← Back to posts🧠Warsh, shutdown and RBA reshape FX and commodities

🧠Warsh, shutdown and RBA reshape FX and commodities

Published: 2/4/2026

Good morning traders from a crisp, partly sunny IntelliTrade desk. It is about 5°C outside with earlier snow and ice warnings fading, pavements still a bit slick, and on the screens the big thaw is in gold volatility, not in macro uncertainty, so refill the mug and let’s walk through it.


Overall Market Sentiment



The mood is cautious, slightly risk off, dollar supported. The Dollar Index is hovering just above 97.3, off Monday’s high but still well above last week’s lows, as markets digest stronger US data and the nomination of Kevin Warsh while also worrying about the government shutdown that has frozen key labour releases.


Gold is trying to stabilise after its historic plunge from above 5,500 dollars, with spot now consolidating in a broad 4,700–4,900 band and local futures showing choppy, low volume trade as investors debate whether the selloff has gone far enough.Brent crude is catching a bounce back toward the high 66–68 dollars region after dropping more than 4 percent on de-escalation headlines, with the latest move driven by a mix of renewed Middle East tension and some bargain hunting after the earlier slide.


Equities are wobbling rather than collapsing. Global indices have edged lower over the past 24 hours as investors rotate out of some software and data names on AI disruption worries, yet the S&P 500 is still not far below recent record territory and Asian indices are mixed rather than uniformly weak.





Geopolitics and policy



On the geopolitical side, US–Iran risk is back in the foreground after a brief calm. Oil, which sold off on talk of renewed diplomacy and easing supply concerns earlier in the week, has rebounded toward the high 60s as reports of new military posturing restore some risk premium. Brent is trading near 67.8 dollars, and US crude around 63–64 dollars, levels that keep energy from being a full blown inflation shock but still represent a clear geopolitical tax on growth.


In policy, the two dominant stories are Warsh at the Fed and the RBA’s hawkish turn. Warsh’s nomination has reinforced expectations that US policy will stay tighter for longer, supporting the dollar and triggering a sharp repricing in metals and some high beta assets.At the same time, a partial US government shutdown has postponed the official NFP and JOLTS labour reports, which forces investors to lean more heavily on private surveys and ISM numbers to infer the state of the jobs market.


In Australia, the RBA has broken its two year pause, lifting the cash rate by 25 basis points to 3.85 percent and warning that inflation has proven more stubborn than expected and may require further tightening. The decision was widely anticipated but the guidance was read as hawkish, pushing AUD higher and underscoring policy divergence between a still tightening RBA and major central banks that are closer to a cutting phase.





Today and the rest of the week



Today, Wednesday


  • FX is trading around three main axes: Warsh and the USD path, metals consolidation, and RBA spillover into AUD and the broader commodity bloc. The calendar is relatively light, so price action is driven by follow through and position adjustment.
  • Markets remain sensitive to any headlines on the shutdown and delayed NFP, which have turned second tier releases, like ADP and ISM services later in the week, into key proxies for labour conditions.



Rest of the week


  • In the US, ISM services, jobless claims and private jobs data will fill the gap left by NFP, shaping whether markets keep pricing fewer rate cuts under Warsh or start to question how much growth can absorb tighter policy.
  • In Europe and the UK, attention turns toward the ECB and BoE meetings, where rates are expected to stay on hold, but any hints about the timing and pace of future cuts could move EUR and GBP after strong January rallies.
  • In Asia Pacific, markets will continue to digest the RBA’s move and watch Chinese data and New Zealand releases as key drivers for AUD and NZD, alongside the behaviour of gold and the global dollar path.






Currency outlooks




⚖️ USD – Warsh supports the dollar, shutdown caps enthusiasm



The dollar has staged a respectable rebound, with DXY closing around 97.35 yesterday after touching a low near 95.5 late last month, helped by Warsh’s nomination and better US manufacturing data.Fed funds pricing now implies fewer cuts for 2026 than at the start of January, which is a clear positive for the dollar relative to where expectations were just a few weeks ago.


At the same time, the government shutdown and delayed NFP report have introduced an unusual uncertainty into the macro picture and limit how confidently investors can extend the dollar rally without fresh data.Structural concerns around US fiscal policy and politics also remain in the background after the commodity turmoil that followed the Warsh announcement.


For the days ahead, USD risks look broadly balanced. A strong run of ISM services and labour proxies would tilt the balance toward further moderate gains, while softer numbers or a quick improvement in shutdown headlines would invite another round of diversification into non-USD assets and gold. Markets are watching the 97.0 area on DXY as near support and the 98.0 region as first resistance in this new range.





⚖️ EUR – Pausing after the breakout with data and ECB in focus



EURUSD is holding above 1.18, after its failed push through the 1.20 handle last week, as a steadier dollar and mixed Eurozone data take some momentum out of the move without reversing it.The euro benefited strongly from January’s dollar weakness and a perception that the ECB will ease more cautiously than the Fed, but that narrative now has to share space with Warsh-linked USD support and lingering questions about the strength of European growth.


The upcoming ECB meeting and Eurozone inflation data will be key for direction. A clear signal that cuts remain some distance away and that the Bank is comfortable with a somewhat stronger euro would support the currency, while any hint of earlier or faster easing could see EURUSD drift back toward the mid 1.17s if the dollar holds firm.


Near term, risks for EUR versus USD are mixed: the pair is likely to stay range bound between the 1.18 support zone and the 1.20–1.21 resistance band, until either US data or ECB communication provides a clearer trend catalyst.





⚖️ GBP – High but range bound ahead of the BoE



GBPUSD is trading around 1.37, just below the recent four year high at 1.3867, as sterling consolidates strong January gains while watching both the BoE and the evolving Fed story.UK front end yields remain relatively high and sticky services and wage inflation keep the Bank of England cautious on cuts, which provides underlying support, but growth is modest and the currency already looks rich versus recent history.


For the rest of the week, GBP risks versus USD look broadly balanced. A BoE that stresses patience and emphasises data dependence without sounding alarmed about sterling strength would help maintain the 1.36–1.38 range, while any softer rhetoric or stronger US data would expose the downside toward the lower 1.36s. Markets are watching the 1.36 area as first support and 1.38–1.40 as resistance, levels that have repeatedly capped the rally so far.





⚖️ CAD – Oil and shutdown noise keep USDCAD in its mid range



USDCAD is sitting close to 1.365, right in the middle of its recent multi week range, after a modest bounce from last week’s lows near 1.35.Earlier support from higher oil prices has faded as crude gave back part of its Middle East premium, yet the latest rebound toward the high 60s for Brent means CAD still has some commodity backing.


Domestic data and inflation remain broadly in line with the Bank of Canada’s target, so the near term story is driven mostly by external factors: the Warsh-supported dollar, oil volatility and the impact of the US shutdown on North American risk sentiment.


This week, CAD risks versus USD look roughly neutral. Stronger oil or a softer dollar on weaker US data would support a drift back toward 1.35, while a further rise in yields or a deeper risk wobble tied to US politics could push USDCAD toward 1.37–1.38 again.





🔺 CHF – Steady haven as USDCHF grinds back toward the lows



USDCHF is trading near 0.775, only marginally above the recent trough and consistent with a firm Swiss franc in both nominal and real terms.Low Swiss inflation and a policy rate close to zero continue to give the SNB room to tolerate a strong currency as an insurance policy against imported price shocks, particularly while global markets are adjusting to sharp swings in metals and evolving US leadership.


Short term, risks for CHF versus USD lean modestly to the upside. If the dollar fails to extend its rebound beyond the high 97s on DXY or if there is another spike in risk aversion tied to political headlines or renewed commodity volatility, USDCHF could ease back into the 0.77–0.77 low area that marked the recent lows.





🔻 JPY – Yield gap and Warsh narrative keep yen under pressure



USDJPY has climbed back above 156, close to the upper end of its recent range, as the combination of a firmer dollar and very low Japanese yields keeps the yen on the defensive.The Bank of Japan policy rate at 0.75 percent is still far below US levels and recent data have not forced a major acceleration in normalisation, so the currency continues to serve as a funding vehicle despite the earlier intervention chatter.


With Warsh expected to favour a higher for longer stance compared with market pricing at the start of the year, rate differentials remain a headwind for JPY. Intervention risk has not disappeared, but officials have been relatively quiet, and markets are increasingly treating 155–157 as a broad tolerance band rather than a hard ceiling.


Near term, risks for JPY still lean toward weakness. Any upside surprise in US data or further re-pricing of Fed cuts would encourage more upside tests in USDJPY, while meaningful yen strength likely requires either explicit official pushback or a genuine risk shock that sends investors scrambling for defensive positions.





🔺 AUD – RBA’s hawkish hike props the Aussie despite firmer USD



AUDUSD has reclaimed the 0.70 handle, trading slightly above that level after the RBA raised the cash rate to 3.85 percent and signalled that further tightening is possible if inflation does not cool.Markets now price additional hikes later in 2026 and see Australian inflation staying above target for longer, which provides a clear support for AUD carry compared with peers where easing is the next likely step.


The headwind is the broader dollar backdrop and any wobble in global risk sentiment. AUD remains sensitive to moves in gold, industrial metals and Chinese data, all of which have been volatile in the wake of the Warsh nomination and the commodity shakeout.


For this week, risks for AUD versus USD lean mildly to the upside, as long as the RBA’s hawkish signal remains intact and global risk avoids a sharp deterioration. The 0.695–0.70 area is key support, while 0.71–0.71+ is the resistance zone that would need to break to confirm a more extended AUD upswing.





🔺 NZD – Quiet beneficiary of AUD strength and metals stabilisation



NZDUSD is trading just over the 0.60 mark, supported by the rebound in gold and silver and by the spillover from a stronger AUD after the RBA decision.New Zealand inflation remains slightly above the top of the RBNZ’s 1–3 percent target band, and the Bank has signalled it is in no hurry to cut, which gives NZD a modest relative yield advantage over low-beta currencies.


Because NZD is a high beta, growth-sensitive currency, it can benefit from the combination of stabilising commodities and still constructive, if choppy, equity markets. In the short run, risks for NZD versus USD lean moderately bullish, provided the dollar does not surge and global risk sentiment remains more rotational than outright negative.


Reference zones: 0.60 as near support and the 0.61–0.62 band as the next resistance area that would confirm a more decisive break away from the lower ranges of late 2025 if cleared.





Cross-asset wrap



  • 🪙 Gold:
    Gold is attempting to build a floor after one of its sharpest two day percentage drops in decades, rebounding toward the 4,800–4,900 region following a plunge from above 5,500 dollars that was driven by Warsh’s nomination, higher margins and a stronger dollar. Near term, analysts see a broad consolidation band between roughly 4,500 and 5,000 as markets reassess the balance between long term structural demand and the immediate headwind from tighter policy expectations.
  • 🛢 Oil:
    Brent is taking a breather near 67–68 dollars and WTI in the low 60s, after a volatile stretch that saw prices fall more than 4 percent on de-escalation headlines then bounce on renewed Middle East tension and some dollar weakness. The net effect is to keep a moderate risk premium in energy markets, enough to matter for inflation and CAD but not yet at levels that would force a major shift in central bank communication.
  • 📈 Stocks:
    Global indices are in consolidation mode. The S&P 500 remains close to the 7,000 region after a strong January, while Asia is mixed, with some tech and software names under pressure from AI disruption worries even as hardware-heavy indices hold up better. Markets are adjusting to a world where the Fed may stay tighter for longer and where commodities are no longer one way movers, which favours more selective positioning rather than broad risk-on or risk-off extremes.
  • ₿ Crypto:
    Bitcoin is stuck in a broad range in the mid 70,000s, lagging the sharp swings in gold and behaving more like a high beta macro asset than a primary hedge. The combination of a firmer dollar, higher yields under Warsh and choppy equities has dampened enthusiasm, and near term direction is likely to track the same US data and central bank themes driving FX and metals.






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


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