USD/THB rose 0.3% to 32.65 and has trended higher since early March as energy prices increased and gold prices eased. The baht is down 3.5% against the US dollar year-to-date, versus a -1.3% average move for Asian currencies ex-Japan. February exports grew 9.9% year-on-year, below a Bloomberg consensus of 17.0%, and down from 24.4% in January, the weakest growth in three months. The Trade Policy and Strategy Office (TPSO) reported two-sided risks to export growth.

Key Trade And Currency Drivers

Imports rose 31.8% year-on-year, above a Bloomberg consensus of 25.0%, and up from 29.4% in January, the fastest since December 2021. Capital goods increased 49.3% versus 29.5%, and intermediate goods rose 53.3% versus 20.3%, the strongest since August 2021. Thailand’s trade balance stayed in deficit at about -USD2.8bn, compared with a Bloomberg consensus of +USD1.0bn, and versus -USD3.3bn in January. The Ministry of Commerce forecast 2026 exports in a range of -3.1% to 1.1%, with a review due in April. TPSO linked the outlook to the war’s effects and whether US importers bring forward shipments before a 10% global tariff expires in July. The article notes it was produced using an AI tool and reviewed by an editor. The Thai Baht is clearly showing weakness against its regional peers, making it a target for bearish positions in the coming weeks. A persistent trade deficit and higher global energy costs are the main drivers behind this underperformance. We should therefore see the current upward trend in the USD/THB pair as likely to continue. With Brent crude futures consistently trading above $95 a barrel, Thailand’s import bill will remain inflated, putting further pressure on its current account. The interest rate differential is also a key factor, as the Bank of Thailand held its policy rate at 2.50% in its February 2026 meeting while the US Federal Reserve maintains a hawkish stance. This environment makes holding US dollars more attractive than holding the Baht.

Options Strategy And Volatility Setup

We see an opportunity in purchasing USD/THB call options with expirations in the next one to two months, targeting a move towards the 33.00 level. This strategy offers a defined risk while capitalizing on the current momentum we are observing. This pattern is reminiscent of what we saw back in mid-2022, when a spike in energy costs similarly pushed the pair above 36. While the surge in capital and intermediate goods imports is worsening the short-term trade balance, we must watch it closely. This data suggests businesses were investing heavily after the political situation stabilized in late 2025, which could signal a future rebound in manufacturing and exports. A sudden improvement in export data could quickly reverse the Baht’s downward trend. The wide range of export forecasts, from -3.1% to +1.1%, signals significant market uncertainty, which we can use to our advantage. Given the two-sided risks mentioned, including the US tariff expiry in July, implied volatility may be underpriced. This suggests strategies that benefit from a large price swing, such as buying options, could be profitable. Create your live VT Markets account and start trading now.

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The Bank of Korea’s manufacturing Business Survey Index (BSI) fell to 71 in April. It was 77 in the previous month. The change shows a lower level of sentiment among manufacturing firms in April. The release reports a 6-point decline month on month.

Manufacturing Sentiment Turns Lower

This falling manufacturing sentiment is a clear bearish signal for the South Korean economy. We should anticipate downward pressure on key industrial and tech stocks in the coming weeks. The drop to 71 indicates that pessimism is not just present but actively worsening among manufacturers. For equity traders, this suggests it is time to consider protective put options on the KOSPI 200 index. Looking back at the last major manufacturing dip in 2023, we saw foreign outflows accelerate, a pattern that could easily repeat. Specific sectors like semiconductors and auto manufacturing are particularly vulnerable to this negative outlook. This data also points to a weakening Korean Won, making call options on the USD/KRW pair an attractive strategy. With the US Federal Reserve maintaining a relatively firm monetary policy through most of 2025, any sign of domestic weakness in Korea will likely push the currency pair higher. We have seen USD/KRW test the 1,380 level several times in the past year on similar concerns. The increased uncertainty should lead to higher market volatility. We can expect the VKOSPI index to rise from its current lows as investors react to the negative forecast. Buying futures on the volatility index or setting up strangles on major index ETFs could profit from the anticipated increase in price swings. This survey result aligns with other recent data points that have concerned us. We saw that semiconductor exports, which are a vital engine for the economy, fell by 4.2% month-over-month in February 2026 after a brief recovery period. This BSI figure confirms that the weakness is not isolated and is expected to continue into the second quarter.

Implications For Rates And Policy

Finally, this sharp decline in sentiment will likely force the Bank of Korea to adopt a more dovish tone. Any expectations of a rate hike in the near future have now significantly diminished. This may create opportunities in interest rate swap or bond futures markets, betting that rates will remain steady or even be cut later in the year if conditions worsen. Create your live VT Markets account and start trading now.

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AUD/USD fell for a third day on Thursday and traded below 0.6900, down 0.76%, as risk sentiment weakened on Middle East escalation concerns and doubts over a ceasefire between the US and Iran. Wall Street closed lower, while rising US Treasury yields supported the US Dollar. The US Dollar Index rose 0.37% to 100.00. Energy prices climbed after the war led to a quasi-closure of the Strait of Hormuz; year-to-date, WTI is up 64% and petrol is nearly 80%.

Us Labor Market Signals

US Initial Jobless Claims for the week ending 21 March increased from 205K to 210K, in line with expectations and the lowest in nearly two years. The four-week average slipped from 210.75K to 210.5K, pointing to a steadier labour market. AUD/USD had moved towards 0.7100 after the Reserve Bank of Australia’s rate rise, but then reversed as demand for the US Dollar grew. The pair traded around 0.6892; resistance is near 0.7000 and 0.7070, with support near 0.6890 and 0.6800. The RBA targets inflation of 2–3% using interest rates and can also use quantitative easing or tightening. Iron ore is Australia’s largest export at $118 billion a year (2021 data), and China is its main destination. We remember how last year, around this time, the flare-up in the Middle East sent the US Dollar soaring and crushed the Aussie. Today, the situation is less of a crisis and more of a tense standoff, which changes how we should view risk. The AUD/USD, now trading near 0.6750, reflects this new, uneasy calm.

Options Strategies And Volatility

The massive spike in WTI oil prices we saw in early 2025 is no longer the main driver, with crude now stable around $85 a barrel. This removes some of the intense safe-haven demand for the US Dollar that previously hammered the Aussie. Traders should consider that a sudden shock to oil is less likely now, making options strategies with defined risk, like vertical spreads, more attractive than outright short positions. The Reserve Bank of Australia’s recent pause, holding the cash rate at 4.50%, shows they are less aggressive than they were this time last year. This contrasts with the US Federal Reserve, which continues to signal a “higher for longer” stance on rates, keeping the US dollar fundamentally strong. This policy divergence suggests a cap on any significant AUD/USD rallies, making selling call options above 0.6900 a potential strategy. We must also focus on China, which remains a weak spot for the Australian dollar’s outlook. Recent data showing China’s manufacturing PMI dipping to 49.8 indicates a sputtering recovery for Australia’s largest trading partner. This underlying weakness supports a bearish to neutral outlook, suggesting that buying puts on the AUD/USD could offer good protection against further disappointment from China. Last year, the pair broke down decisively below 0.6900; today, that level acts as significant resistance. Implied volatility has decreased since the peak of the crisis in 2025, making options cheaper. Given the strong resistance and weak fundamentals, purchasing put options with a strike price around 0.6700 could be a calculated way to position for a potential slide towards the 0.6500 level in the coming weeks. Create your live VT Markets account and start trading now.

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US President Donald Trump said on Thursday that planned US strikes on Iran’s energy plants would be delayed by 10 days, to April 6 at 08:00 PM Eastern Time. The earlier deadline had been Friday, and a correction issued on March 26 at 20:44 GMT stated the date was April 6, not April 10. After the announcement, gold (XAU/USD) rose from about $4,345 to $4,412 before easing to around $4,404. At the time of writing, gold was still down by nearly 2.20%.

Market Reaction And Timing

The US Dollar Index (DXY), which measures the dollar against six currencies, reduced its gains. It moved from a daily high near 100.01 to about 99.86. With the US delaying strikes on Iran until April 6th, we are now in a ten-day window of heightened uncertainty. This pause does not remove the risk but simply concentrates it on a specific date. Derivative traders should be focused on pricing in the binary outcome of either further de-escalation or a sudden military conflict. The most direct impact will be on crude oil, as over a fifth of the world’s daily supply passes through the nearby Strait of Hormuz. We saw the oil volatility index, or OVX, spike above 45 during similar tensions last year in 2025, and it’s currently hovering around 38. Buying straddles or strangles on WTI or Brent crude futures with expirations just after April 6th is a direct way to trade the expected price swing, regardless of the direction. Yesterday’s volatile moves in gold and the US Dollar Index show that safe-haven assets will be extremely sensitive to news over the next week. Implied volatility on gold options is already ticking up, with the GVZ index climbing 4% in the last 24 hours. We believe buying protective call options on gold and put options on the dollar are logical hedges against a breakdown in talks.

Equity Volatility And Portfolio Hedges

This specific geopolitical risk adds a new layer of anxiety to the broader market. While the VIX is still relatively low at 15.2, we have seen it double in a matter of days during past international crises. Hedging broader equity portfolios with cheap, out-of-the-money SPY puts expiring in mid-April could be a prudent move to protect against a shock to the system if the situation deteriorates. Create your live VT Markets account and start trading now.

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Standard Chartered has updated its South Korea forecasts after oil prices rose due to Middle East tensions. It now expects 2026 CPI inflation of 2.4%, up from 2.0%, based on oil averaging USD 85 per barrel. The bank lowered its 2026 growth forecast to 1.9% from 2.0%. It linked this to higher import costs, a wider trade deficit, and weaker economic activity in an import-dependent energy economy.

Forecast Implications

The update also noted fiscal support, including a proposed KRW 25tn supplementary budget. For 2027, the bank kept both growth and CPI inflation forecasts at 1.8%. Downside risks for 2027 were described as a longer conflict and oil prices staying higher for longer. The article was produced using an AI tool and reviewed by an editor. With the 2026 inflation forecast now at 2.4%, the market’s expectation for Bank of Korea rate cuts is fading. We should consider positions in Korea Treasury Bond futures that bet on yields remaining elevated or rising further. The Bank of Korea’s more hawkish tone in its recent meeting reinforces this view, making any rate cuts before the third quarter highly unlikely. The forecast hinges on oil averaging $85 a barrel, a level Brent crude is currently trading near. Looking back at the price volatility we saw in the final quarter of 2025, this sustained high price is now being baked into inflation expectations. Long positions in crude oil futures or buying call options could be a direct way to trade this ongoing tension.

Market Positioning

The latest February CPI data already showed a stubborn 2.8% reading, which lends credibility to this new, higher forecast for the year. This persistent inflation will pressure the central bank to delay any easing, even as growth forecasts are trimmed. This divergence between rising inflation and slowing growth creates a challenging environment. This revision of 2026 growth down to 1.9% signals trouble for corporate earnings, especially for South Korea’s energy-intensive manufacturers. This creates an opportunity to short KOSPI 200 index futures or buy put options as a hedge against a potential market downturn. These headwinds from energy costs will likely cap any significant market upside in the coming months. Higher energy import costs are also pressuring South Korea’s trade balance, which will likely weaken the won. We have already seen the USD/KRW pair climb from around 1300 in mid-2025 to its current level near 1380. Buying USD/KRW non-deliverable forwards (NDFs) appears to be a sound strategy to position for further depreciation of the won. Create your live VT Markets account and start trading now.

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ABN AMRO has updated its China outlook after the Iran conflict. It now forecasts GDP growth of 4.6% in 2026 (down from 4.7%) and 4.5% in 2027 (up from 4.4%). Early-2026 data showed firmer activity, led by fixed investment returning to growth in January and February at +1.8% year on year. This followed a -3.8% contraction in 2025, with infrastructure spending supported by local government bond issuance, alongside faster manufacturing investment and a softer decline in property investment.

China Outlook After Iran Conflict

China’s role as the largest energy importer and as a main destination for shipments through the Strait of Hormuz links it to the conflict’s effects. The bank notes mitigating factors such as high oil stocks and access to Russian energy, while pointing to higher downside risks via energy prices and weaker global demand. The bank adjusted its quarterly view to a stronger Q1 and weaker Q2. It also raised CPI forecasts for 2026 and 2027, as higher energy costs are expected to lift inflation and delay further monetary easing. Before the conflict, CPI inflation reached 1.3% year on year in February, a two-year high. Core inflation was 1.8% year on year, a seven-year high, while annual producer price deflation continued to ease. Given the recent events, we see that the Iran conflict has introduced significant uncertainty, directly impacting oil prices and global shipping. We saw Brent crude futures jump to over $100 a barrel earlier this month, a level not consistently seen since 2022, which suggests we should anticipate higher volatility. This makes buying options to protect against sharp market swings a prudent strategy for the coming weeks.

Derivatives Ideas For China Risk

The spike in energy costs is a primary concern, as it feeds directly into inflation and complicates monetary policy. We saw core inflation hit a seven-year high of 1.8% in February, and the People’s Bank of China responded by holding its key policy rate steady in its latest decision. This pause in easing means we should consider using interest rate swaps to position for borrowing costs remaining higher for longer than we expected at the start of the year. While China’s fixed investment data for January and February was strong, showing a 1.8% rise after contracting through much of 2025, the outlook for the second quarter is weaker. The conflict’s impact on global demand will likely hit Chinese exporters, creating a headwind for the broader economy. Therefore, we could look at buying put options on major Chinese equity indices like the HSCEI as a hedge against a potential downturn this spring. There is a clear split between sectors, which presents opportunities for pairs trades. The government’s push in infrastructure spending, which is driving the rebound in investment, supports a bullish view on industrial commodities like copper. In contrast, the property sector continues to struggle, so we could pair a long position in a materials-focused ETF with a short position in a real estate developer. The Chinese yuan faces conflicting pressures, which is ideal for volatility-based currency derivatives. A higher energy import bill is negative for the currency, but delayed interest rate cuts offer support, creating a state of tension. This suggests that using an options strategy like a long straddle on the USD/CNY pair could be effective, as it would profit from a significant price move in either direction without needing to predict which force will win out. Create your live VT Markets account and start trading now.

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Intel reached a weekly topping tail high at $54.60, then fell about 18% to around $44.57–$44.63. The price is now below an inclining trendline that has shaped the recent consolidation. A weekly topping tail marks a week where price rose but closed much lower, showing selling pressure by the end of the week. This pattern is often linked with further downside before price can challenge the high again. The key level now is the inclining trendline, which has acted as both support and resistance. A weekly close above it would put the $54.60 level back in focus. If price holds above the trendline, resistance levels cited are $54.60, then $57.61, and then $62.70. If price breaks down through the trendline, support levels cited are $40.49 and then $36.13. Intel Corporation (NASDAQ: INTC) designs and makes microprocessors, chipsets, and integrated circuits used in PCs, data centres, and connected devices. The setup remains dependent on weekly closes rather than short-term moves. We see Intel stock currently pinned beneath a critical inclining trendline, struggling around the $44.57 level after the sharp 18% rejection from its late 2025 high. Recent industry reports published this quarter show a continued weakness in enterprise PC demand, providing a fundamental reason for the stock’s current hesitation. This technical and fundamental picture presents a clear decision point for us. For those of us leaning bearish, the strategy is to view this trendline as a ceiling. Buying near-term put options, like those for the April or May 2026 expiration with strike prices around $42.50 or $40.00, would directly profit from a failure at this level. This aligns with the scenario where the stock moves toward its first major support target at $40.49. This cautious stance is justified when we recall the multi-year production delays Intel faced with its 10nm process earlier this decade, which created significant stock underperformance. While the company’s execution has improved, the semiconductor industry remains fiercely competitive, with AMD reportedly gaining share in the high-margin server market in the fourth quarter of 2025. Current implied volatility is not at extreme highs, suggesting protective puts can be bought without overpaying. Conversely, a sustained break above this inclining trendline on a weekly closing basis would signal that the bearish pressure is fading. This would be our trigger to initiate bullish positions, such as buying call options dated for June or July to allow time for a potential retest of the $54.60 high. The 18% pullback has built up energy, and a breakout could be powerful. This more optimistic view is supported by recent news of Intel’s foundry business landing a significant client for its advanced 18A process node, boosting confidence in its long-term turnaround. Furthermore, analyst earnings estimates for the second half of 2026 have remained stable over the past month, suggesting Wall Street believes the company can meet its targets. A move back into the upper part of the consolidation range would reflect this budding optimism. Given the stock is at such a clear crossroads, using options spreads is a sensible approach to manage risk. A bull call spread or a bear put spread allows us to make a directional bet while defining our maximum loss. This is especially useful if Intel simply continues to chop sideways around the trendline without a decisive break in the coming weeks.

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Banco de Mexico (Banxico) cut its main interest rate to 6.75% from 7% on Thursday. The decision was by a 3–2 vote, with Deputy Governors Jonathan Heath and Galia Borja voting to keep rates unchanged. Banxico said inflation risks are trending upwards despite the rate cut. It expects inflation to return to its 3% target, with a plus or minus 1% range, in Q2 2027, and it will assess further reference rate changes.

Inflation Outlook And Policy Stance

The bank said its current monetary policy stance is adequate to face risks linked to an extension and escalation of the Middle Eastern conflict. It kept its 2026 headline inflation forecast unchanged at 3.5%. Banxico projected underlying inflation at 3.4% by the end of 2026. It also expects both headline and underlying inflation to reach 3% by the end of 2027. Banxico is Mexico’s central bank, tasked with preserving the value of the Mexican peso (MXN) and setting monetary policy. Its main tool is the interest rate, with higher rates usually supporting the peso and lower rates often weakening it. Banxico meets eight times a year, usually a week after the US Federal Reserve. Its decisions are influenced by Fed policy and the interest rate gap with the US.

Market Implications For The Peso

The unexpected rate cut to 6.75% introduces significant uncertainty for the peso, challenging the profitable carry trade strategy we have relied upon. While the move is bearish for the currency, the interest rate spread with the US Federal Reserve, which sits at 4.25%, remains attractive at 250 basis points. This differential may provide a floor for the peso in the near term. The split 3-2 vote signals a divided central bank, meaning the path for future cuts is not guaranteed. This division suggests that implied volatility in USD/MXN options will likely rise in the coming weeks. We should therefore consider strategies like long straddles to capitalize on potential sharp price swings in either direction. We must now pay extremely close attention to incoming inflation data before the next meeting. The most recent report for February 2026 showed headline inflation was still sticky at 4.1%, well above the central bank’s year-end 3.5% projection. Another high reading could easily cause the two dissenting members to persuade another to pause the cutting cycle. This contrasts sharply with the environment in 2025, when we saw Banxico’s high rates attract significant capital while the Fed began its own easing. Yesterday’s cut, despite inflation risks, is the first clear signal that the peak of the carry trade may be behind us. Therefore, hedging long peso exposure with put options on the currency is now a prudent consideration. Create your live VT Markets account and start trading now.

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The US Dollar Index rose about 0.30% on Thursday, moving from around 99.56 to near 99.90, as demand for the Dollar continued for a third day. The index has gained more than three points from its February low near 96.00 and is close to 100.00 after pulling back from mid-March highs near 101.00. Iran rejected Washington’s 15-point ceasefire plan on Tuesday and issued five counter-demands, including war reparations and sovereignty over the Strait of Hormuz. The Strait remains closed to Western-allied vessels, and shipping analysts do not expect routine commercial transit to resume before year-end.

Dollar Demand Strengthens

Japan started releasing 30 days of state oil reserves on Thursday, and the Philippines declared a national emergency over energy supply. President Trump said on Thursday he was unsure about a Friday deadline to reopen the Strait, and said taking over Iran’s crude oil supply remains “an option”. The Fed held rates at 3.50% to 3.75% in March, with the dot plot still pointing to one cut this year. Powell called the conflict an “energy shock”, while Michael Barr said rates may need to stay high; markets have largely priced out near-term cuts. On charts, price was 99.92–99.93; support levels include 99.90, 99.76, 99.70, and 99.50–99.00, then 98.50, with resistance at 99.96, 100.00, 100.50, and 101.00. The current environment strongly favors the US Dollar, making it the primary safe-haven asset for the coming weeks. The combination of geopolitical risk from the Iran situation and a hawkish Federal Reserve creates a powerful tailwind for the greenback. We should position for the DXY to test and potentially break the critical 100.00 psychological level.

Risks And Positioning

The conflict in the Strait of Hormuz is acting as a significant energy shock, keeping risk aversion high. With Brent crude futures holding above $120 a barrel, this situation is reminiscent of the market turmoil we saw back in 2022 following the invasion of Ukraine. As long as the Strait remains closed, demand for the dollar as a haven will persist. The Federal Reserve’s stance reinforces this dollar strength, giving it a distinct yield advantage over other major currencies. The latest Consumer Price Index reading came in at 4.1%, well above the Fed’s target, justifying the decision to hold rates firm at 3.75%. This contrasts sharply with the European Central Bank, which we saw hesitate to act during the energy price spikes of 2025, leading to euro weakness. For derivative traders, this suggests maintaining a long dollar bias against currencies like the euro and yen. We see this reflected in the options market, where open interest in call options for the June DXY futures contract has surged, particularly around the 101.00 strike. Bull call spreads could be an effective way to play for further upside while defining risk. However, we must be mindful that the rally is showing signs of fading momentum. The daily chart indicates the move is getting stretched, so a sudden pullback is possible if tensions with Iran ease unexpectedly. Buying some cheap, out-of-the-money put options on the DXY or the UUP ETF for the coming month could provide a cost-effective hedge against a sharp reversal. The pressure on energy-importing economies like Japan and the Eurozone will likely keep their currencies weak against the dollar. We should expect pairs like EUR/USD to retest their lows from late 2025 if the DXY successfully breaks above 100.50. Risk reversals in EUR/USD continue to show a strong bias for puts, indicating traders are positioned for more downside. Create your live VT Markets account and start trading now.

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Mexico’s central bank, Banxico, set its interest rate at 6.75%. This was below the expected level of 7%. The decision indicates a lower benchmark rate than forecasts had suggested. The gap between expectation and outcome was 0.25 percentage points.

Banxico Signals Dovish Pivot

Banxico’s surprise 25 basis point cut, deeper than the market expected, signals a clear dovish pivot to support a slowing economy. After inflation showed signs of cooling from its 2025 highs to a more manageable 3.9% last month, the central bank is now prioritizing growth. We see this as the start of a more aggressive easing cycle than what was priced in. This policy divergence from a still-cautious U.S. Federal Reserve should put sustained pressure on the Mexican Peso. The MXN’s strength, a major story through much of 2025, is now vulnerable as the attractive yield differential narrows. We are positioning for a weaker peso by buying USD/MXN call options targeting a move towards the 18.20 level in the coming weeks. For equity derivatives, lower financing costs are a clear positive for the Mexican IPC stock index. Companies that struggled with high interest rates over the last year now have a clearer path to margin expansion. We are looking at buying call spreads on the iShares MSCI Mexico ETF (EWW) to capture this expected upside through the second quarter. The unexpected nature of this cut has caused a spike in short-term implied volatility, which has jumped nearly 12% in the last 24 hours. This makes selling volatility through strategies like short strangles on the peso attractive for those who believe the initial shock will subside into a steady depreciation. This is a contrast to the low-volatility environment we saw at the end of last year.

TIIE Curve Prices Further Easing

Looking at the interest rate markets, the TIIE swap curve is now pricing in a much lower terminal rate for the end of 2026. This confirms the market’s belief that Banxico will continue cutting rates aggressively. We believe there is still value in entering new positions that bet on further declines in Mexican forward rates. Create your live VT Markets account and start trading now.

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