AUD/USD has held up better than other high-beta currencies as global equities have avoided a major sell-off. There was a hint of a sell-off about a week ago. Support has also come from Australia’s role as an energy exporter, with terms of trade up sharply. Reserve Bank of Australia policy is described as hawkish.

China Trade Data Supports The Aussie

Chinese February trade data added support, with imports surprising on the upside. Focus is on whether AUD/USD can break above the year-to-date high of 0.7150. We see the AUD/USD pair is again showing remarkable strength, holding its ground while other risk-sensitive currencies have faltered. This resilience is supported by fresh data from China’s General Administration of Customs, which showed February 2026 imports rising 2.5% year-over-year, beating forecasts. This is a positive signal for Australian commodity exports, particularly iron ore. The Reserve Bank of Australia’s firm policy stance remains a key pillar of support for the Aussie dollar. With Australia’s latest quarterly CPI print at 3.1%, still hovering above the RBA’s target band, there is little pressure on the central bank to signal rate cuts from the current 4.35% level. This creates a favorable interest rate differential outlook against the US dollar. For traders, this environment suggests buying call options on AUD/USD to position for a potential breakout. Implied volatility is not excessively high, with the CBOE Volatility Index (VIX) trading near 14.5, making option premiums relatively affordable. This strategy allows us to capture upside momentum while strictly defining our risk to the premium paid.

Possible Options Strategies

A more conservative play would be to structure a bull call spread, buying a call with a strike price near the current level and selling a call with a higher strike. This would cheapen the cost of the trade, offering a profitable outcome if AUD/USD grinds higher through the year-to-date highs near 0.7150. This is ideal if we expect a measured rally rather than a sharp, explosive move. We are also seeing an improvement in Australia’s terms of trade, a factor that helped the currency last year. Looking back at 2025, we saw weakness when LNG prices dipped, but they have since stabilized around $11 per MMBtu. This echoes the conditions of early 2022, when a similar combination of a hawkish RBA and strong commodity exports led to a significant AUD rally. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Higher oil and gas prices and Norges Bank’s daily krone purchases have supported the Norwegian Krone in January and February. Despite this, the krone’s moves over the past week have been modest compared with the sharp rise in oil prices in March. Further rises in oil and gas prices could increase demand for NOK as oil and gas companies buy kroner to pay petroleum taxes. Norges Bank is also buying NOK 600 million per day, which may add support during March.

Norges Bank Meeting Outlook

At its March meeting, Norges Bank is expected to revise its interest rate path higher, implying a probability of a rate rise. Any currency reaction to the meeting is expected to be short-lived. EUR/NOK could drop to 11 in March, but this is expected to be temporary. Over the next three months, EUR/NOK is forecast to move back towards 11.25. The article was produced with the help of an AI tool and reviewed by an editor. The Norwegian Krone has been strong lately, pushed by high oil prices and the central bank’s daily currency purchases. With Brent crude currently trading over $95 a barrel, up from around $85 at the start of the year, this support continues. As of today, the EUR/NOK exchange rate is hovering around 11.05, close to the key psychological level of 11.

Trading Strategy Considerations

Factors like ongoing petroleum tax payments, which require energy companies to buy krone, could push the EUR/NOK rate down toward 11 in the coming days. This is amplified by Norges Bank continuing its daily purchase program of NOK 600 million. This confluence of demand for the krone creates a window of opportunity for further, albeit brief, strength. We also anticipate a hawkish message from Norges Bank at its next meeting, especially with the latest CPI data for February showing inflation remains sticky at 4.2%, well above target. While the market has priced in some tightening, the bank’s revised interest rate path could be more aggressive than expected. However, we saw in 2025 that the krone’s positive reaction to monetary policy news was often very short-lived. For traders, any dip in the EUR/NOK pair towards the 11 level should be seen as a potential entry point for a reversal. This could involve buying EUR call options with expirations two to three months out. This strategy positions for a scenario where the krone’s current strength fades as predicted. We expect this period of krone strength to be temporary, viewing the fundamental drivers as fleeting. Our forecast anticipates that the EUR/NOK pair will drift back up towards the 11.25 mark by June 2026. This view relies on the pattern seen last year, where seasonal strength in the krone gave way to broader currency trends. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

US existing home sales rose to an annual rate of 4.09 million in February. This was higher than the forecast of 3.89 million. The result indicates stronger month-on-month sales than expected. It compares actual sales volume with the market estimate for the month.

Implications For Rates And Fed Expectations

This stronger-than-expected housing number suggests the economy has more momentum than we thought. It challenges the narrative that the Federal Reserve has a clear path to cutting interest rates. For derivatives traders, this means re-evaluating bets on lower rates in the near term. We should anticipate a sell-off in interest rate futures, pushing implied yields higher as the market prices out one or even two of the anticipated rate cuts for 2026. This data comes even as 30-year mortgage rates have remained sticky, hovering around 6.7% for the past month, according to recent Freddie Mac data. This shows buyers are adjusting to a higher-rate environment, giving the Fed more room to stay patient. In equity options, this news is bullish for specific sectors like homebuilders and banks. We expect to see increased call buying in ETFs like XHB and KBE as traders bet on continued strength. Looking back, we saw a similar trend in early 2024 when surprisingly strong economic data fueled rallies in cyclical stocks despite high rates.

Broader Market Volatility And Hedging

For the broader market, this is a mixed signal that could increase volatility. The fear is that a resilient economy, especially after last week’s CPI report showed core inflation holding at 3.1%, will force the Fed to keep policy tight for longer. Traders may respond by buying protective puts on broad market indices like the SPY to hedge against a potential downturn caused by these renewed rate concerns. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

The Canadian dollar was slightly stronger against a softer US dollar, with lower crude prices offset by improved risk appetite. Support also came from narrower 1-year swap spreads over the past week, while attention moved away from geopolitical tensions. USD/CAD stayed above an estimated fair value of 1.3375. The estimate was noted as potentially needing a day or so to reflect the past week’s volatility in the model. Downside risk for the Canadian dollar was described as limited, and scope for US dollar gains was also seen as limited within a consolidation that has been in place since the start of February. USD/CAD support was noted at 1.3530, with a bullish “hammer” signal on the daily chart and the low 1.35 area described as firm support in the near term. We are seeing the USD/CAD pair remain within a familiar consolidation pattern, echoing the sentiment from last year. Firm support continues to establish itself in the low 1.35s, a floor that has held despite recent volatility following last week’s mixed North American economic data. This reinforces the view that significant downside risk for the Canadian dollar is limited for now. Given the limited upside potential for the US dollar, this suggests an environment favorable for selling volatility. Implied volatility for USD/CAD 1-month options has compressed to just 6.1%, hovering near the lowest levels seen since early 2025. These conditions make strategies like selling strangles or deploying iron condors attractive, as they would capitalize on time decay while the pair struggles to break out. This outlook is reinforced by central bank signaling, with both the Bank of Canada and the Federal Reserve appearing to be in a holding pattern. Last month’s Canadian inflation print came in at an annualized 2.7%, while the latest US PCE data showed similar moderation, removing any immediate pressure for rate adjustments. This policy alignment supports the pair remaining range-bound for the coming weeks. We observed a similar dynamic through much of the second half of 2025, where the pair traded within a tight three-cent range for nearly four months before a breakout. The primary risk to this strategy remains a significant deviation in upcoming employment data from either country, which could force a central bank to shift its tone. Therefore, any positions should be structured with defined risk to guard against a sudden spike in volatility.

Start trading now – Click here to create your real VT Markets account

TD Securities reported weak gold demand after the start of the war, with over-the-counter interest fading after the first trading session. It said recent trading volumes look like a summer lull. The firm said leveraged participation has declined, linked to modest deleveraging by quant funds. It also said gold ETF holdings have fallen.

Demand Signals And Positioning

TD Securities added that the largest traders in SHFE gold have modestly reduced long positions. It said retail demand has eased since what it described as unprecedented purchases in January. It listed three factors behind the lack of inflows: fewer expectations for US Federal Reserve rate cuts, reduced gold purchases by Middle Eastern nations, and broader institutional ownership. The firm based the ownership point on analysis of 13F filings, stating gold is held by a large majority of institutional holders. The expected safe-haven buying in gold has failed to appear, despite the recent geopolitical shock. We see the market is far more focused on the Federal Reserve’s intentions than on global conflict. The latest core CPI data for February 2026 came in at a stubborn 3.1%, forcing markets to price out any rate cuts until at least the third quarter. This explains why money is not flowing into gold, with trading volumes looking more like a quiet summer day than a crisis response. We’ve seen major ETFs like the SPDR Gold Shares (GLD) experience net outflows of over $1.5 billion in the first two months of 2026 alone. This lack of new money from large funds and retail traders is putting a firm ceiling on prices. For derivative traders, this suggests that strategies benefiting from a sideways or downward trend are more logical right now. With gold trading around $2,250 an ounce, selling out-of-the-money call options or establishing bear call spreads above the $2,300 resistance level could capture value from this stagnant price action. The low participation means a powerful, unexpected rally is unlikely without a significant change in Fed policy.

Implications For Gold Prices

This environment reminds us of what we observed looking back at 2022, when an initial war premium was quickly erased as the market’s attention shifted back to aggressive rate hikes. The “debasement” narrative that drove significant buying through 2025 is now unwinding as the dollar stays strong. This makes holding a non-yielding asset like gold less appealing for now. We must also recognize that gold is no longer a fringe asset, with most large institutional investors already holding their desired positions. This broad ownership offers a floor of support but also limits the potential for the kind of explosive rallies driven by new buyers. This suggests that price moves will likely be more contained in the weeks ahead. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Switzerland’s inflation is near zero at 0.1% year-on-year, while the Swiss National Bank (SNB) keeps its policy rate at 0.00%. The SNB is monitoring the Swiss franc (CHF) as safe-haven demand can push it higher. Swiss consumers have lower exposure to energy price rises than those in the euro area because energy is a smaller part of the consumer price index (CPI) basket. Energy accounts for 5% of Swiss CPI versus 9% in the euro area, and Swiss electricity supply relies heavily on hydropower. Imported fossil fuels still matter for Switzerland’s industrial sector. Even so, the CPI structure and electricity generation mix can limit how higher oil and gas prices feed into inflation. CHF appreciation can increase the risk of deflation by lowering import prices. The SNB’s main options are foreign exchange market intervention or a move to a negative policy rate. The SNB has said it is increasingly prepared to intervene in the foreign exchange market. It has also indicated that a return to negative rates faces a high bar. Looking back at the analysis from 2025, we can see the primary concern was the Swiss National Bank’s readiness to fight against a strengthening franc due to safe-haven demand. The core issue of near-zero inflation meant the SNB had a clear reason to intervene in currency markets. This dovish stance, favouring intervention over a return to negative rates, set a distinct tone for the market. As of early March 2026, this fundamental picture has not changed much, only intensified. The latest data from February showed Swiss inflation at just 0.6%, which, while higher than last year, remains far below the SNB’s target and significantly lower than the Eurozone’s recent 2.4% figure. This persistent inflation gap reinforces the view that the SNB will maintain its policy rate at 0.00% and continue to see any significant CHF appreciation as unwelcome. The EUR/CHF exchange rate has recently tested the 0.9450 level, a low not seen since the brief dip in late 2025, driven by renewed market volatility. We saw the SNB’s sight deposits increase in February 2026, a classic indicator that they were actively buying foreign currency to weaken the franc, just as they hinted they would. This confirms their verbal commitments from last year are now being put into practice, creating a soft floor for the currency pair. For derivatives traders, this suggests a clear opportunity in the coming weeks to position against further significant CHF strength. Selling out-of-the-money EUR/CHF puts or implementing put spreads could be an effective strategy to collect premium, based on the belief the SNB will defend levels below 0.9400. The implied volatility on these options may offer attractive selling opportunities, as the market prices in the central bank’s intervention risk. Alternatively, buying short-dated EUR/CHF call options provides a direct, limited-risk way to profit from a potential sharp rebound triggered by more aggressive SNB intervention. Given the SNB’s clear communication, any move lower in EUR/CHF will likely be met with resistance, making bullish strategies on the pair compelling. This approach bets on the central bank’s credibility and its repeated actions to cap the franc’s appreciation.

Start trading now – Click here to create your real VT Markets account

GBP/JPY rose on Tuesday as the Yen weakened amid concern that the US-Iran conflict could disrupt shipping through the Strait of Hormuz and affect energy supplies to Japan. The pair traded around 212.25, near a one-month high. Japan sources about 95% of its crude oil imports from the Middle East, with roughly 70% moving through the Strait of Hormuz. Any extended disruption could weigh on Japan’s economic growth.

Strait Of Hormuz Risk And Yen Sensitivity

Oil markets have carried a geopolitical risk premium, although prices fell on Monday, with WTI down 5.84% and Brent down 3.69%. The drop followed comments from US President Donald Trump that the war was “very complete, pretty much”. G7 countries are discussing a coordinated release of oil reserves via the International Energy Agency. Japan’s Trade Minister Ryosei Akazawa said Japan supports the plan, and G7 Energy Ministers are due to meet later on Tuesday. Oil prices remain elevated as airstrikes continue across the Middle East, raising inflation concerns for central banks. Sterling found modest support as markets reduced expectations of a Bank of England rate cut in March, previously priced at about an 80% probability, while the Bank of Japan is also seen as potentially delaying further rate rises. Japan’s GDP grew 0.3% quarter-on-quarter in Q4, up from 0.1%, and annualised GDP rose to 1.3% from 0.2%, above the 1.2% forecast. UK BRC like-for-like retail sales rose 0.7% year-on-year in February, down from 2.4% and below the 2.3% forecast.

Market Backdrop And Rate Divergence

Looking back to early 2025, we saw the Yen weaken significantly due to fears over energy supplies from the Middle East. This dynamic pushed GBP/JPY towards the 212.00 level as Japan’s heavy reliance on imported oil became a key vulnerability. The market priced in a substantial geopolitical risk premium at that time. However, the coordinated release of strategic reserves by the International Energy Agency last year helped calm the market, and we saw Brent crude prices retreat from their highs. By late 2025, prices had stabilized, which reduced the immediate pressure on the Yen. Currently, Brent is trading around $82 a barrel, showing the initial panic has subsided for now. On the Sterling side, the expected Bank of England rate cut in March 2025 never materialized. UK core inflation remained stubbornly above 3% for the second half of the year, according to the Office for National Statistics, forcing the central bank to maintain a restrictive stance. This continued policy divergence has provided underlying support for the Pound. Conversely, the Bank of Japan finally ended its negative interest rate policy in January of this year, a major policy shift we had been anticipating. While the hike was small, moving the overnight call rate to a range of 0.0% to 0.1%, it signaled a new era for monetary policy. This has introduced a strengthening force for the Yen that was not a factor a year ago. This creates a more complicated picture for the coming weeks, unlike the clear upward trend we saw in early 2025. Implied volatility on GBP/JPY options has increased, with the 1-month contract now pricing in larger swings than it did during the oil scare. Traders should use options to trade this expected choppiness, rather than taking a simple directional bet. With GBP/JPY currently trading near 208.50, traders should consider strategies like long straddles, which profit from a large price move in either direction before options expire. Be aware of the risk of volatility crush if the pair consolidates instead. The key is that the clear, one-sided trade of last year is over. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

China’s metal imports were mixed early in the year. Iron ore imports rose 10% year-on-year in January and February, despite lower steel output. China’s imports of copper ore and concentrates increased 4.9% year-on-year. Volumes averaged about 2.5 million tonnes per month, only slightly below recent months, with the Chinese New Year typically reducing early-year imports.

Raw Copper Imports Fall

Imports of raw copper and copper products fell 16% year-on-year. These shipments averaged about 350 thousand tonnes per month, below recent months. Import patterns point to rising copper production in China. This comes even as treatment and refinery charges stayed negative in February, meaning smelters paid mines a premium to refine copper. Supply risks are also noted for Congo, which accounts for 14% of global copper ore output. A blockage linked to Iran has limited sulphur exports from the Gulf through the Strait of Hormuz, which may reduce sulphuric acid availability and disrupt mining in the coming weeks. We are seeing a clear conflict between robust demand signals and a growing supply risk. China’s manufacturing PMI beat expectations at 51.2 for February, and their imports of copper ore are up nearly 5% from last year, indicating smelters are ramping up production. This is confirmed by spot treatment charges, which have fallen to record lows below -$5 per tonne as smelters pay a premium to secure scarce raw material.

Watch Congo Supply Developments

The main catalyst in the coming weeks will be the supply situation in the Democratic Republic of Congo, which is responsible for 14% of global copper output. An ongoing blockage of sulphur exports from the Gulf directly threatens the supply of sulphuric acid needed for copper extraction in the region. Early reports for February 2026 already show a 2% dip in the DRC’s copper exports, suggesting these constraints are becoming a reality. This fundamental picture supports taking a bullish position on copper futures and options. We should look at buying near-term call options, focusing on the May and June 2026 contracts to capture potential price spikes from any further news of supply disruptions. This approach offers a defined-risk way to capitalize on the upside momentum. Given that LME copper is currently consolidating around the $9,550 per tonne mark, a bull call spread might be a more prudent strategy to lower the entry cost. This would involve buying a call option and simultaneously selling another call with a higher strike price for the same expiration. This strategy would benefit from a moderate price increase, which seems highly plausible. We saw a similar setup unfold during the second half of 2025 when concerns over production in Peru and Chile drove prices higher amid steady demand. That rally demonstrated how quickly the market reprices when a major supply source is threatened against a backdrop of solid consumption. The current situation with the Congo feels very familiar to that period of upward momentum. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Market volatility around Bank of Canada rate expectations rose in March, linked to the conflict in Iran. Pricing briefly shifted from potential rate cuts to the chance of rate rises, with markets at one point pricing hikes in 2026 rather than cuts. National Bank of Canada expects the Bank of Canada to keep rates unchanged through 2026. This view assumes the Bank will look past higher petrol prices driven by oil, if Canada’s CPI stays within the 1–3% control band.

Bank Of Canada Rate Outlook

The note also points to weak growth conditions and remaining slack in the labour market. These factors are cited as supporting a steady policy stance even if oil prices remain high. The article states it was produced with the help of an AI tool and then reviewed by an editor. Volatility in Bank of Canada rate expectations has increased lately because of the conflict in Iran. Just a few weeks ago, the market was thinking about rate cuts, but now it is pricing in the possibility of hikes. We see this as a temporary swing driven by headline fear rather than a fundamental shift. We think policymakers will look through the recent jump in gasoline prices, which pushed February’s headline CPI to 2.9%. The more important core measures, however, remained stable at 2.4%, which is comfortably inside the Bank’s control band. This gives them room to wait and see, much like they did during the oil price spikes back in 2025.

Implications For Curve And Volatility

The case against hiking is strengthened by the latest jobs report, which showed the unemployment rate ticking up to 6.4% last month. Looking back, we saw GDP growth in the final quarter of 2025 was nearly flat, confirming a trend of uninspired growth. With this economic backdrop, a rate hike seems very unlikely. This suggests that the front-end of the curve, which is now pricing in a risk of hikes, is overdone. Traders could consider selling options that profit from a rate increase, as volatility is currently elevated. The current pricing in the OIS market looks like an opportunity to position for the Bank to remain on hold through 2026. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

The United States Redbook Index (year-on-year) fell to 6.2% on 6 March, down from 7% previously. The data shows a 0.8 percentage point decrease from the prior reading.

Consumer Spending Signals

The slowdown in the Redbook index to 6.2% is an early warning that consumer spending might be cooling. For us, this suggests the impact of sustained high interest rates is finally filtering through to the average shopper’s wallet. We should therefore be cautious about sectors that rely heavily on consumer discretionary spending. This data point creates a tricky situation when viewed alongside other recent numbers. The February 2026 jobs report showed a still-solid gain of 215,000 jobs, but the most recent CPI inflation reading for February came in stubbornly high at 3.4%. This combination of slowing growth and sticky inflation makes the Federal Reserve’s path forward uncertain. Given this, we are looking at purchasing puts on retail-focused ETFs as a potential hedge over the next few weeks. This strategy allows us to protect against a potential drop in retail stocks if upcoming earnings guidance reflects this consumer weakness. It is a defined-risk way to position for a potential downturn in this specific sector. Looking back from our 2025 perspective, we recall the market volatility in 2023 when the Fed was aggressively hiking rates. Those events taught us that signs of consumer weakness can precede broader market downturns. This Redbook number feels like one of those early signals that we need to take seriously.

Portfolio Protection Approach

Consequently, we are also considering protective strategies for broad market indices like the S&P 500. With the VIX volatility index hovering near a low of 14.5 last week, buying call options on the VIX could be an inexpensive way to insure the portfolio against a sudden market shock. This positions us for a potential increase in market anxiety if more weak data follows. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account