The traditional positive correlation (dollar up when VIX up) that held over much of the prior 5 years weakened or flipped in parts of 2025 and into early 2026. Goldman Sachs noted earlier that the dollar's appeal as a haven diminished, with correlations turning opposite (dollar weakening amid rising volatility) for much of 2025, signaling reduced safe-haven demand. More recently (late 2025 into 2026), correlations have trended toward more "normal" behavior again — meaning the

Market sources pointed out that the broad USD position remains net long as of Monday's session; the proprietary indicator shows hedge-funds and real money leading the dollar long. However, hedge funds sold dollars on Friday's session as the U.S. Supreme Court delivered its ruling on President Trump's tariffs. Additionally, sources saw the Australian dollar as the most bought currency at the time of the headline release on Friday. The trading volumes were in line with prior tr

**As seen in Online Tools>Inflation Monitor, subscribe at cablefxm.co.uk In the U.S., headline CPI slowed to 2.4% y/y in January 2026 (down from 2.7% in December 2025), the lowest since mid-2025. Core CPI eased to around 2.5%. This reflects base effects, softer energy, and some shelter moderation, supporting expectations of gradual Fed policy normalization. Across the pond, HICP dropped to 1.7% y/y in January 2026 (from 2.0% in December 2025), the lowest in over a year, drive

Year-to-date, G10 currencies have mostly strengthened against the USD, with the greenback emerging as the weakest performer amid Fed easing expectations, US policy uncertainties (e.g., tariffs, fiscal risks), and global rotation into pro-cyclical assets. The CAD has been a close laggard due to USMCA renegotiation jitters. High-beta currencies like NZD, SEK, and AUD have led gains, supported by resilient growth, carry appeal, and risk-on sentiment.

Speculation has built around an earlier/next BoJ hike, potentially as soon as April 2026. Comments from former BoJ board member Seiji Adachi highlighting April as likely timing. This narrowed the US-Japan yield spread appeal and supported yen demand, pressuring USD/JPY lower (e.g., sharp drop after Bloomberg report on Feb 17). Another factor supporting the strength of the yen has been the recent unwinding of carry positions, which has had a notable impact on currency dynamics

The correlation between USDJPY and the Nikkei 225 remains strongly positive overall—when the dollar strengthens against the yen (USDJPY up, yen weaker), the Nikkei tends to rise too. This has been the case since around two thousand two, driven by export boosts for Japanese companies and carry trade flows. In recent months, the relationship holds firm. From late 2025 data, the twenty-day rolling correlation was around 0.81, and the past-month figure sat at about 0.79—still hig

**As seen in Online Tools > Risk Map, get full access at cablefxm.co.uk Risks ahead: U.S. Non Farm Payrolls U.S. CPI U.S. jobless claims Switzerland CPI Euro output

How does Lagarde describe the recent moves seen in the FX market and is the ECB worried about recent currency moves? We continue to think the ECB will keep rates at current levels this year, and see the risk picture gradually moving towards rate hikes, though as the start of the year has reminded us, downside risks have not disappeared either. We do not expect actual hikes until the second half of 2027, though. Current market pricing suggests a small remaining bias towards a

For gold, the recent correction does not appear to reflect a change in the underlying macro narrative. Safe-haven demand, ongoing central bank purchases, and the outlook for real rates remain supportive over the medium term. While shorter term drivers triggered the latest rally, the foundation of gold’s multiyear uptrend remains the steady accumulation by global central banks. This phase began in 2022 following Russia’s invasion of Ukraine, which prompted a reassessment of re

The table below is showing the z-score ranking for our G10FX quantitative momentum model, rebalanced for February 2026. The results show no filter applied to the nominal model screenings. As of January close, basket is going long AUD and NZD. The bottom rankings show yen and dollar as funding targets. The euro was second bottom ranking after the filter was applied. Pairs to express this model (long format): AUD/JPY, NZD/JPY, AUD/EUR, NZD/USD Subscribe to get early access to m

2025 staged a clear downtrend for the dollar, the greenback posted its worst year in almost a decade against G10 peers. A debasement theme has been pressuring the greenback as foreign investors diverse away from U.S. assets. EM currencies and metals benefited from this dynamic too, spot gold intensified its rally and moved past $5,000.0/oz. Alternative assets like bitcoin have underperformed in an environment where most assets are rising against the U.S. dollar. Unlike fiat c

Trump's second term began after the DXY had risen significantly under the prior administration (from ~90.6 at Biden's start to ~109.4 by January 2025). Expectations initially pointed to potential dollar strength from tariffs, growth policies, and Fed caution. The index experienced substantial depreciation through much of 2025, with reports of an ~10–11% annual decline in 2025—the largest since 2017 or even earlier periods. Tariff announcements and trade policy uncertainties,

When the economy is close to full employment and full capacity utilisation, it is hard to know which side of the line it is on. Inflation outcomes are the best guide in this situation. This is one reason why inflation gets the ‘casting vote’ at the RBA’s February meeting. With trimmed mean as the clearest signal of the underlying inflation trend, its 0.9%qtr, 3.4%yr quarterly result in the December quarter implies that the RBA is likely to raise rates at the February meeting.

The tension over Greenland might be over, but the impact on the dollar and the financial market is not. The concern around US exposure was confirmed by several pension funds announcing publicly that they were scaling back their exposure to US bonds because the situation had reduced their confidence in the political and fiscal situation. This is an important signal, because the foreign sector owns around 30% of the total government debt in the US. The geopolitical tension arou

**As seen in Online Tools > Chart Grid, get full access now! The greenback remained fragile and under pressure, trading softer in G10 space for much of the day. It consolidated without a strong rebound, reflecting stretched positioning and poor sentiment. The dollar index hovered near multi-month lows after recent declines. JPY standout: The yen was the strongest G10 performer, with gyrations pointing to market nervousness (likely around intervention risks). USD/JPY saw initi

Tuesday session saw spot gold prices rise more than 3.0% after breaching $5,0000/oz. Momentum is taking over metals prices as Reuters reported the gold/silver ratio dipping further. The CME Group said that its metal complex saw a daily record volume on Monday session. The recent increase is pushing analysts forecast higher, Deutsche Bank revised its 2026 spot gold call to $6,000/oz. A detailed list of desks' gold forecasts is provided below: JP Morgan (or J.P. Morgan): $6,000

The JPY to remain under pressure barring a loud policy signal from Japan that counters common knowledge or something that drives heightened anticipation of intervention in Fed policy from the Trump administration. EURJPY hit a new all-time high. It’s amazing that JPY is achieving a -8.6 reading (rare to see absolute magnitude of trends exceeding about 6 outside of precious metals) with an ATR ranking (daily trading ranges for JPY pairs) in the bottom 10% of the last 1,000 tra

The direct implications of a US military takeover of Greenland are limited, though there could be more significant indirect implications. We see two main channels of impact both in the short- and medium/long-term. First, it could raise geopolitical policy uncertainty hitting household and business confidence, depending on how prolonged any tension between the US and Europe lasts. Such a hit to confidence would have some parallel with the Russian invasion of Ukraine. This woul

Agri and food products account for the largest share of the EU’s imports from Mercosur, with a total import value of €24 billion in 2024 (43% of total imports). The agreement will facilitate trade growth by increasing import quotas and reducing or eliminating tariffs on products such as beef, poultry, and sugar. Discontent among EU beef, poultry, and sugar beet farmers has been mounting, given that the deal will increase competition with Mercosur farmers who can operate at lo

2025 has been a challenging year for the US Dollar, which has been one of the weakest performers among major currencies. Across a variety of measures, the dollar is posting almost double-digit declines — the DXY is down approximately 9.7% year-to-date as of December 30, 2025, on track for its worst annual performance since 2017. This reflects factors like Fed rate cuts, narrowing interest rate differentials, fiscal concerns, and global diversification away from USD assets. Th