Market Wrap 27th January to 02nd February 2026

The week was dominated by aggressive  reversal in precious metals, hotter‑than‑expected US producer price data, and a firming US dollar as traders pushed back the timing of the next Fed cut. A much stronger US PPI print (headline and core both 0.5–0.7% m/m versus 0.2% expected) reignited inflation concerns, drove yields higher, and helped burst an extended speculative bubble in gold and silver. 

FX Market Reactions 

• The US dollar snapped back from earlier weakness and finished the week stronger, aided by the hawkish PPI surprise and a sharp risk‑off shift as metals and equities sold off. 
• Trump’s explicit endorsement of dollar weakness on 27 January triggered the greenback’s worst single‑day drop in months, sending it to 2022 lows before the inflation data‑driven rebound later in the week.  
• The Swiss franc led G10 gains during the early dollar rout, while EUR, GBP, CAD, NZD, and even JPY and AUD all rallied strongly against the dollar on the day, underscoring how broad the move was.  
• By weekend, USD/JPY had reversed lower from resistance near 155.5 to trade back below 154, while AUD/USD underperformed peers as the metals crash weighed on commodity currencies ahead of a closely watched RBA meeting.  

Commodities Market Reactions 

• A spectacular precious‑metals rally flipped into an equally spectacular rout: silver collapsed about 37% from its highs and gold dropped roughly 18% between Thursday and Monday as crowded long positions were forced out.  
• The metals sell‑off spilled over into broader risk assets, with leveraged positions in gold and silver unwinding and spilling into equities and other commodities.   
• Oil prices slumped under the combined pressure of the metals rout and headlines that Washington is holding talks with Iran, even as separate reports pointed to sharp rises in gasoline and crude futures driven by tensions between Washington and Tehran. 

Indices Market Reactions 

• US equities were volatile but resilient: the S&P 500 ultimately pushed to fresh highs into early February, even as the Friday metals crash briefly hit risk sentiment and raised concerns about broader de‑leveraging.   
• Volatility eased slightly, with the VIX drifting back toward 16, suggesting reduced near‑term stress despite the turbulence in commodities.  
• European and UK indices edged higher earlier in the period as US stocks broke out ahead of the FOMC, though sentiment turned more cautious once metals began to unwind. 
• Japanese markets stayed choppy, with the Nikkei under pressure from rising domestic bond yields and political uncertainty ahead of lower‑house elections, even as global risk appetite tried to stabilise. 

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