The 3–9 February week was driven by an RBA rate hike, a historic rout in software and AI‑linked tech, and ongoing reassessment of central‑bank timing against a backdrop of mixed data and a delayed US jobs report due to a temporary government shutdown. Volatility stayed elevated but orderly as investors rotated within equities, trimmed stretched positions in commodities, and used FX mainly to express relative policy views rather than growth fears.
FX Market Reactions
The Australian dollar was the strongest major currency after the RBA hiked rates by 25 bps as expected, with AUD/JPY breaking to a new 30‑year high on the combination of Aussie strength and persistent yen weakness.
The Japanese yen remained the weakest major as wide rate differentials and post‑election politics in Japan kept USD/JPY elevated above 156 despite some late‑week risk aversion.
EUR/USD edged slightly higher on steady ECB messaging, while GBP/USD slipped as a dovish‑tilting Bank of England hold brought forward expectations for UK cuts, leaving sterling softer.
The US dollar traded unevenly but ended modestly firmer versus the yen and softer versus high‑beta and European FX, reflecting a mixed risk and policy backdrop.
Commodities Market Reactions
Commodities saw another week of outsized, liquidity‑driven swings, but with a more constructive tone than late January.
Brent crude rose about 2.6% to roughly 68 USD and WTI gained around 1.6% to just above 63 USD, supported by Middle East tensions and firmer demand expectations that helped the energy sector outperform.
Gold recovered further from its January shock, ending about 4.3% higher on the week near 4,956 USD as volatility cooled and investors rebuilt selective hedges, while silver lagged and remained vulnerable to gaps and forced de‑risking. Positioning data pointed to ongoing clearing of excess leverage in metals, suggesting that stability is improving but not yet fully restored.
Indices Market Reactions
Equity markets were mixed but broadly steady: the S&P 500 and Nasdaq Composite each slipped around 2%, reflecting renewed pressure on technology and software names amid fears that AI could disrupt rather than enhance parts of the sector.
In contrast, the Dow Jones Industrial Average and broader value/cyclical areas held up better, signalling rotation rather than wholesale de‑risking, with energy, consumer staples, industrials, and utilities all posting positive weekly returns.
European and UK indices, including the FTSE 100, were comparatively resilient, benefiting from sector mix and more measured central‑bank communication.
Emerging markets showed pockets of resilience helped by regional cooperation and healthier trade balances, even as crypto and some high‑beta assets saw renewed volatility.
Get ready for the week ahead
Visit our market calendar to see all the key economic data, earnings, and events that could move the markets. Plan your trades before the action starts.
Trading forex and futures is high-risk and may result in total loss. Use risk capital only and assess your experience before trading with ATC Brokers.
While ATC Brokers Limited takes reasonable care to ensure the information provided is reliable, no warranty is given as to its accuracy or completeness, and no liability is accepted for any errors or omissions.
