Gold (XAU/USD) fell below $5,100 and traded near $5,090 in early Asian trading on Friday. The decline continued alongside a stronger US Dollar and higher US Treasury yields. The US Personal Consumption Expenditures (PCE) Price Index for January is due later on Friday. The data is expected to affect views on inflation and US interest rates.

Middle East Risk And Safe Haven Demand

Iran’s new supreme leader, Mojtaba Khamenei, said the Strait of Hormuz should remain closed and that Iran will continue attacks on Persian Gulf neighbours, according to Bloomberg. US President Donald Trump called Iran “a nation of terror and hate” and said the situation is “moving along very rapidly” towards his pledge of limited military involvement. Market focus remains on developments in the Middle East. A longer conflict can increase demand for safe-haven assets such as gold. At the same time, higher oil prices linked to the conflict have raised inflation fears in the US. This can support expectations that the Federal Reserve keeps interest rates higher for longer, which can favour interest-bearing assets over gold. When we were looking at the situation in early 2025, the threat of the Strait of Hormuz closing sent a shock through the energy markets. We saw WTI crude prices spike to over $110 a barrel in that first quarter, which directly fueled the inflation fears mentioned. This forced the Federal Reserve to maintain its restrictive monetary policy throughout most of last year.

Rates Volatility And Gold Positioning

The conflict created a tough environment for gold, trapping it between safe-haven demand and the pressure of high interest rates. While geopolitical bids kept a floor under the price, the strong dollar and attractive bond yields capped any significant rally past the $5,250 level for months. This created a period of high volatility but limited directional movement for the precious metal. Now, as of March 2026, the intense military posturing in the Persian Gulf has cooled, bringing more stability to oil supply routes. We’ve seen WTI crude settle into a range around $85 a barrel, supported more by recent OPEC+ production discipline than by active conflict risk. This has allowed inflation to ease, with the latest February CPI report showing a headline figure of 2.8%, moving closer to the Fed’s target. Given this drop in geopolitical tension, implied volatility in the energy sector has fallen significantly. The CBOE Crude Oil Volatility Index (OVX), which soared above 50 during the 2025 scare, is now trading in the much calmer mid-20s. Traders should consider strategies that benefit from this lower volatility, such as selling options premium on major energy ETFs. With inflation moderating, the market’s focus has shifted from rate hikes to the timing of the first Fed rate cut, which is now anticipated in the second half of 2026. This changing interest rate outlook removes a major headwind for non-yielding assets like gold. Long-dated call options on gold futures could be an effective way to position for upside as monetary policy begins to ease later this year. Create your live VT Markets account and start trading now.

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Malaysia’s industrial production rose 5.9% year-on-year in January, above the Bloomberg consensus of 5.0% and up from 4.8% in December. It was the strongest reading since July 2024. The rise was linked to export-focused manufacturing and demand for semiconductors. Output is expected to remain supported this year by global demand for both leading-edge and trailing-edge semiconductors, alongside investment in data centres.

Ringgit Stability And Oil Support

The Malaysian ringgit (MYR) has been relatively stable compared with other Asian currencies during a rise in oil prices. Malaysia’s net crude oil exporter position has helped provide support. Domestic refineries meet about 66% of Malaysia’s refined oil demand. Malaysia still imports petroleum products, which remains an area of exposure. The MYR may still be affected by weakness in regional currencies. It may be less exposed to further increases in oil prices than some regional peers. Looking back to early 2025, we were encouraged by industrial production hitting its strongest point since mid-2024, driven by a booming semiconductor sector. However, the latest data from January 2026 shows this growth has moderated to a more subdued 3.5% year-on-year. This suggests the initial export surge may be losing some momentum.

Implications For Hedging Strategy

The Malaysian ringgit benefited from its oil exporter status when Brent crude was pushing past $95 a barrel in late 2025. With prices now easing to around the $88 mark, that supportive cushion is diminishing, making the currency more sensitive to other factors. This shift in oil’s influence is a key change from the view we held over a year ago. Considering the softening industrial output and the pullback in crude prices, the MYR’s relative stability from 2025 appears less certain. The USD/MYR exchange rate has already drifted from 4.65 to 4.75 over the last year, showing this emerging weakness. We should therefore consider buying short-dated USD/MYR call options to hedge against or speculate on further ringgit depreciation in the coming weeks. Adding to this outlook is Bank Negara Malaysia’s recent commentary, which hints at potential rate cuts later in the year if growth continues to slow. This contrasts with the situation in early 2025 when stable rates were a given. This monetary policy divergence could further pressure the ringgit against regional currencies whose central banks remain more hawkish. Create your live VT Markets account and start trading now.

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Standard Chartered said the Offshore Renminbi (CNH) has been stable, with its Renminbi Globalisation Index (RGI) largely flat between November and January. This followed gains from August to October. The bank said the RGI has stabilised since mid-2025 after fluctuations linked to US–China tariff uncertainty. It linked the steadier reading to trade negotiations and a trade truce reached in November.

Offshore Renminbi Stability

It also reported a steady rise in Dim Sum bond issuance and higher Renminbi use in trade settlement. The bank associated these factors with the RGI’s stable performance. Standard Chartered attributed support for wider Renminbi use to efforts by mainland China and Hong Kong authorities under the 15th Five-Year Plan. It also pointed to a widening range of Renminbi assets as part of the backdrop. The stable performance of the offshore Renminbi (CNH) suggests that implied volatility should remain low in the coming weeks. We are seeing CNH implied volatility trading near 18-month lows, a sharp contrast to the elevated levels seen during the US-China tariff uncertainty in mid-2025. This low-volatility environment makes selling options, rather than buying them, an attractive strategy for generating income. Given the steady upward trend expected for the CNH, we see an opportunity in selling out-of-the-money puts on the USD/CNH pair. This strategy profits from both time decay and the currency’s stability or gradual appreciation. The ongoing policy support from the 15th Five-Year Plan provides a solid foundation for this view.

Rising Renminbi Global Usage

This outlook is reinforced by recent data showing increased global usage of the currency. SWIFT data released last week showed the Renminbi’s share of global payments reached a new high of 4.8% in February, up from 4.5% at the end of last year. This confirms the renewed appetite for Renminbi assets that we’ve been tracking since the trade truce was reached in November 2025. We also note that Dim Sum bond issuance has been strong, with over RMB 100 billion issued in the first two months of this year alone. This signals broad investor confidence that extends beyond just the currency markets. This continued demand for Renminbi-denominated assets should provide a supportive floor for the CNH. Create your live VT Markets account and start trading now.

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BNY reported an increase in demand for the Chinese yuan since the conflict began. It said this rise was not mainly due to hedge unwinding, and noted that Chinese assets, including equities, have held up. Hedging in the yuan is now about 30% below the rolling one-year average. BNY linked this to the clearing of previously underheld positions.

Yuan Volatility Remains Contained

BNY expects official management of the currency to keep realised volatility low. It also said near-term current-account surpluses across Asia-Pacific face risks from energy bottlenecks, while China is less exposed than peers in North and East Asia. Over time, BNY expects gradual reallocation towards Chinese bonds and equities if market access improves and capital market reforms continue. It added that foreign holdings of Chinese assets remain small compared with holdings of US assets, so larger interest in China would not materially alter overall US portfolio allocations. We have observed a surprising surge in Chinese Yuan buying that is not just from the unwinding of old hedges. With the USD/CNY pair holding steady below 7.20, it seems that the under-hedged positions we saw building in late 2025 have now been cleared. This creates a solid base of support for the currency moving forward. Official management of the yuan is limiting sharp swings, keeping volatility unusually low for the current global environment. One-month implied volatility on USD/CNY is now hovering near 4.8%, a significant drop from the highs seen at the end of last year. This backdrop makes selling volatility, through strategies like short strangles, an attractive proposition for traders who expect this stability to continue.

Capital Flows Support The Yuan

We are also seeing a gradual but consistent flow of capital back into Chinese assets, a trend confirmed by the nearly $12 billion that entered the country’s bond market last month. While these portfolio allocations are still small compared to holdings of U.S. assets, they provide a steady demand for the yuan. This supports the case for positions that benefit from a stable or gently appreciating currency. Looking back to the end of 2025, many market participants were positioned for a weaker yuan due to global trade jitters. With hedging levels still well below their one-year average, there is significant room for corporations and investors to increase their yuan holdings. This suggests that buying call options on the yuan could be a low-cost way to position for a potential catch-up in hedging activity. China’s relative insulation from the energy supply bottlenecks that affected its neighbors in North and East Asia last year continues to be a positive factor. The latest Caixin Manufacturing PMI data showing modest expansion reinforces this view of economic resilience. For derivative traders, this makes long yuan positions a potential hedge against renewed weakness in other Asian currencies. Create your live VT Markets account and start trading now.

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New Zealand’s Performance of Manufacturing Index (PMI) eased to 55 in February, down from 55.2 in the previous month. A reading above 50 indicates expansion in manufacturing activity, while a reading below 50 indicates contraction.

Manufacturing Activity Cools Slightly

We see the New Zealand manufacturing sector cooled slightly in February, with the PMI dipping to 55 from 55.2. While any reading above 50 still signals growth, this is the second consecutive month of slower expansion, a trend worth watching. This suggests the high interest rate environment may finally be weighing on business activity. For those trading the New Zealand dollar, this data weakens the case for further rate hikes by the Reserve Bank of New Zealand. Looking back at the RBNZ’s aggressive hiking cycle through 2025, this cooling could be exactly what they wanted, reducing pressure on them to act further. We could see increased demand for NZD/USD put options as traders hedge against or speculate on a lower kiwi dollar. This slowdown comes at a complex time, as the latest quarterly CPI data from late 2025 still showed inflation at a stubborn 4.1%, well above the RBNZ’s target. The central bank is now caught between fighting persistent inflation and supporting a potentially faltering economy, creating ideal conditions for options traders pricing in future volatility. A search of recent data shows that forward rate markets are now pricing in a less than 10% chance of another rate hike this year.

Global Headwinds And Trading Implications

We also have to consider the global picture, as recent data shows a continued manufacturing slowdown in China, New Zealand’s largest export market. This external headwind, combined with domestic cooling, supports a cautious to bearish stance on New Zealand’s economic outlook. Therefore, strategies like purchasing straddles on the NZX 50 index could be prudent, designed to profit from a significant market move as this uncertainty unfolds. Create your live VT Markets account and start trading now.

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HSBC sets out Asia as a destination for portfolio diversification away from the US. It links this to growth drivers, domestic demand, technology policy support and valuation levels. The bank points to Asia’s role in artificial intelligence, semiconductors and e-commerce. It also refers to government policy measures and fiscal spending connected to AI.

Asia Diversification And Growth Drivers

Mainland China is described as competing in AI, with innovation named as a growth driver in its 15th Five-Year Plan. Hong Kong is reported to have a revival in M&A activity and strong southbound inflows via Stock Connect. Japan and South Korea are reported to be making corporate governance reforms. These reforms are linked to higher dividend payouts and share buybacks. HSBC describes a “barbell approach” that combines growth opportunities with dividend income from high-quality companies. It also includes bond yields from the region. The bank says it is most positive on equities in Mainland China, Hong Kong, Singapore, South Korea and Japan. Within investment grade credit, it prefers Asian financials, Chinese hard currency bonds and Indian local currency bonds.

Options And Income Strategies In Asia

As investors look to diversify away from portfolios heavy in US assets, Asia stands out with its dynamic growth and robust domestic demand. We are seeing a clear path for upside in the region, driven by favorable technology policies and innovation. This suggests it is a good time to consider buying call options on key Asian indices to capture potential gains in the coming weeks. The momentum in artificial intelligence and semiconductors is a primary driver, with strong government backing providing a tailwind. China’s 15th Five-Year Plan is heavily focused on this, and Beijing recently confirmed an additional $50 billion for its National Integrated Circuit Industry Investment Fund. To gain targeted exposure, traders could explore options on ETFs that track the Asian technology and semiconductor sectors. In Japan and South Korea, corporate governance reforms initiated back in 2025 are now translating into higher shareholder returns. The Nikkei 225 recently pushed past the 45,000 mark, while we saw a 15% increase in share buybacks on the KOSPI in the final quarter of 2025. Selling covered calls on high-dividend Japanese and Korean blue-chips could be an effective strategy to generate income while participating in the upward trend. Hong Kong is also showing signs of a revival, with a pickup in M&A activity and strong southbound inflows via the Stock Connect. Deal volume in the city is up 20% year-over-year according to preliminary data for this quarter, which may lead to increased market volatility. This environment makes selling put options on select Hong Kong-listed companies an attractive way to collect premium. On the income side, we see value in Asian bonds, particularly those from India, whose inclusion in global bond indices was completed in 2025. This has continued to attract foreign capital, and the rupee has shown notable resilience, holding steady against the dollar even as the Fed signaled a pause last month. Using futures to establish a long position on the Indian rupee could be a strategic play on this continued strength. Create your live VT Markets account and start trading now.

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Taiwan’s February exports rose 20.6% year on year, below a Bloomberg consensus estimate of 35.5% and down from 69.9% in January. Even so, this was the 13th consecutive month of double-digit export growth, with results affected by Lunar New Year timing. Electronics exports stayed strong, supported by demand for leading-edge semiconductors during the current electronics cycle. AI-related shipments are expected to recover in coming months as holiday effects fade.

Us Export Share Hits Record

Exports to the US increased 33.7% year on year, compared with 151.8% in January. The US accounted for 32% of total exports, the highest share in 36 years. Taiwan’s statistics office warned that a prolonged Middle East conflict could affect the export outlook. Risks named included disrupted shipping routes, higher fuel prices, pressure on corporate profits, and weaker consumer sentiment. Net foreign inflows into Taiwanese equities turned positive for the first time in two weeks, totalling USD 1.2bn. The article was produced using an AI tool and reviewed by an editor. Taiwan’s thirteenth straight month of double-digit export growth signals a durable trend, even if it missed the highest estimates. The continued global demand for high-end electronics and AI components is the clear engine here. The recent USD $1.2 billion in net foreign inflows confirms that international investors are positioning for further gains.

Options Strategy And Hedging

The TAIEX has already climbed over 4% this month, pushing past the 21,000 mark, largely on the back of semiconductor stocks. We saw this AI-driven momentum build throughout 2025, and it appears to be accelerating now. Options on major tech ETFs therefore look attractive for capturing this continued upside. The most striking detail is that shipments to the US now account for the highest share of exports in 36 years. This tight link to the strong US economy provides a buffer against weakness elsewhere. We should consider long positions on the New Taiwan Dollar, as it has already strengthened past the 30.5 per USD level on this news. We must remain cautious of the warnings about conflict in the Middle East. With Brent crude already hovering around $95 a barrel, any escalation could quickly raise shipping and energy costs for Taiwanese companies. Buying call options on energy ETFs could serve as an effective hedge against our tech-focused positions. A prudent strategy would be to use bull call spreads on Taiwanese tech indices to profit from the momentum while limiting upfront cost. Looking back at the supply chain disruptions of 2025, we know how quickly shipping problems can rattle markets. Pairing these bullish trades with a small, out-of-the-money put on a broader Asian index provides a cheap hedge against geopolitical surprises. Create your live VT Markets account and start trading now.

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OCBC said the ringgit recovered partly as oil prices eased, the US dollar softened, and the renminbi firmed. The next moves for USD/MYR depend on Middle East tensions and any oil supply disruption. Developments linked to Iran were described as fluid, with focus on how long and how wide any disruption could be. If tensions ease and risks to shipping routes and production stay contained, the oil risk premium may unwind quickly.

Oil Risk And Ringgit Outlook

If tensions stay elevated, Iran has cited the possibility of USD200 per barrel oil, which could restrain risk appetite. In that case, the ringgit’s early-week recovery may stall. On the daily chart, bullish momentum was described as fading and the RSI has fallen. Support is at 3.9150/80, with a break lower pointing to 3.90 and 3.88, while resistance is at 3.9550 and 3.9760, with 3.9760 marked as the 50-day moving average. Looking back at our analysis from 2025, the focus was on the Ringgit holding firm below 3.98. Today, on March 13, 2026, we are facing a different reality with the USD/MYR trading near 4.7500. The core drivers remain similar, hinging on global risk sentiment and oil price volatility. The warnings from Iran in 2025 about $200 oil did not fully materialize, but we did see Brent crude peak near $120/bbl late last year before easing. With Brent now hovering around a still-elevated $95/bbl, Malaysia’s status as a net oil exporter provides some support for the Ringgit, but not enough to reverse the broader trend. This partial benefit is being offset by persistent geopolitical risk premiums.

Dollar Policy Divergence And Market Volatility

A significant factor now is the stronger US Dollar, a lesser concern when we were watching the 3.90 level. February’s US non-farm payrolls data came in stronger than expected at 275,000, causing markets to scale back bets on Federal Reserve rate cuts this year. This policy divergence is putting broad pressure on emerging market currencies, including the Ringgit. Given the conflicting signals, implied volatility on USD/MYR options has risen, with the 1-month tenor now priced near 8.5%. This environment suggests that simple directional bets are risky. Traders could consider strategies like long straddles to profit from a significant price move in either direction, capitalizing on the high uncertainty. The technical picture has shifted dramatically from the 3.9150 support we noted in 2025. We now see immediate support for USD/MYR at the 4.7200 level, with a break below potentially targeting 4.7000. Key resistance is forming at 4.7850, and a push through that level could challenge the year-to-date highs near 4.8000. Create your live VT Markets account and start trading now.

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USD/CNH traded in a narrow range near recent lows, with reduced bullish momentum and limited downside follow-through overnight. Market mood was affected by concerns that oil prices may stay elevated and by Iran-related risks, despite the IEA plan to release a record 400mn barrels from reserves. A firmer daily CNY fixing provided some support, but broader risk sentiment and the US Dollar’s direction remained the main drivers. Geopolitical news flow was described as prompting two-way trading.

Relative Performance Across Asian Currencies

On a relative basis, RMB was described as steadier than some oil- and risk-sensitive Asian currencies, with KRW and PHP mentioned as more exposed to oil and sentiment shocks. Technical levels cited were support around 6.85–6.86 and 6.8270, the February low. Resistance was placed at 6.89, the 21-day moving average, and 6.9280, the 50-day moving average. The USD/CNH pair seems to be caught in a consolidation phase, much like we saw in periods during 2025 when bullish momentum faded. Persistently high oil prices, with Brent crude now holding above $95 a barrel, and geopolitical risks are undermining broader sentiment. This environment is creating two-way trading flows. With the pair likely to remain range-bound in the near term, we see opportunities in selling volatility through options. Current one-month implied volatility is ticking higher towards 5.5%, which seems elevated if the pair remains contained. Strategies like iron condors or short straddles could allow us to collect premium while the market waits for a new catalyst.

Risk Management For Short Volatility Trades

We remember from last year how these quiet periods can precede sharp moves, as the market reaction to the IEA’s 2025 reserve release was short-lived. A sudden escalation of geopolitical tensions could quickly push the pair higher. Any short volatility positions must therefore be managed with disciplined risk parameters. The yuan may prove more resilient than its Asian peers that are more sensitive to oil price shocks, such as the Korean won. China’s latest Caixin PMI data showed modest expansion at 51.2, offering a degree of fundamental support not seen everywhere else. We could express this view through relative value trades, such as buying CNH against the KRW using forwards. For now, the technical levels suggest support for USD/CNH around the 7.12 mark, with notable resistance near 7.18. A decisive break outside of this range would signal the end of this consolidation. Until then, we expect headline risk from energy markets and geopolitics to be the main drivers. Create your live VT Markets account and start trading now.

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AUD/USD fell on Thursday after reaching 0.7187 on Wednesday, and it was trading near 0.7070 late in the US session. The US Dollar strengthened as the Middle East war intensified and demand increased for safe-haven assets. Oil prices rose after reports that the Strait of Hormuz remained closed and attacks continued in the Persian Gulf. WTI traded at $95 per barrel and Brent moved above $100.

Australian Inflation Expectations And Rba Policy

In Australia, consumer inflation expectations rose to 5.2% in March from 5% in February, the highest level since July 2023, according to the Melbourne Institute. The RBA lifted rates by 25 basis points in early February, taking the Official Cash Rate to 3.85%. Australia has no major data due on Friday. The US will publish the January PCE Price Index, January Durable Goods Orders, and a preliminary March Michigan Consumer Sentiment Index. On the 4-hour chart, price moved below the 20-period SMA near 0.7120 and tested the 100-period SMA around 0.7075, while holding above the 200-period SMA near 0.7050. The RSI dropped from above 60 to the mid-40s and Momentum turned negative. On the 1-hour chart, the pair stayed below the 20- and 100-period SMAs, with the 200-period SMA near 0.7068. Resistance sits at 0.7115–0.7120 then 0.7150, while support is at 0.7075 and 0.7000. We recall how this exact situation played out around this time in March 2025, when conflict in the Middle East sent oil prices soaring and pushed AUD/USD down from its peak. That sharp increase in volatility rewarded traders who used derivatives to bet on a stronger US Dollar. The flight to safety was a clear and profitable trend for those positioned correctly.

Policy Divergence And Options Positioning

Since that shock last year, the RBA did indeed hike rates further to 4.35% to combat the inflation wave but has been on hold for the last five months. Australian inflation has now cooled significantly from the 5.2% expectation seen in March 2025, with the latest quarterly CPI data for December 2025 showing a drop to 3.4%. This has taken the pressure off the RBA to continue its hiking cycle. The story now is more about policy divergence, as US core PCE inflation remains sticky at 2.9% as of January 2026, which is preventing the Federal Reserve from considering rate cuts. This has helped keep the US Dollar strong and has been a primary reason the AUD/USD has drifted down to the 0.6800-0.6850 range we see today. The market is pricing in fewer rate cuts from the Fed this year than was expected just a few months ago. In the coming weeks, we see limited upside for the Australian dollar, suggesting that selling call options could be a prudent strategy. For instance, selling AUD/USD call options with a strike price around 0.6950 allows traders to collect premium while betting that the pair will not break out to the upside. This strategy capitalizes on the current market sentiment and the ongoing strength of the US dollar. We must also watch for any sudden spikes in volatility, especially with WTI crude oil prices creeping back up towards $88 a barrel on fresh OPEC+ supply cut announcements. To protect against a sudden downturn, buying short-term put options with a strike price near 0.6750 can serve as a cheap hedge. This provides a safety net if geopolitical risks flare up again, mirroring the events of last year. Create your live VT Markets account and start trading now.

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