Pips for Breakfast: February 2, 2026

India decided to tax its stock market on a Sunday, proving that even the day of rest isn't safe from the taxman.

On This Day

Back in 2018, markets realized that low volatility wasn't a law of physics. The Dow shed 666 points, the VIX woke up from a coma, and Yen crosses started moving like they had somewhere to be. It was the start of a very expensive week for anyone shorting fear.

The Play

USD/JPY Long Potential: While Japan's PMI looks shiny, the real story is the USD ISM print later today. If Manufacturing Prices beat that 59.3 forecast, the inflation is back trade gets a second wind. We're looking at a breakout above recent highs if the Fed's higher for longer narrative gets more fuel. On the flip side, AUD/USD Short: The RBA is expected to hike, but they've got a history of dovish hikes where they raise rates and then spend an hour explaining why they might never do it again. Sell the fact if the statement is cautious.

What's on Deck

ISM Manufacturing PMI (10:00 UTC) is the main course for the New York session. If the headline stays under 50, the soft landing crowd will cheer. If prices paid jump, the sticky inflation crowd gets to say I told you so at the water cooler. Then, we pivot to the RBA Cash Rate (22:30 UTC). A 25 basis point hike is priced in. The real volatility lives in the RBA Press Conference (23:30 UTC) where Governor Bullock will try to navigate the fine line between fighting inflation and not crashing the Sydney housing market.

The Data Behind the Patterns View Packages →

Quick Pips

EUR/USD: Stuck in a range. It's waiting for the USD ISM to decide if it wants to visit 1.07 or try 1.09 again.
Oil (WTI): Under pressure. China's PMI setback is acting like a wet blanket on demand hopes.
GBP/USD: Cable is drifting. Without UK data today, it's just a proxy for how much people like or hate the Greenback.

Why Your P&L Cares

History says February is the month where January's optimism goes to die, or at least gets a reality check. In 2023, the ECB hiked rates on this date and the Euro actually fell because the market decided the peak was near. We're seeing a similar vibe today with the RBA. Central banks are hiking into slowing growth, which is the monetary policy equivalent of trying to fix a leaky pipe with a sledgehammer.

The China PMI miss adds another layer of fragile to the global growth story. If the ISM data today confirms manufacturing is still shrinking while prices are rising, we're looking at stagflation lite. That's usually a recipe for a stronger Dollar and a very hesitant Aussie Dollar. The India Sunday session wipeout is just a reminder that liquidity is a gift, not a right.

The Bottom Line

Watch the ISM prices paid more than the headline. If that number is hot, the USD is the only game in town. The RBA will probably hike and then immediately hedge their bets. Now go make some pips. You're fed.