Australia’s private sector credit grew by 0.8% month-on-month in December, surpassing the expected 0.6%. This indicates a steady rise in credit demand within the Australian economy.
Various global market movements were also noted. The USD/CHF rebounded above 0.7650, NZD/USD traded around 0.6050, and the Japanese Yen remained weak against the USD, with the USD/JPY climbing to 154.00.
Currency Market Movements
The EUR/USD pair saw a dip, then recovered to around the 1.1920-1.1925 region, down 0.35% for the day. Meanwhile, GBP/USD softened to close to 1.3750, influenced by developments in US fiscal policy.
Gold experienced a decline as positive US fiscal developments boosted the US Dollar. Stellar continued to decline, hitting a three-month low, while technical indicators suggest further decline.
In equity markets, Microsoft experienced a massive sell-off, resulting in a $400 billion loss. Cryptocurrencies like Bitcoin, Ethereum, and Ripple deepened their sell-offs, nearing significant technical levels.
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Private Credit Growth and Economic Indicators
Australia’s private credit growth beat expectations in December, a sign of a robust domestic economy. This follows a trend we saw through late 2025 where inflation remained stubbornly above the Reserve Bank of Australia’s 3% target. We believe traders should consider buying AUD call options against currencies with weaker central bank outlooks.
The US Dollar is showing broad strength, driven by the resolution of a potential government shutdown and anticipation over the new Fed nomination. Looking back at the last major Fed transition, we saw similar short-term dollar rallies fueled by market uncertainty. We see opportunities in buying USD futures or using bear put spreads on pairs like the EUR/USD, which has broken below the 1.1900 level.
The massive sell-off in Microsoft has injected significant fear into the technology sector, reminding us of the single-stock shocks that preceded the wider 2022 downturn. With the Nasdaq heavily weighted towards a few large names, this single event makes index protection crucial. Buying put options on the NDX index or selling out-of-the-money call spreads could be a prudent way to hedge against further downside in the coming weeks.
Broad risk aversion is evident as cryptocurrencies like Bitcoin are seeing a sharp sell-off and gold is pulling back after a massive 25% rally earlier this month. This surge in market volatility is reflected in the VIX index, which has jumped over 30% this week to trade above 22. We believe buying VIX call options or using strangles on volatile assets like gold could profit from these expected large price swings.
