserve Bank of Australia may need to adopt a more cautious approach. We should consider selling AUD/USD call options in anticipation of possible rate cuts later this year. This is a sharp contrast to the persistent inflation expected in 2024 and 2025, making any dovish comments from the RBA significant. A surprisingly high US Producer Price Index is driving a strong dollar rally, reminiscent of the inflation concerns from a few years ago. This reinforces the case for a hawkish Federal Reserve, particularly with discussions about a hawkish candidate for the next Fed chair. Buying US Dollar index (DXY) call options is a smart way to capitalize on this trend against weaker currencies.Gold And Currency Market Dynamics
Gold’s rapid decline from its recent record highs indicates that its rally may be losing momentum for now. A stronger dollar and the possibility of prolonged high US rates are tough challenges for this non-yielding metal. We’re considering buying put options on XAU/USD or establishing bear put spreads to take advantage of this downturn. In Japan, discussions about further rate hikes signify a major policy change since the central bank moved away from negative rates in 2024. This creates a clear contrast with other central banks that are keeping rates steady or becoming more dovish. We plan to invest in long Japanese Yen futures as a direct response to this new hawkish stance. The inability of EUR/USD to maintain gains above the critical 1.2000 level is a significant bearish sign for the pair. Similarly, the weakness of the British Pound shows that broad dollar strength is the prevailing market trend. We should take advantage of any minor rallies in these pairs to open new short positions using futures contracts. The crypto sell-off is intensifying, with Bitcoin now testing the $80,000 support level from last November. Since the spot ETF approvals in 2024, crypto has become more linked to macroeconomic data, and this strong dollar environment is negatively impacting risk assets. We recommend buying put options on major crypto-tracking ETFs to hedge against or speculate on further declines. Create your live VT Markets account and start trading now.Gold price (XAU/USD) dropped to about $4,780 during the early Asian session following political stability.
**Gold Demand Amid Economic Uncertainty**
Geopolitical tensions, like the US-Iran conflict, may boost gold as a safe-haven asset. Iran’s leader has warned about potential regional conflicts, coinciding with a growing US military presence in the area.
Central bank demand could further support gold. In 2022, central banks bought 1,136 tonnes of gold, worth around $70 billion, making it the highest yearly purchase ever recorded. Countries like China, India, and Turkey are quickly increasing their gold reserves.
Gold usually rises when the US Dollar and US Treasuries fall. It serves as a diversification tool during instability or recession fears. Interest rates and the behavior of the USD influence gold prices, with a stronger dollar generally keeping prices in check.
Reflecting on 2025, gold prices fell from historic highs as political stability signs emerged in the United States. Kevin Warsh’s nomination to lead the Federal Reserve was viewed as a safe choice that calmed markets, pressuring gold prices. This recent drop to the $4,780 level should be seen in this context.
**Current Economic Outlook**
As of February 2nd, 2026, new economic data is changing the landscape. The latest US ISM Manufacturing PMI report, released last month, showed a figure of 48.2, marking the fifteenth month of contraction in the manufacturing sector. This ongoing weakness raises concerns about a broader economic slowdown, which typically boosts gold’s appeal as a safe-haven asset.
This bleak economic outlook is shaping expectations for monetary policy, with the market now seeing over a 70% chance of a Federal Reserve interest rate cut by June. Gold becomes more attractive as rates are expected to fall since it does not yield interest. This is a sharp contrast to the hawkish environment we faced a couple of years ago.
Geopolitical tensions, especially between the US and Iran, linger in the background, providing steady support for gold. Although there has been no major conflict yet, the ongoing risk of escalation maintains a safety net for gold prices. Any regional flare-up could lead to a quick rush to safety, benefiting gold.
We also need to consider ongoing demand from global central banks, which has become a crucial support for the market. Following record purchases in previous years, central banks added another 1,037 tonnes in 2023, and this strong trend continued through 2025. This consistent accumulation by official institutions, especially from emerging economies, shields the precious metal from some downward pressures.
Given these mixed signals—the stability of last year versus new economic fears—we expect increased volatility in the coming weeks. For derivative traders, this environment presents a good opportunity for long-dated call options or bull call spreads to position for potential upside while managing risk. The higher implied volatility also creates chances for those willing to sell cash-secured puts at key technical support levels.
The direction of the US Dollar will be crucial, as it has an inverse relationship with gold. An expected shift to lower interest rates by the Federal Reserve is likely to weigh on the dollar. A weaker dollar makes gold cheaper for holders of other currencies, which could further drive demand and push prices higher.
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Xi Jinping emphasizes plans for the yuan to achieve global reserve status
China wants the Yuan to become a stronger international currency to lessen its dependence on the US Dollar. The goal is to increase its use in global trade and as an international reserve.
The AUD/USD pair is currently at 0.6941, down 0.30% for the day. Several factors influence the Australian Dollar, including interest rates from the Reserve Bank of Australia, the country’s resource exports like Iron Ore, and the overall health of China’s economy.
Australia’s Trade Balance and Its Impact
Australia’s trade balance plays a big role in the value of the AUD; a positive balance makes it stronger. The Reserve Bank of Australia impacts the AUD through interest rates, targeting 2-3% inflation, where higher rates help support the currency. Iron Ore is Australia’s largest export, bringing in about $118 billion each year, mostly to China. When Iron Ore prices go up, the AUD usually rises too, helping to create a positive trade balance. China’s economic health is crucial for the AUD due to trade connections; strong growth in China boosts the AUD. On the other hand, slower growth decreases demand and weakens the currency. Beijing’s renewed focus on a “strong currency” adds significant uncertainty to the market, making the US dollar a safe choice for now. This creates challenges for currencies tied closely to China’s economy, like the Australian Dollar. The AUD/USD pair has been under pressure for the past week due to this situation.Vulnerability of the Australian Dollar
The Australian Dollar is especially at risk because a stronger Yuan might lead to less demand for industrial commodities as China adjusts its economy. This concern follows China reporting a GDP growth of 4.8% for Q4 2025, just below the 5.0% market forecast, indicating a cooling trend. This marks a shift from the more positive outlook we had for much of last year. This is particularly concerning for iron ore, Australia’s main export, with future prices recently dropping below $120 per tonne for the first time in four months. A similar price drop occurred in mid-2025 when fears about China’s property sector unsettled the market. Derivative traders should prepare for more downward pressure on commodity prices with any further negative data from China. Given these external challenges, the Reserve Bank of Australia is likely to take a more cautious approach in its upcoming meetings. Market expectations are changing, as overnight index swaps now show less than a 20% chance of an interest rate hike in the first quarter. This weakens a key support for the Aussie dollar that was present throughout last year. For traders, this environment suggests increased volatility in the AUD/USD over the coming weeks. Options traders should be aware that implied volatility is rising, making strategies like long straddles or strangles more attractive than simple directional bets. We can expect more erratic price movements, similar to the market turbulence we saw in the third quarter of 2025. Create your live VT Markets account and start trading now.The Bank of Japan’s biannual report on inflation and growth impacts USD/JPY rates.
The Bank of Japan (BOJ) will release its Summary of Opinions report on Sunday at 23:50 GMT. This report will share insights on inflation and economic growth and is issued eight times a year, about ten days after the Monetary Policy Statement.
As we wait for the report, the USD/JPY pair is trading positively, with the US Dollar gaining strength. The pair may face resistance at the January 23 peak of 159.81 and again at the psychological level of 160.00.
Price Movement Analysis
There is downside support around the 100-day Exponential Moving Average at 154.50. If prices drop further, they might reach the January 30 low of 152.50. Another support level can be found at the January 29 low of 151.95. The Japanese Yen’s value is influenced by the country’s economic performance, BOJ policies, and US bond yield differences. The BOJ sometimes steps in to manage the Yen’s value, which affects its strength. The BOJ’s very loose monetary policy, in contrast to the Federal Reserve’s approach, is widening the yield gap between US and Japan bonds. This affects currency values. During times of market stress, the Yen is seen as a safe-haven asset, increasing its demand and value.USD JPY Outlook
With the BOJ’s Summary of Opinions coming, let’s look back at early 2025 for context. Back then, the pair was testing the 160.00 level after a new, hawkish Fed chair was appointed. Now, a year later, the main factors remain the same, focusing on the interest rate gap between the US and Japan. The BOJ has been very careful, only raising its policy rate to 0.25% throughout 2025, despite core inflation staying above target. Last week, January’s inflation data showed a national Core CPI of 2.4%, putting pressure on the BOJ to act. However, their hesitation to tighten policies is still affecting the Yen’s value. On the other side, the US economy is doing well, with January’s jobs report showing a strong gain of 265,000 non-farm payrolls. This has kept the Federal Reserve from signaling any rate cuts, keeping the US 10-year Treasury yield around 4.6%. In contrast, the Japanese 10-year government bond yield struggles to stay above 1.1%. This ongoing yield gap of about 350 basis points makes holding US dollars much more profitable than holding Japanese yen. The carry trade, where traders borrow in yen to invest in dollars, remains active, providing support for the USD/JPY pair. Given this situation, buying call options on USD/JPY to position for further gains seems wise for the upcoming weeks. With the spot price currently near 163.20, targeting strikes at 164.50 or the psychological level of 165.00 could bring potential profits. It’s expected that the BOJ will signal a very gradual policy approach, which would strengthen the dollar. However, if the Summary of Opinions includes unexpectedly hawkish language, it could temporarily cause a sharp drop in the pair. To manage this risk, traders might consider buying affordable out-of-the-money put options with a strike around 160.00. Remembering support levels from early 2025, like 154.50, can offer perspective on how much the market has changed in the past year. Create your live VT Markets account and start trading now.S&P 500 briefly rebounds despite strong PPI figures, but can’t match Thursday’s excitement
The S&P 500 initially held up well against the unexpected rise in the Producer Price Index (PPI) but faced challenges by the end of the trading day. The Nasdaq’s results were underwhelming, despite several companies reporting positive earnings, highlighting ongoing worries about finances and interest rate changes.
US Dollar Trends
The US dollar is still on a downward path, with short recoveries expected. This trend is affecting precious metals like silver and gold, while Treasury bonds may see temporary gains due to market conditions and geopolitical events. The focus remains on earnings growth versus valuation. After years of strong S&P 500 growth, there is concern over whether P/E ratios can keep up with earnings growth. Some speculate that 2026 could be a good year, but likely not as strong as in the past. Other articles are discussing the currency markets and how they are impacted by geopolitical and economic factors. There is a particular emphasis on central bank actions and major currency pairs such as EUR/USD and GBP/USD, which fluctuate based on US monetary policy and overall financial data. The potential effects of important financial updates and upcoming global market developments are also explored. The S&P 500 is showing signs of weakness after the January Producer Price Index report was higher than expected, raising inflation worries. This weakness was noticed back in 2025, where even solid earnings couldn’t keep the momentum going. The index ended January down more than 1.5%, suggesting that using options to protect long positions or take short-term bearish actions could be wise. We should closely monitor the US dollar, which is a key market player. The U.S. Dollar Index (DXY) increased from around 101 to 103 last month, although this seems like a temporary bounce within a longer-term decline. A renewed dollar weakness in the upcoming weeks could signal important trends for traders in other asset classes.Opportunities in Precious Metals
The recent strength of the dollar has lowered precious metals prices, presenting a possible buying opportunity. Gold has retreated to about $2,040 per ounce, and silver has dipped below $23, creating more appealing entry points. Consider purchasing call options on metal ETFs or futures contracts if the dollar shows signs of weakening. Market participation is concerningly narrow, with small-cap stocks lagging. The Russell 2000 has dropped nearly 4% this year, more than double the S&P 500’s decline, indicating a risk-averse attitude among investors. This shallow market breadth suggests broad bullish bets on the market are less likely to succeed compared to more focused strategies. Reflecting on our analysis from 2025, it seems our view that earnings would grow into high valuations was accurate. While the S&P 500 had impressive double-digit returns in 2024 and 2025, we don’t expect the same this year. In this environment, selling covered calls for income might be a better approach than buying costly call options in hopes of another significant rally. Create your live VT Markets account and start trading now.The pivot at 25,405 attracts attention as the chances of reaching 25,794 seem limited.
Nasdaq 100 futures have dropped after failing to break above the 25,794–26,036 range, a barrier it faced since November 2025. Prices are now close to 25,578, which shifts the focus back to the important daily pivot at 25,405, a key decision point.
The daily market structure remains active, allowing for a potential rise if the breakout range is reclaimed. If the pivot at 25,405 holds, it may support another attempt to reach the upper range again. Key levels to watch are 25,794–26,036 at the top, with possible dips to 25,051 and 24,774 if the pivot fails.
Nasdaq 100 Market Outlook
If prices rise above 25,794, it could indicate that the recent decline was just temporary, possibly putting the market back on an upward track. However, if it fails to hold above 25,405, attention will shift downward, starting with support at 25,051 and possibly reaching 24,142 if selling pressure continues. In contrast, Bitcoin is pushing to new lows, which is different from the recent pullback in Nasdaq futures. This difference highlights varying behaviors in risk markets, though it doesn’t strongly link the two. Overall, market watchers are keenly observing whether 25,405 will hold since it remains crucial for the future direction. As of February 1, 2026, the Nasdaq 100 futures market is at a critical point after it couldn’t push past the 25,794 mark. Prices have fallen back to the important daily pivot of 25,405, now the battleground. This weakness follows a stronger-than-expected jobs report last Friday and recent inflation data showing sticky headline CPI at 3.1%, reducing hopes for quick rate cuts. For derivatives traders, the focus is on how the price behaves around the 25,405 pivot. The CBOE Volatility Index (VIX) has risen to nearly 17, indicating that traders are preparing for more uncertainty. If the pivot holds, it could lead to short-term bullish strategies, like selling put credit spreads, in anticipation of another move toward 25,794 resistance.Trading Strategies and Market Implications
If prices fall below 25,405, it would suggest a deeper drop toward 25,051 and then 24,774. This move aligns with cautious guidance from major tech firms during the recent Q4 2025 earnings season. Traders might consider buying puts or initiating bearish call spreads to aim for those lower levels. This failed breakout resembles what we saw in the third quarter of 2025, where an initial failure led to a multi-week decline before the trend continued upward. The market indicates that upward momentum has paused. Therefore, managing positions around this pivot will be crucial in the coming weeks. A rise back above 25,794 would negate the current bearish trend, turning the failed breakout into a simple shakeout. Achieving this would need a significant positive trigger, which doesn’t seem to be on the immediate horizon. Until that happens, the risk leans toward testing the lower end of the established range. Create your live VT Markets account and start trading now.In January, the Australian S&P Global Manufacturing PMI fell slightly from 52.4 to 52.3.
The S&P Global Manufacturing PMI for Australia dropped slightly in January, going from 52.4 to 52.3. Although there’s a small decline, this still shows that the manufacturing sector is expanding, just at a slower pace than before.
This report comes from FXStreet, a financial news site that provides in-depth market analysis and updates. FXStreet goes beyond headlines to offer valuable insights in their Orange Juice Newsletter.
Topics Covered by FXStreet
FXStreet features a variety of articles on multiple topics, including forex recommendations and commodity updates. This includes changes in currency pairs like EUR/USD and GBP/USD, shifts in commodity prices, and trends in digital currencies like Stellar. FXStreet also shares information on brokerage services, highlighting the top broker choices for 2026 in various categories. They stress the importance of thorough research before making investment decisions and do not take responsibility for any financial losses that result from their information. We are currently dealing with the aftermath of market changes from late 2025. Kevin Warsh’s nomination to lead the Fed indicated a hawkish approach, and along with rising inflation data, this led to a strong rally of the US Dollar. This scenario affected many assets, including the EUR/USD and major tech stocks. The main focus remains on the US Federal Reserve’s views on inflation. The latest January Consumer Price Index for 2026 shows inflation stubbornly at 3.1%. This supports Warsh’s likelihood of keeping a restrictive policy. Traders in derivatives should be cautious about expecting major rate cuts this year, making options on SOFR futures that predict “higher for longer” rates an appealing strategy.Impact on Global Markets
Last year’s $400 billion sell-off in Microsoft highlighted the tech sector’s susceptibility in a high-rate environment. The VIX volatility index has recently risen to over 18, up from the low teens in December 2025. Investors might consider buying protective puts on the Nasdaq 100 or call options on the VIX to safeguard against potential equity market fluctuations in the weeks ahead. Gold has shown strength, remaining above $5,000 even with a strong dollar, indicating persistent demand due to ongoing geopolitical risks. Tensions in the South China Sea and the Middle East are contributing to gold’s stability. If you’re cautiously optimistic, strategies like call spreads on gold futures could be a cost-effective way to tap into possible gains. The risk-averse attitude from 2025 is still affecting the crypto market, which has seen Bitcoin and Ethereum prices drop. Recent data reveals a 15% decrease in open interest for Bitcoin perpetual futures since the year’s start, suggesting that capital is flowing out. Traders might find it wise to treat price rallies as selling chances and consider puts on crypto-related stocks to express a bearish stance. The recent slight decline in Australia’s manufacturing PMI, while still indicating growth, could signal that the aggressive tightening from last year is slowing down economic activity. Although the dollar is currently strong, this may pose long-term challenges. It might be worthwhile to explore inexpensive, long-term call options on currencies like the Australian Dollar as a hedge against a future peak in US dollar strength. Create your live VT Markets account and start trading now.In January, South Korea’s trade balance exceeded expectations, reaching $8.74 billion instead of the projected $4.6 billion.
South Korea achieved a trade surplus of $8.74 billion in January, significantly higher than the $4.6 billion that analysts predicted. This strong performance is due to high demand for exports, which strengthened in the current global economy.
A significant trade surplus shows that South Korea’s trade situation is stable, particularly in key sectors like technology and automotive. This could influence the country’s economy and future monetary policy.
Global Trade Tensions
As global trade tensions continue, people are closely watching South Korea’s ability to keep a positive trade balance. Boosting export performance is crucial for maintaining economic growth, especially with external challenges. This January trade surplus, almost double what was expected, is a positive sign for South Korean assets. The numbers confirm the strength we noticed in tech and auto exports during the latter half of 2025. In the near future, we can expect this strength to have a real impact on the market. For currency traders, this report puts immediate pressure on the USD/KRW exchange rate. The pair has had difficulty falling below the 1300 level, but this strong data might give the Korean Won a chance to strengthen. We might consider strategies that benefit from a stronger Won, such as buying put options on the USD/KRW pair.The Impact on Korean Assets
This news is also a positive development for the KOSPI index, which has already risen over 5% since the start of the year due to optimism around semiconductor demand. The export data supports this rise and suggests further potential gains for major companies like Samsung Electronics and SK Hynix. We could think about increasing our bullish positions using call options on the KOSPI 200. This strong growth makes the situation more complex for the Bank of Korea, which has kept its policy rate at 3.50% for over a year. With January inflation remaining high at 2.9%, above the target, the central bank has less incentive to cut rates in its next meeting. This could lead to increased volatility in interest rates, making options on Korean bond futures an appealing strategy. Create your live VT Markets account and start trading now.January China NBS non-manufacturing PMI reports 49.4, below expectations of 50.3
China’s NBS Non-Manufacturing PMI dropped to 49.4 in January, missing the expected 50.3. This number indicates a contraction in the non-manufacturing sector since readings below 50 show reduced activity.
The USD is gaining strength due to Warsh’s nomination to the Federal Reserve and higher-than-expected U.S. Producer Prices. Gold prices rose above $5,000 after profit-taking and a stronger dollar.
