← Back to posts🧠Metals flush, oil dips and dollar finds footing

🧠Metals flush, oil dips and dollar finds footing

Published: 2/2/2026

Good morning traders from a bright but chilly, partly sunny IntelliTrade desk. The air is a couple of degrees above freezing, showers are lined up for later, so for now it is you, your coffee and a very busy macro tape.


Overall Market Sentiment



The mood is nervous and mildly risk off as the new week kicks off. The US Dollar Index has bounced back toward the 97.0 area after undershooting to four year lows last week, suggesting the weakest part of the dollar slide may be behind us for now.


Gold is in full correction mode after last week’s blow off peak above 5,500 dollars, with spot now closer to the high 4,800–4,900 region and reports of double digit percentage declines as margin hikes and the new Fed chair nomination force a position flush.Oil has reversed sharply lower as US–Iran tensions cool, while equity futures and Asian indices are under pressure on the metals selloff and renewed worries about tighter Fed leadership.





Geopolitics and policy



The main geopolitical shift is de escalation between the US and Iran. Oil has dropped nearly 5 percent from last week’s highs, with Brent futures around 66 dollars and WTI near 62 dollars, as comments from US and Iranian officials point to talks rather than imminent military action and military drills near key shipping lanes are scaled back.That takes some risk premium out of crude and slightly reduces the near term inflation impulse from energy.


On the policy side, markets are still digesting the nomination of Kevin Warsh as the next Fed chair, a figure seen as more hawkish on inflation and less enthusiastic about very loose policy. This has helped the dollar stabilise and is a key reason why gold and silver have seen one of their sharpest two day declines in decades.


The week ahead is dominated by central banks and US labour data. The Reserve Bank of Australia meets with markets pricing about a 70 to 75 percent chance of a 25 basis point hike to 3.85 percent, several European and UK decisions follow later in the week, and the US jobs report on Friday will help determine whether the new Fed leadership stance gets translated into a higher for longer path in pricing.





Today and the rest of the week



Today, Monday


  • The key US release is ISM manufacturing, expected to edge higher but stay below 50, which would still signal contraction in the factory sector. The prices and employment components will matter for inflation and labour supply narrative.
  • Markets are watching whether the dollar can hold its rebound and whether the metals selloff extends or stabilises after margin and positioning shocks.



Rest of the week


  • Central banks: The RBA decision is up first in Asia, with a high probability of a hike priced. Later in the week, attention turns to the Bank of England and the European Central Bank, where no moves are expected but guidance on the timing of future cuts will be key.
  • Data: US labour market numbers, including the main jobs report at the end of the week, plus key releases from China, Germany, the wider Eurozone, New Zealand, Australia and Canada will shape how durable the current risk off tilt in FX really is.
  • Earnings: Big Tech results continue, which will influence whether equities can hold near S&P 7,000 resistance while metals unwind and yields firm.






Currency outlooks




🔺 USD – Dollar tries to build a base after the flush



The broad dollar has stopped falling. The Dollar Index is trading near 97.0, up modestly from last week’s lows but still well below levels from late 2025, as markets balance a more hawkish Fed leadership outlook against ongoing concerns about US politics and fiscal dynamics.


Growth and inflation remain consistent with a Fed on hold for now. Recent data and the last policy statement describe activity as solid and inflation as somewhat elevated, which does not argue for imminent cuts, and a chair seen as cautious on inflation risk adds weight to that stance.


For the next few sessions, risks for USD lean slightly to the upside. A firmer tone in US data, the sharp metals correction and a more hawkish perceived policy mix are supportive of a grinding recovery, although the bigger picture still features a dollar that has weakened notably over the past year and is sensitive to any negative surprises in growth or politics.





🔻 EUR – Retreating from the highs as the dollar steadies



EURUSD is trading around 1.185–1.187, down from last week’s test above 1.20 as the dollar bounces and the euro pauses near important multi year resistance.


The euro had been carried higher by broad dollar selling and a perception that the ECB will ultimately move more cautiously on cuts than the Fed, but incoming Eurozone data remain modest rather than spectacular. With big European releases and a central bank meeting later in the week, markets are reluctant to chase EUR higher from stretched levels.


Into the end of the week, risks for EUR versus USD look tilted slightly to the downside. A stabilising or firmer dollar, plus the chance of softer European numbers, gives the pair room to drift lower or at least stay capped below the 1.20 zone unless US data disappoint significantly.


Key areas that traders are watching: roughly 1.18 as first support and the 1.20–1.21 band as a resistance zone that would need to be reclaimed to restart the euro uptrend.





⚖️ GBP – Still elevated, now more sensitive to global wobble



GBPUSD is holding around 1.37, just under the recent peak near 1.3867 that marked the high for the year so far.


Sterling continues to enjoy relatively high UK front end yields and the idea that the Bank of England will cut more slowly, given sticky wage and services inflation, even though domestic growth is only moderate. At the same time, recent sessions have shown that the pound is vulnerable when global risk sentiment weakens and the dollar firms, as we are seeing today.


For the days ahead, risks for GBP versus USD look broadly balanced. The currency can remain supported if the BoE sounds patient and the dollar recovery is gradual, but after a strong January run, the potential for choppier two way trading has increased.





🔻 CAD – Oil pullback and firmer USD weigh on the loonie



USDCAD is trading around 1.36–1.37, a little above last week’s lows near 1.35 as the dollar finds a floor and oil gives back part of its Iran risk premium.


Canada’s recent data have been reasonable and inflation sits near the middle of the Bank of Canada’s target band, so there is no immediate domestic shock. The issue near term is external: lower crude and a slightly stronger USD reduce support for CAD at precisely the moment that positioning in favour of the loonie had become more crowded.


For this week, risks for CAD versus USD lean modestly toward weakness. A further slide in oil or stronger US numbers would likely push USDCAD higher, even if the medium term trend is still one of gradual CAD resilience compared with 2025.





⚖️ CHF – Strong in real terms, but USDCHF rebound limits near term gains



USDCHF is sitting around 0.77–0.773, slightly above last week’s trough near 0.76 but still very low in a multi year context, which means the franc remains fundamentally strong.


Ultra low Swiss inflation and a near zero policy rate continue to justify a firm CHF, especially as investors look for havens that feel insulated from the more dramatic parts of US and Asian politics. The recent shock in metals has also reminded some investors of the value of traditional safe currencies alongside gold.


Short term, though, the combination of a stabilising dollar and a somewhat calmer geopolitical backdrop keeps CHF risks versus USD more neutral. Further franc strength would probably require either another leg down in US yields or a fresh burst of global risk aversion.





🔻 JPY – Back above 155 as rate and leadership expectations shift



USDJPY is trading near 155, toward the upper end of its recent range, after three sessions of gains that followed softer Japanese data and rising expectations of tighter Fed leadership.


Japan’s policy rate is still only 0.75 percent, well below US levels, and while the BoJ has started to normalise gradually, recent numbers have not forced an aggressive shift. That leaves the yen structurally weak and attractive as a funding currency, even if persistent concerns about possible intervention limit how fast USDJPY can climb.


Into the end of the week, risks for JPY lean toward further weakness overall. A firmer dollar on the back of US data or policy expectations is more likely to push USDJPY higher than lower, barring fresh signs of official discomfort or a sudden risk off shock that boosts demand for yen as a hedge.





⚖️ AUD – Waiting on the RBA, caught between hike risk and USD bounce



AUDUSD is trading around 0.693–0.695, down from last week’s test above 0.70, as the dollar rebound and a softer risk tone offset the still hawkish domestic backdrop.


Australian inflation remains above target and recent labour data have been strong, so markets now assign roughly a 70 to 75 percent chance that the RBA hikes this week to 3.85 percent. That offers support, but with global equities wobbling and metals under pressure, enthusiasm to add AUD exposure at these levels is more restrained.


For the coming days, AUD risks versus USD look finely balanced. A surprise from the RBA on either side, or a larger than expected move in US yields and risk sentiment, will likely decide whether AUDUSD holds the high 0.69s or retests the mid 0.68s.





⚖️ NZD – Holding above 0.60 on China support, but still high beta



NZDUSD is hovering around 0.60–0.602, having recovered from a mild correction and helped by better Chinese PMI data and a generally constructive view on New Zealand’s external environment.


Recent domestic figures and inflation near the upper end of the 1 to 3 percent target band allow the Reserve Bank of New Zealand to stay cautious on cuts, which provides some rate support, but the kiwi remains a classic high beta currency that responds strongly to moves in global risk appetite.


For this week, NZD risks versus USD look roughly neutral to slightly positive, as long as Chinese data do not reverse and the dollar recovery remains controlled. However, any renewed wave of risk aversion or a sharper move higher in US yields would likely drag NZDUSD back toward the high 0.59s.





Cross-asset wrap



  • 🪙 Gold:
    Gold has flipped from star performer to main pressure point. After spiking above 5,500 dollars late last week, spot is now closer to the 4,800–4,900 area and is on track for one of its largest two day percentage drops in decades, as a firmer dollar, margin hikes and a more hawkish Fed chair nomination force investors to cut positions. The key question for the rest of the week is whether this is a healthy reset in an ongoing secular uptrend or the start of a broader regime shift in safe haven preferences.
  • 🛢 Oil:
    Brent has retreated to about 66 dollars and WTI to around 62 dollars, giving back a significant chunk of last week’s gains as signs of US–Iran de escalation calm supply fears and the stronger dollar weighs on prices. With OPEC plus output steady and demand growth moderate, the market now looks more balanced, which reduces the near term inflation scare but still leaves energy as a key swing factor if tensions flare up again.
  • 📈 Stocks:
    The S&P 500 is coming off a small pullback from its recent intraday high near 7,000, and futures point to a softer open today as metals slump and investors reassess Big Tech valuations and the implications of tighter Fed leadership. Volatility indices have ticked higher but remain far from crisis levels, which suggests that for now investors are trimming risk rather than exiting en masse.
  • ₿ Crypto:
    Bitcoin is trading below recent highs in a choppy range as the combination of a stronger dollar, higher yields and the metals liquidations reduce enthusiasm for macro risk trades. Crypto continues to behave like a high beta expression of liquidity and tech sentiment rather than a primary hedge, so this week’s central bank decisions and US labour data are likely to matter more for direction than coin specific news.






This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.


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