Meanwhile, the People’s Bank of China set the USD\/CNY reference rate at 7.0051, slightly lower than the previous 7.0078.<\/p>\n
The EUR\/USD currency pair is moving towards 1.1650, even with increased risk aversion, stabilising at around 1.1630 during Asian trading hours. <\/p>\n
In parallel, the GBP\/USD pair is strengthening to near 1.3400, influenced by US tariff threats, with the US observing a holiday.<\/p>\n
Gold’s price has surged to an all-time high, reaching above $4,700 as geopolitical tensions escalate. <\/p>\n
The US Dollar’s recent pullback could be a factor aiding these gains, even as Federal Reserve expectations may limit additional growth. <\/p>\n
Looking ahead, the US PCE and events at Davos are expected to affect market trends, with the Bank of Japan’s meeting drawing attention for future guidance. In the UK, inflation and retail sales data may shape expectations for Bank of England policy decisions.<\/p>\n
The escalating Greenland tariff situation is causing significant market jitters, pushing volatility much higher. We\u2019ve seen the VIX jump over 40% in the past week, hitting levels not seen since the Taiwan Strait tensions in early 2025. Traders should look to buy volatility through options, as sharp, unpredictable moves are likely across asset classes.<\/p>\n
Gold is the clearest beneficiary of this risk-off sentiment, breaking decisively above $4,650. This surge is reminiscent of the 2019 US-China trade war, and we’re seeing open interest in gold call options with a $5,000 strike price triple in just a few days. Using call spreads to go long on gold could capture further upside while managing the high premium costs.<\/p>\n
The President\u2019s tariff threats are directly weighing on the US Dollar, creating opportunities in currency pairs like EUR\/USD and GBP\/USD. While the pound is nearing 1.3400, implied volatility on one-month GBP options has spiked to 12% ahead of potential Bank of England rate cuts, suggesting the Euro may be a cleaner long position against the dollar. Buying EUR\/USD call options could be a straightforward way to play this theme.<\/p>\n
This level of geopolitical risk is a major headwind for equities, a fact underscored by the $15 billion in outflows from S&P 500-tracking funds last week. We believe it is prudent to establish downside protection on stock portfolios. Buying put options on major indices or implementing put spread strategies offers a hedge against a potential market correction.<\/p>\n
The oil market is caught between fears of a tariff-induced global slowdown and the potential for supply disruptions, leaving WTI without clear direction. This uncertainty makes directional bets risky, but it creates a perfect environment for volatility trades. Long straddles or strangles on WTI futures could profit from a large price move in either direction.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" UK house prices rebound, China’s growth beats forecasts, gold hits record highs amid rising geopolitical tensions.<\/p>\n","protected":false},"author":62,"featured_media":16980,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-39447","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t