Australia’s TD-MI Inflation Gauge in December shows a rise to 3.5% year-on-year from 3.2%. Meanwhile, the PBOC sets the USD/CNY rate at 7.0051 compared to the previous 7.0078.
In global markets, EUR/USD heads towards 1.1650 amidst increased risk aversion. GBP/USD nears 1.3400, driven by tariff threats from Donald Trump.
Gold Reaches Record High
China’s economy grows by 1.2% in Q4 2025, against expectations of 1.0% growth. Gold reaches a record high of approximately $4,700 amidst the Greenland trade conflict, despite a pullback in the US Dollar.
The coming week sees attention on US PCE figures, Davos remarks, and BoJ meeting outcomes. The UK faces potential BoE cuts, with focus on CPI and retail sales.
Dash’s price surges towards $100 despite overall market corrections. Futures Open Interest in Dash reaches $165 million, indicating heightened retail interest.
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Geopolitical Uncertainty And Safe Haven Assets
The escalating Greenland dispute has pushed gold to a record $4,700, making it the primary safe-haven asset. We believe call options on gold offer a way to capitalize on further geopolitical uncertainty, as this rally has far surpassed the previous highs seen back in 2024. The high implied volatility also makes selling out-of-the-money puts an attractive strategy for those expecting a floor to be established.
We are seeing the US Dollar weaken significantly due to renewed trade war fears, which is lifting both the Euro and the Pound. While EUR/USD is pushing towards 1.1650, the rally in GBP/USD to 1.3400 could be limited by expectations of more rate cuts from the Bank of England. This conflict between short-term momentum and central bank policy creates opportunities for spread trades.
Better-than-expected growth from China in late 2025, with Q4 GDP at 1.2%, is providing a strong tailwind for commodity currencies. This, combined with Australian inflation hitting a high of 3.5%, suggests the Reserve Bank of Australia will be far less likely to cut rates. We see this environment as particularly supportive for the Australian dollar against the weakening US dollar.
The current market is reacting strongly to headlines, creating significant volatility spikes across asset classes. We note that the CBOE Volatility Index (VIX) has likely surged, similar to patterns seen during the US-China trade disputes of the late 2010s. Derivative traders should consider strategies that profit from this high volatility, such as straddles on major indices, or selling premium if they anticipate a period of calm.
