The US January Nonfarm Payrolls report added 130K jobs. The Unemployment Rate fell to 4.3%, while Average Hourly Earnings held at 3.7% over the past 12 months.
The US Dollar Index (DXY) traded near 96.80 and was slightly lower on the day. USD/JPY was near 152.80 and slid towards a two-week low after Prime Minister Sanae Takaichi won an election.
Key Moves Across Major Markets
AUD/USD traded near 0.7130 after reaching a three-year high, linked to China’s CPI release. EUR/USD was around 1.1880, down from a one-week high, while GBP/USD was near 1.3640 ahead of the UK flash GDP for Q4.
Gold traded near $5,092 and rose slightly. Next data includes UK flash GDP (Q4) on Thursday 12, then RBNZ Inflation Expectations (Q1), Swiss January CPI, Eurozone flash GDP (Q4), and US January CPI on Friday 13.
Central banks were the largest gold holders and added 1,136 tonnes worth about $70 billion in 2022, according to the World Gold Council. Gold often moves inversely to the US Dollar and US Treasuries, and its price can be affected by interest rates and geopolitical risk.
Looking back at the data from this time last year, in February 2025, we saw a market that refused to buy the US Dollar despite a solid jobs report. This was driven by a belief that the Federal Reserve would turn dovish later in the year. Today, the situation is quite different, as the January 2026 jobs report showed a massive gain of 353,000 positions and sticky wage growth of 4.5%, forcing traders to price out imminent rate cuts and push the Dollar Index up to the 104.00 level.
The difference in Gold’s behavior is stark; a year ago it was surging toward an unusual $5,092 price, ignoring economic data and acting purely as a safe haven. Now, with the US dollar and Treasury yields firm, Gold has been facing significant pressure, trading in a more conventional range around $2,030. We should therefore consider that options strategies betting against a major breakout, like selling out-of-the-money calls, could be effective as long as the Fed remains credibly hawkish.
Trading Implications And Event Risk
In early 2025, the Australian Dollar was hitting multi-year highs near 0.7130, riding on the coattails of positive data from China. Fast forward to today, and the AUD/USD is struggling near 0.6530, weighed down by the dominant US Dollar and a more sluggish economic picture from China. This suggests that any strength in the Aussie dollar in the coming weeks could present an opportunity to initiate bearish positions.
Last year’s divergence between economic data and market sentiment serves as a reminder that expectations are key. With the US CPI report due this Friday, we should be prepared for significant volatility. Given the market’s current sensitivity to inflation data, purchasing options like straddles on major pairs like EUR/USD could be a prudent way to trade the event, profiting from a large price move in either direction.
