New Zealand’s electronic card retail sales experienced a decrease, falling to -0.1% in December from 1.2% the previous month. This downturn suggests a contraction in consumer spending within the country during this period.
In Australia, December’s unemployment rate dropped to 4.1%, lower than the anticipated 4.4%. The unexpected decline in unemployment is likely to influence monetary policy in the near future.
China’s Market Update
The People’s Bank of China set the USD/CNY reference rate at 7.0019, slightly up from the previous 7.0014. This adjustment follows ongoing developments in the foreign exchange market.
Gold prices have slumped below $4,800 after a record high, as tensions ease with the US stepping back from a European tariff threat. US President Donald Trump announced a framework Greenland deal, which also affected market movements.
The Australian dollar has risen against its US counterpart, buoyed by the latest employment figures. This has likely strengthened the outlook for the Reserve Bank of Australia’s monetary policy approach.
Monero, a prominent cryptocurrency, continues its downward trend, trading below $500. This marks a roughly 38% decline from a recent high of $800, illustrating the asset’s recent volatility.
Market Sentiment Shift
The de-escalation of the European tariff threat has shifted market sentiment dramatically. We are seeing a classic risk-on move, with gold dropping sharply from its record highs near $4,888. This suggests that for the next few weeks, we should consider strategies that benefit from lower market volatility, such as selling out-of-the-money call options on gold.
This sentiment is also hitting safe-haven currencies like the Japanese Yen, pushing USD/JPY above the 158.00 level. Historically, when major geopolitical risks are taken off the table, the yen tends to underperform for a sustained period. We saw a similar dynamic through much of 2023 and 2024, suggesting that buying USD/JPY call options could be a viable way to trade this ongoing momentum.
Divergence is appearing between Australia and New Zealand, creating a clear pair trading opportunity. The surprise drop in Australia’s unemployment rate to 4.1% in December 2025 strengthens the case for a hawkish Reserve Bank of Australia. In stark contrast, New Zealand’s electronic card sales fell by 0.1%, signaling consumer weakness that may push the Reserve Bank of New Zealand toward a more dovish stance.
This fundamental split supports a long AUD/NZD position. Looking back at RBA statements from 2024, we know they consistently pointed to labor market strength as a primary reason for maintaining tight policy. Therefore, positioning for the Aussie to outperform the Kiwi seems logical, perhaps through futures contracts or long-dated options to capture the trend.
All eyes must now turn to the upcoming US Personal Consumption Expenditures (PCE) and GDP data. The US dollar has rebounded, but this strength will be tested by these figures, as we remember how stubborn inflation data in 2023 forced aggressive central bank action. A strong PCE reading would likely solidify the dollar’s gains and further pressure assets like gold and the euro.
