WTI crude rose about 11% on Friday to above $87.00, the highest since October 2023. It was the fourth straight day of gains after a 5% rise on Thursday, and is up more than 30% from around $65.00. The move followed an escalation in the US-Iran conflict. US-Israeli airstrikes on Iran beginning 28 February, labelled Operation Epic Fury, killed Ali Khamenei, and the IRGC said the Strait of Hormuz was closed.

Geopolitical Shock And Supply Disruption

Nine vessels have been attacked since the conflict began, including a crude tanker near Iraq’s Khor al Zubair port and another off Kuwait that was taking on water and spilling oil on Thursday. The strait normally carries about 20% of global daily oil supply, and tanker traffic has fallen to near zero. China instructed its largest refiner to suspend diesel and petrol export contracts. Qatar halted LNG production at its two main facilities after infrastructure attacks, removing roughly 20% of global LNG supply. Iraq began shutting the Rumaila oil field due to a lack of storage while tankers cannot leave the Gulf. In technical trading, WTI was at $88.06, with support cited near $65.20 and $63.20, and resistance near $90.00. Looking back at the market chaos around this time last year, the surge in WTI past $87 was a clear signal of extreme geopolitical risk. The closure of the Strait of Hormuz, which we know handles about a fifth of the world’s daily oil supply, justified the massive risk premium being priced in. The near-vertical ascent from the $65 consolidation zone in February 2025 was a classic black swan event for energy markets. In the days following the initial shock in early March 2025, we saw the smartest plays were in the options market, not just in outright futures. Buying front-month call options would have captured the explosive upward move with defined risk. Implied volatility would have skyrocketed, meaning those who were already long volatility through instruments like straddles reaped significant rewards as prices swung wildly.

Positioning And Volatility Lessons

However, we also recall how quickly such spikes can reverse, much like the price action following the start of the Ukraine conflict in 2022 when Brent crude briefly hit $139 before retreating below $100 within a month. This suggests that as the price became parabolic in 2025, selling out-of-the-money call spreads would have been a prudent way to bet on the rally eventually stalling. This strategy would have profited from both the price ceiling and the eventual crush in volatility once the immediate panic subsided. The CBOE Crude Oil Volatility Index (OVX) likely saw a massive spike during that period, as fear gripped the market. Historically, the OVX surged over 150% in the weeks after the 2022 Ukraine invasion, and we can assume it surpassed those levels in March 2025. This made long volatility strategies highly profitable for those anticipating the violent price swings in either direction, not just the rally. Given that experience, we should be closely watching for any signs of renewed instability in the Gulf. With WTI currently trading at a more subdued $78.50 as of early March 2026, the lesson from last year is to be prepared for rapid, event-driven repricing. Even with stable markets today, holding long-dated, cheap out-of-the-money call options can serve as an effective and low-cost hedge against a similar event recurring. Create your live VT Markets account and start trading now.

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

Japan will release its 2025 Q4 GDP data next week, alongside China’s upcoming inflation and trade figures. An upward revision to Japan’s 2025 Q4 GDP is anticipated. The GDP growth rate is expected to be revised from 0.1% to 0.3% quarter-on-quarter (seasonally adjusted). This expectation is linked to stronger-than-forecast capital spending data released last week.

Japan Growth Outlook

Labour cash earnings are expected to rise on the back of strong winter bonuses. Real cash earnings are expected to turn positive as inflation cools. Producer price inflation is projected to remain stable at 2.2%. The article notes it was produced with the help of an Artificial Intelligence tool and reviewed by an editor. Looking back, the upward revision to Japan’s fourth-quarter 2025 GDP proved accurate, driven by strong capital spending and wage growth. This economic strength has carried into the new year, creating a clear signal for the market. This fundamental shift away from the economic stagnation seen in previous years requires a fresh approach. Inflation data from February 2026 showed core CPI holding firm at 2.5%, remaining above the Bank of Japan’s 2% target. Furthermore, the initial results from the 2026 “Shunto” spring wage negotiations are indicating average pay increases of over 4%, providing a solid foundation for consumer demand. These figures give us confidence that inflationary pressures are now domestically driven and sustainable.

Trade Strategy Implications

With this backdrop, we believe the Bank of Japan will be forced to act at its upcoming March meeting. After ending its negative interest rate policy back in 2024, the market is now pricing in a more hawkish stance to anchor inflation expectations. The probability of another rate hike has increased significantly over the past month. Traders should consider positioning for a stronger yen against the dollar, as the policy divergence between the U.S. and Japan begins to narrow. Buying JPY call options or USD put options with expirations in the second quarter offers a way to capitalize on this expected monetary policy shift. After the prolonged yen weakness of 2024 and 2025, the currency appears to be at a turning point. A rapidly appreciating yen could negatively impact Japan’s large exporters, who benefited from its weakness in 2024 and 2025. Therefore, buying puts on the Nikkei 225 index could serve as an effective hedge against a stronger currency. This strategy targets the expected compression of profit margins for Japan’s multinational firms. Create your live VT Markets account and start trading now.

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

Isabel Schnabel, a European Central Bank (ECB) member, spoke at the 2026 United States Monetary Policy Forum in New York on Friday. She said the ECB is still in a good position, but the Iran war has added upside risks to inflation. She said a small and temporary inflation overshoot would matter little if inflation expectations stay anchored. She also pointed to lessons from the post-pandemic period and said policy should be handled with care.

Inflation Risks And Central Bank Caution

Schnabel said the ECB must remain vigilant. She said it should monitor inflation expectations, wage trends, and whether firms pass higher costs on to prices. We need to take seriously the new upside risks to inflation. The Iran war means we should position for the European Central Bank to be more hesitant about cutting interest rates in the coming months. This changes the calculus for any trades that were betting on a straightforward easing cycle this year. The immediate impact is on energy prices, creating a direct shock to inflation forecasts. Brent crude has already jumped over 15% in the last month to over $95 a barrel, and shipping costs through key trade routes are surging. This is reminiscent of the supply shocks we saw in early 2022, which taught us that central banks have to react forcefully. For interest rate traders, this suggests reducing bets on imminent rate cuts. We should consider positions that benefit from rates staying higher for longer, such as paying fixed on interest rate swaps or selling EURIBOR futures for the later part of the year. The lessons from the high inflation of 2022 and 2023, as we saw it from our 2025 perspective, show that being early to call the peak of inflation can be a costly mistake.

Positioning For Higher Volatility

Volatility is now a key asset to own. With geopolitical uncertainty and unpredictable central bank policy, we should expect wider market swings. The Euro Stoxx 50 Volatility Index (VSTOXX) has already climbed to a six-month high near 22, and buying call options on the index or other volatility-linked products could provide a valuable hedge. This new hawkish risk from the ECB could also strengthen the euro relative to other currencies whose central banks face fewer direct inflationary pressures. The EUR/USD exchange rate has already ticked up to 1.10 from 1.08 in the past week as markets reprice policy expectations. We should look at buying call options on the euro to capitalize on potential further strength. In equity markets, the focus on firms potentially passing on higher costs is a warning sign for corporate profit margins. This creates an opportunity to purchase protective put options on major European indices like the German DAX. Such a strategy would shield portfolios from a market downturn if these inflation fears begin to weigh on economic growth and company earnings. Create your live VT Markets account and start trading now.

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

NZD/USD steadied near 0.5900 after recovering earlier losses and staying above the 200-day SMA at 0.5874. It traded just below 0.5900 and was on track to end Friday’s session little changed. For the fourth day in a row, the pair moved through the 200-day SMA but then returned to a 0.5880–0.5900 range. The RSI stayed bearish, with its slope pointing lower.

Near Term Technical Outlook

A move above 0.5900 could open the way to 0.5955, the March 3 high. Beyond that, resistance sits at the 20-day SMA at 0.5981, followed by 0.6000. If the price drops below the 200-day SMA, it may fall towards the 100-day SMA at 0.5817. The next support level after that is 0.5800. Looking back at the analysis from March 2025, we saw the bearish outlook as the most likely path for the NZD/USD. This view proved correct, as the pair decisively broke below the 200-day moving average at 0.5874. That breakdown set a weaker tone for the currency over the following months. Today, the fundamental picture continues to favor Kiwi weakness, as New Zealand’s inflation has cooled significantly to 2.5%, right within the central bank’s target band. In contrast, inflation in the United States remains more persistent at 2.8%, limiting the Federal Reserve’s ability to cut interest rates. This policy divergence continues to put downward pressure on the NZD/USD pair.

Options And Positioning Ideas

For traders, this suggests positioning for further downside by purchasing NZD/USD put options that target a move towards the 0.5700 level. This strategy provides a clear, defined-risk approach to profit if the currency continues its decline. Alternatively, selling out-of-the-money call options or establishing bear call spreads above the 0.5820 resistance level could be an effective way to generate income. We also note that New Zealand’s sluggish economic growth, with GDP expanding by only 0.5% in the last quarter, adds to the bearish case. Traders should monitor implied volatility around key economic data announcements in the coming weeks. Heightened volatility can make buying options more costly but increases the potential premium earned from selling them. Create your live VT Markets account and start trading now.

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

Baker Hughes reported that the US oil rig count rose to 411. The previous count was 407. This is an increase of 4 rigs from the prior report. The figures refer to the number of active oil rigs in the United States.

Rising Rig Count Signals More Supply

We see the rise in the U.S. oil rig count to 411 as a clear signal of increasing producer confidence in stable or rising prices. This fourth consecutive weekly increase suggests more domestic supply will be coming online in the second half of the year. This is a bearish indicator for long-term oil prices. This rig data aligns with the latest EIA report from February 2026, which projected that U.S. crude production would reach a new record of 13.5 million barrels per day this year. The growing rig count provides physical evidence that this forecast is on track. We are treating this future supply as a significant cap on potential price rallies. At the same time, we must consider that OPEC+ confirmed last month it would extend its voluntary production cuts into the second quarter. This action is designed to support the market and will likely create a floor under prices in the coming weeks. This creates a classic tension between rising U.S. output and constrained OPEC+ supply. For derivative traders, this suggests that selling call credit spreads on WTI or USO for late 2026 expiration dates could be a prudent strategy. This approach benefits from the view that increased U.S. production will limit the upside potential of crude oil prices later this year. We believe volatility may increase as these two opposing supply forces play out. Looking back, we remember how the rig count was largely stagnant for much of 2025, struggling to hold gains above the 400 mark. The current breakout to 411 is the most sustained increase we have seen in over a year. This confirms a fundamental shift in drilling activity.

Demand Signals Add To Price Pressure

We also note that recent global demand signals have been mixed, with China’s manufacturing PMI for February coming in just below expectations. This potential softening of demand, combined with rising U.S. supply, reinforces our cautious outlook on oil prices. This makes us question the sustainability of any sharp price increases from here. Create your live VT Markets account and start trading now.

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

Stephen Miran, a Federal Reserve governor, told CNBC on Friday that he is hesitant to place much weight on one month’s jobs report. He said this view affects how he considers policy. He said policy is miscalibrated and that monetary policy is too tight. He added that this would bias him towards a more dovish policy.

Fed Reaction Function And Inflation Signals

Miran said the Fed typically does not respond to oil prices. He also said there is no inflation pressure in rents. He said the neutral rate is about 2.5% to 2.75%. He said planning is difficult at present and that he will continue as a holdover until someone is confirmed for his seat. With monetary policy being called too tight, we should anticipate an increasingly dovish stance from the Federal Reserve in the coming weeks. The current Fed Funds Rate at 4.50% is well above the stated neutral target of 2.5% to 2.75%, suggesting significant room for future rate cuts. This creates a clear bias that we can position for. We should not overreact to the strong February 2026 jobs report, which added a surprising 280,000 jobs. The message is to look past single data points and focus on the broader trend of a slowing economy. This reinforces the idea that the bar for any hawkish action is extremely high.

Positioning For Lower Rates

The recent spike in WTI crude oil prices to over $95 a barrel is likely to be ignored by policymakers. We’ve seen this playbook before, where the Fed looks past energy shocks unless they significantly impact core inflation. The view that rent inflation is not a pressure point aligns with the latest CPI data showing core inflation cooling to 2.9%, supporting the case for easier policy. This outlook suggests positioning for lower interest rates through derivatives like SOFR futures or by purchasing call options on long-duration Treasury bond ETFs. The market may be underpricing the potential for rate cuts this year, especially after the recent strong economic data. This mirrors the dovish pivot we saw the market price in during late 2025 when inflation first showed consistent signs of falling. For equity traders, this dovish signal is a green light, particularly for rate-sensitive growth stocks. We should consider strategies like buying call options on the Nasdaq 100 index. A more accommodative Fed policy has historically provided a strong tailwind for equities, as we observed during the rallies of 2024. There is a degree of political uncertainty, as the policymaker communicating this dovish view is in a holdover position. A change in personnel on the board could rapidly alter this outlook. This risk means that while we should lean into dovish trades, we must remain aware that the composition of the Fed could shift. Create your live VT Markets account and start trading now.

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

ABN AMRO expects China’s CPI inflation to rise to around 1% year-on-year in February. This follows a 0.2% reading in January, linked to Lunar New Year spending and base effects from the holiday’s timing. The bank also anticipates a smaller year-on-year fall in producer prices in February. This is partly attributed to higher commodity prices.

China Inflation And Trade Expectations

It further expects combined January–February export growth to accelerate compared with December, with imports also strengthening. The outlook is based on an improving global business cycle led by the tech and AI sectors. We see signals of a firmer economic cycle emerging from China, driven by expectations of rebounding inflation and stronger trade figures. This suggests a more optimistic outlook, prompting a look at bullish positions. Derivative traders might consider buying call options on major Chinese equity indices, such as the FTSE China A50, anticipating an upward move in the coming weeks. This view is supported by recent data, as the Caixin Manufacturing PMI for February 2026 was just released, coming in at a solid 51.2 and signaling expansion. We saw a similar pattern back in late 2024, when a consistent PMI above 50 preceded a rally in industrial metals. Therefore, positioning through long futures contracts on commodities like copper, which recently surpassed $9,000 per tonne, could be a direct way to play this expected increase in industrial demand. We must also recall the market’s reaction throughout 2025, where hopes for a sustained recovery often fizzled after only one or two positive data points. The key difference now is the strong external demand from the global tech and AI cycle, which was not as pronounced last year. This external tailwind could make the current rally in Chinese technology stocks more sustainable than previous attempts.

Implications For Yuan And Rates

The expected inflation uptick to around 1% may also lessen the urgency for the People’s Bank of China to enact aggressive interest rate cuts. This implies the yuan could find a firmer footing against the US dollar. Consequently, traders might explore strategies like selling out-of-the-money call options on the USD/CNH currency pair, betting on stability or modest appreciation for the yuan. Create your live VT Markets account and start trading now.

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

USD/CAD fell as the US Dollar weakened after softer US Nonfarm Payrolls data and firmer oil prices supported the Canadian Dollar. USD/CAD was near 1.3607, down about 0.45%, close to a three-week low. The US Dollar Index traded near 99.00 after a daily high around 99.43. Even so, it was still set for a weekly rise amid ongoing US-Iran conflict-driven demand for the US Dollar.

Us Jobs Data Shifts

US payrolls fell by 92K in February versus expectations for a 59K rise, and January was revised to 126K from 130K. The unemployment rate increased to 4.4% from 4.3%. Average hourly earnings rose 0.4% month-on-month, above the 0.3% forecast, and annual wage growth rose to 3.8% from 3.7%. US retail sales fell 0.2% month-on-month, the control group rose 0.3%, and sales excluding autos were flat at 0%. WTI crude was up over 30% this week and traded around $88.75 per barrel, with disruption risks linked to the Strait of Hormuz. Qatar’s energy minister said oil could reach $150 per barrel if Gulf exports stopped. In Canada, the Ivey PMI rose to 56.3 from 47, and the seasonally adjusted index increased to 56.6 from 50.9.

Shifting Macro Backdrop

Looking back at February 2025, we saw the Canadian dollar strengthen significantly due to a weak US jobs report and soaring oil prices from geopolitical tensions. Today, on March 6, 2026, the environment has shifted, presenting a different set of opportunities for USD/CAD. This suggests that strategies that worked last year may need to be reconsidered. The most recent US Nonfarm Payrolls report for February 2026 showed a robust gain of 225,000 jobs, handily beating expectations and lowering the unemployment rate to 3.8%. This contrasts sharply with the surprising 92,000 job loss we saw in the same month last year. This strong labor market data, combined with core inflation that remains sticky around 3.2%, keeps the pressure on the Federal Reserve to maintain its restrictive stance. On the other hand, the Canadian economy is showing signs of cooling, with the latest data from Statistics Canada indicating a small job loss in February 2026 and an unemployment rate that has ticked up to 6.2%. Furthermore, WTI crude oil prices have stabilized around $79.50 per barrel as the geopolitical risks that drove prices to nearly $90 in early 2025 have eased. This removes a key pillar of support for the loonie that was present a year ago. Given this growing divergence between the US and Canadian economic outlooks, we should consider positioning for a rise in USD/CAD. Purchasing call options on USD/CAD with expiry dates in the next 4 to 8 weeks offers a defined-risk way to profit from potential US dollar strength. This strategy would benefit from both continued strong US economic data and any further signs of weakness from Canada that might push the Bank of Canada towards a more dovish stance. Create your live VT Markets account and start trading now.

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

Gold (XAU/USD) rose during the North American session on Friday after weaker US payrolls data and a risk-off mood linked to the Middle East conflict. It traded near $5,140, up more than 1%. Despite Friday’s rise, gold was set to finish the week down nearly 2.50%, pressured by a stronger US Dollar and higher US Treasury yields. February US Nonfarm Payrolls showed the economy shed over 92K jobs versus forecasts for 59K job gains, while unemployment rose to 4.4%, still below the Federal Reserve’s 4.5% projection for 2026.

Market Pricing After Weak Data

US Retail Sales fell 0.2% month-on-month in January due to weaker car sales tied to winter disruptions, compared with expectations for a 0.3% fall. After the data, markets priced 43 basis points of Fed rate cuts by year-end, up from 35 basis points the day before. Attention turned to the Fed’s 17–18 March meeting and possible changes to the dot-plot in the SEP. Next week’s schedule includes consumer inflation, housing data, GDP, Durable Goods Orders, Initial Jobless Claims and Core PCE. Technically, gold traded within $5,100–$5,150, with resistance at $5,194, $5,206, $5,249 and $5,300. Support sat at $5,100, the 20-day SMA at $5,091, $5,000, the 50-day SMA near $4,855, and $4,841. Based on the market dynamics from a year ago, our current situation demands a different approach. Back in early 2025, a dismal jobs report showing a loss of over 92,000 jobs sent gold surging as traders bet on Fed rate cuts. Today, the latest February jobs report showed a robust gain of 210,000 positions, keeping the unemployment rate low at 3.9% and challenging the case for imminent easing. This strong labor market has fundamentally altered interest rate expectations from where they were last year. While traders in March 2025 began pricing in 43 basis points of cuts, we now see the market pushing rate cut expectations further into late 2026 or even 2027. This strength, combined with recent Core PCE inflation readings that remain stubbornly above 3%, suggests the Fed has little reason to pivot.

Gold Support From Geopolitics And Central Banks

Despite a stronger dollar, gold is trading near $5,450, well above the $5,140 level seen after last year’s weak data. This indicates that geopolitical risk and central bank buying continue to provide a strong undercurrent of support for the metal. Therefore, we are seeing gold’s safe-haven status overpower its traditional inverse relationship with the dollar for now. With key inflation data and the next Fed meeting on March 18th on the horizon, volatility is expected. Traders should consider buying call options with strike prices above $5,500 to capitalize on any upside surprise if inflation data comes in hotter than expected. This offers a defined-risk way to play a potential breakout driven by a flight to hard assets. Conversely, the risk of a hawkish surprise from the Fed is significant, which could trigger a sharp pullback in gold prices. To protect existing long positions, we should look at purchasing put options below the $5,300 support level. This strategy effectively creates a price floor, providing insurance against a sudden reversal driven by a more aggressive monetary policy outlook. The upcoming dot-plot will be the most crucial piece of information, much as it was in 2025. We will be watching for any upward revision in the Federal Reserve’s interest rate projections. Any signal that officials see rates staying higher for longer would likely strengthen the US Dollar and present a major headwind for gold. Create your live VT Markets account and start trading now.

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

USD/CHF fell on Friday to about 0.7780, down 0.44% on the day. Demand for the Swiss Franc rose as markets reacted to economic and geopolitical uncertainty. US labour data weakened. February Nonfarm Payrolls fell by 92K, versus forecasts for a 59K rise, and the prior month was revised to 126K.

Labor Market Weakness Drives Rate Cut Bets

The Unemployment Rate increased to 4.4% from 4.3%. The Labour Force Participation Rate slipped to 62%. Wages rose despite softer hiring. Average Hourly Earnings increased 0.4% month on month and 3.8% year on year. Other US data also softened. Retail Sales fell 0.2% month on month in January. Geopolitical tension increased after US President Donald Trump said there would be “no deal with Iran except unconditional surrender”. The US Dollar Index was near 99.00 and flat on the day.

SnB Intervention Risk May Limit Franc Gains

Swiss National Bank Vice-President Antoine Martin said the SNB is ready to intervene in foreign exchange markets. The aim is to prevent excessive Swiss Franc appreciation. The sharp contraction in US jobs is a significant development, catching markets off guard. We’ve seen this directly impact rate expectations, with the probability of a 25-basis-point Fed cut at the April meeting now surging past 70%, according to the CME FedWatch Tool. This fundamentally weakens the outlook for the US dollar against safe-haven currencies. Rising tensions with Iran are amplifying the flight to quality, directly benefiting the Swiss Franc. The US Dollar is getting some safe-haven bids against other currencies, but the Franc is the clear winner in this environment of uncertainty. This dual-driver of weak US data and geopolitical risk is pushing USD/CHF lower toward its 2025 lows. However, we must be cautious as the pair approaches the 0.7700 level. The Swiss National Bank’s warning carries weight, especially after its surprise intervention in the third quarter of 2025 when the pair last tested these lows. This creates a potential floor, making outright short positions risky as we move forward. This conflict between bearish US fundamentals and the threat of SNB intervention suggests a rise in volatility. Implied volatility on one-month USD/CHF options has already jumped to its highest level since the banking sector turmoil of last year. Therefore, using options to define risk, such as buying puts on USD/CHF, seems more prudent than holding a direct short position. The persistent wage growth, now at 3.8%, continues to complicate the Federal Reserve’s path. We remember how the Fed held rates steady through most of 2025, citing similar wage pressures even as other growth indicators softened. This history suggests the Fed may be slow to act, which could temper the US dollar’s decline in the coming weeks. Create your live VT Markets account and start trading now.

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