US Treasury Secretary Scott Bessent met several world leaders this week to set out US plans to secure trade deals and adjust policies. The agenda was described as aimed at reversing damage from the first year of the Trump administration, with a focus on earth minerals and wider trade.

In a meeting with UK Chancellor Rachel Reeves, Bessent said the US remained committed to its “Economic Fury” policy agenda. The talks covered trade and related policy priorities.

Trade Policy Reset And Global Outreach

Bessent also met Italian Economy Minister Giancarlo Giorgetti and discussed critical minerals. Separate talks were held with Japan’s Finance Minister, where Bessent reaffirmed a “strong alliance” between the US and Japan.

The meetings this week signal a clear pivot away from the protectionist policies we saw implemented in 2025. This agenda of “Economic Fury” appears focused on aggressively re-establishing predictable trade rules, which is a bearish signal for overall market volatility. We should anticipate a calmer CBOE Volatility Index (VIX), which spiked above 30 during the tariff uncertainty last year, settling closer to its historical average around 19.

The focus on critical minerals with Italy is a direct play to reduce supply chain risk for our tech and auto sectors. Given that the U.S. has historically imported over 75% of its rare-earth metals from China, securing European sources could stabilize input costs for EV and semiconductor manufacturers. This makes call options on automakers and the SOXX semiconductor ETF look more attractive as a key risk is mitigated.

Reaffirming alliances with major trading partners like Japan and the UK suggests stability in currency markets. With Japan being a top-five trading partner, responsible for over $200 billion in annual goods trade, a stronger alliance reduces the likelihood of sharp, unexpected swings in the USD/JPY pair. This environment is favorable for traders selling options premium on currency-focused ETFs.

Sector Winners And Losers

This policy shift will create clear winners and losers compared to the environment in 2025. Industrial companies that rely on imported materials should see their margins improve, while domestic producers like steelmakers, who were shielded by tariffs, may face renewed pressure from international competition. We should be exploring long positions in industrial sector ETFs and considering puts on commodity producers that benefited most from last year’s protectionism.

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AUD/USD ended a three-day rise on Thursday, closing near-flat at about 0.7165 after failing to break 0.7200. It briefly reached around 0.7200, then reversed later in the day and stayed within its recent consolidation range.

Australian figures were mixed, with Employment Change up 17.9K in March versus a 20K forecast and February’s 49.7K. The unemployment rate stayed at 4.3%, while Consumer Inflation Expectations rose to 5.9% from 5.2%.

Market Focus Shifts

US Dollar attention remained on the Iran conflict that started after US-led strikes in late February. The Strait of Hormuz stayed closed, including a US-backed blockade intended to force its reopening, adding to inflation concerns.

On a 15-minute chart, AUD/USD was near 0.7164 below the day’s open at 0.7174, with Stochastic RSI around 89. On the daily chart, price held above the 50-day EMA at 0.6995 and the 200-day EMA at 0.6770, while Stochastic RSI was 96.

The Australian Dollar is influenced by RBA policy and its 2–3% inflation target, China’s demand, and iron ore exports worth $118bn a year (2021). Trade balance shifts can also affect AUD.

Looking back to early 2025, we saw the Australian dollar showing signs of hesitation, failing to break above the 0.7200 level. That period was marked by concerns over a US-Iran conflict and a potential global inflation shock from supply disruptions in the Strait of Hormuz. Now, on April 17, 2026, the landscape has completely shifted, with AUD/USD trading much lower around 0.6550.

Central Bank Divergence

The key driver now is the divergence in central bank policy, a stark contrast to last year’s uncertainty. We have seen Australian inflation cool to 3.6% annually, and with the unemployment rate recently ticking up to 4.1%, the Reserve Bank of Australia is signaling a more dovish stance. Meanwhile, the US Federal Reserve remains hawkish as core inflation there proves sticky above 3%, creating a powerful headwind for the Aussie through interest rate differentials.

Furthermore, the commodity tailwinds that supported the Aussie in the past have weakened considerably. Iron ore prices have pulled back to around $105 per tonne, reflecting sluggish demand from China, whose recent manufacturing PMI data dipped below 50 into contractionary territory. This confirms that the health of Australia’s largest trading partner is now a significant drag, rather than a source of support.

The geopolitical risks have also changed from the supply-side inflation fears we saw in 2025. The focus has moved away from Middle East oil disruptions and towards concerns about global growth and demand. This “risk-off” sentiment, driven by economic fundamentals instead of conflict, naturally weighs on growth-sensitive currencies like the Australian dollar.

For traders, this means the technical picture from early 2025, where dips were seen as buying opportunities, is no longer valid. The key moving averages from that time, like the 50-day EMA near 0.7000, now represent formidable levels of resistance. We should view any rallies toward these old support levels as potential opportunities to initiate bearish positions, perhaps using options strategies like buying puts to gain downside exposure with defined risk.

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Standard Chartered economists Jonathan Koh and Edward Lee expect Bangko Sentral ng Pilipinas (BSP) to keep the policy rate at 4.25% in April, pushing a previously expected 25 bps increase to June. They still project one rate rise and have lifted their 2026 CPI inflation forecast to 4.5% from 4.0% after March inflation.

They note BSP may avoid tightening because March inflation was driven by supply factors, and the bank held rates at an off‑cycle March meeting. March inflation was 4.1%, above BSP’s 3.1–3.9% forecast range, while seasonally adjusted month‑on‑month core inflation followed its usual path.

BSP Monitoring Signals

They report that BSP is watching inflation expectations, core inflation, and prices faced by the bottom 30% of households. In March, inflation for the lowest‑income households was 4.2% year on year, close to the 4.1% headline rate, and expectations remain anchored.

They list risks that could raise pass‑through in coming months, including faster fiscal disbursements, possible transport fare increases, higher rice and restaurant prices linked to fertiliser costs, and imported inflation tied to the PHP. These factors could lift inflation expectations and lead to a one‑off hike.

The expectation is for the Bangko Sentral ng Pilipinas to hold its policy rate steady at its upcoming April meeting, pushing a potential 25 basis point hike to June. This creates a clear window for derivatives traders to position for a steeper yield curve in the coming months. The focus now shifts from the immediate decision to the forward guidance that will be provided.

With short-term interest rate swaps likely to remain anchored for now, we see an opportunity in trades that anticipate a hike in the third quarter. We remember the series of aggressive rate hikes throughout 2025, and this expected pause offers a temporary reprieve before that pressure resumes. Philippine 2-year bond yields have eased slightly to 6.25% this week, but forward rate agreements for June are already pricing in a higher probability of a rate increase.

Currency and Hedging Considerations

This delayed action could put modest downward pressure on the Philippine peso, especially as the US dollar remains firm. The peso has recently weakened past the 58.70 mark against the dollar, a key psychological level. Traders should consider using short-dated options to hedge against further peso depreciation ahead of the anticipated June move.

We believe a rate hike is not off the table, just postponed, because underlying price pressures are building. The latest data for early April showed inflation ticking up to 4.3%, driven by rising transport and food costs. These supply-side shocks are beginning to fuel broader price increases, which will likely force the central bank to act to maintain credibility.

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China’s Q1 GDP grew 5.0% year-on-year, compared with a 4.8% market forecast and 4.5% in the prior period. The result sits at the top of the official 4.5% to 5% target range.

Exports rose 14.7% year-on-year in US dollar terms over Q1, alongside early use of the bond quota. Industrial output increased 5.7% year-on-year versus a 5.3% market forecast, linked to AI-related manufacturing.

Domestic Demand And Property Drag

Retail sales rose 1.7% year-on-year, below the 2.4% market forecast. Property-linked demand remained weak, with construction materials down 9% year-on-year and furniture down 8.7% year-on-year.

The survey unemployment rate reached 5.4%, compared with a 5.2% market forecast, the highest in a year. Export growth slowed from 22% in January to February to 2.5% year-on-year in March, with the Middle East war cited as a factor affecting external demand.

The report noted that these conditions may affect the outlook for the yuan. The article was produced using an AI tool and reviewed by an editor.

We are seeing a familiar playbook from what we observed back in Q1 2025, where a strong headline GDP figure masked underlying fragility. China’s latest Q1 2026 GDP was just reported at a better-than-expected 5.3%, yet similar to last year, the details reveal significant cause for concern. The market may initially react to the positive headline, but the underlying weakness is where the real story is.

Market Implications And Positioning

The internal picture is not encouraging, mirroring the demand issues from 2025. March 2026 retail sales grew by only 3.1%, falling short of expectations and showing the consumer remains reluctant to spend. Furthermore, the property crisis continues to deepen, with official statistics showing new home prices falling at their fastest pace in over nine years, putting more pressure on the sector than we saw last year.

Externally, the picture has also deteriorated sharply, just as it did toward the end of Q1 2025. March 2026 exports unexpectedly plunged by 7.5% year-on-year, a dramatic reversal from the growth seen earlier in the quarter and a far cry from the export-led booms of 2021-2022. This drop in global demand, combined with weak domestic consumption, signals that economic momentum is already fading.

Given this divergence between the headline number and reality, we should anticipate rising volatility in Chinese assets. The yuan is facing renewed downward pressure, so positioning for weakness through USD/CNH call options could be a sound strategy, as authorities may be forced to guide the currency lower. We should also consider buying put options on China-linked equity indices, as the weak consumer and export data are likely to overshadow the official GDP print in the weeks ahead.

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Netflix shares fell more than 9% late Thursday after first-quarter earnings came in below Wall Street expectations. GAAP EPS was $1.23, missing consensus by $0.11, and the stock dropped from $107.88 to briefly under $98.00.

Revenue totalled $12.25 billion, up 16% year on year. This beat the consensus estimate by $80 million.

Q2 Guidance And Margin Outlook

The company set second-quarter guidance below forecasts, with sales expected at $12.57 billion versus a $12.63 billion consensus. It also projected Q2 GAAP EPS of $0.78, compared with a prior consensus of $0.84.

Netflix said Q2 will have the highest year-on-year content amortisation growth rate in 2026, then slow to mid-to-high single-digit growth in the second half. It forecast a Q2 operating margin of 32.6%, down from 34.1% a year earlier.

For Q1, operating margin was 32.3%, up from 31.7% in the prior-year quarter. Full-year 2026 guidance stayed the same, with revenue of $50.7 billion to $51.7 billion, equal to 12% to 14% growth (11% to 13% currency-neutral), and a projected rough doubling of ads revenue.

Given the sharp 9% after-hours drop on April 16, 2026, we see an immediate opportunity driven by fear. The market is reacting harshly to the Q1 earnings miss and, more importantly, the lowered guidance for the second quarter. This creates a classic conflict between short-term sentiment and the company’s unchanged full-year outlook.

For those expecting continued downward pressure, buying put options with May or June expirations makes sense. This strategy directly profits if the stock continues to slide below the $98 mark in the coming weeks. The lowered Q2 operating margin forecast, down to 32.6% from 34.1% a year ago, provides a strong justification for this near-term bearishness.

Options Positioning After The Selloff

However, implied volatility has spiked, making options expensive. We’ve seen this pattern before; looking back from 2025, the stock’s dramatic swings in 2022 and 2024 after earnings reports show that these big moves often create rich premiums for option sellers. This suggests that selling cash-secured puts at a strike price like $90 or $95 could be a viable strategy for those who believe the sell-off is overdone.

The company’s reiterated full-year guidance is the key piece of information for a contrarian view. Management’s confidence in hitting its 12%-14% revenue growth target suggests the Q2 margin issue is a temporary blip related to content costs. Research indicates the broader market, with the VIX holding above 18, is already nervous, often causing investors to overreact to single-stock news.

We also note that ad revenue is projected to roughly double in 2026. This significant growth driver seems to be ignored by the market’s current focus on the Q2 margin compression. Based on recent analyst reports, the growth of the ad-supported tier is expected to contribute over $4 billion in revenue this year, a critical factor for long-term valuation.

A more nuanced approach could involve using spreads to manage risk and cost. A bull put spread, selling a higher-strike put and buying a lower-strike one, would allow us to collect premium with limited risk. Alternatively, a calendar spread, selling a near-term option against a longer-dated one, could capitalize on the expected volatility crush while positioning for a recovery into the stronger third quarter.

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Silver (XAG/USD) fell 0.30% on Thursday and did not break above resistance at $81.00. It was trading at $78.73 after reaching a daily high of $80.86.

The chart showed a lower high and a lower low, with back-to-back doji candles. This points to indecision near $81.00 while the Relative Strength Index (RSI) stayed bullish but moved flat, suggesting consolidation.

Key Technical Signals Near Resistance

A move above $81.00 would open the way to the 2025 high at $83.75 and then March’s 10-cycle high at $90.01. Further gains could target the March 2 peak at $96.39, followed by the $100 level.

If price drops below the 100-day Simple Moving Average (SMA) at $76.94, the next levels are the 20-day SMA at $73.36 and then $70.00. These are the key downside support areas mentioned.

Looking back at the market in 2025, the indecision near the $81 resistance was a key signal for us. Those back-to-back doji candles suggested a big move was coming, but the direction was unclear. This was a classic setup for using options strategies like straddles to profit from a breakout in either direction.

The weakening bullish pattern we saw then, coupled with a strengthening dollar, made the risk of a drop below $76.94 very real. The U.S. Dollar Index (DXY) did briefly climb above 105 in late 2025, validating those short-term concerns. For those holding long positions, buying put options with a strike price around $75 would have been a prudent way to hedge against a potential slide toward the $70 mark.

Ultimately, the consolidation resolved to the upside, as the dollar’s strength faded into early 2026. As we see today with silver trading around $85, the break above the $81 level was the decisive move. This rally has been supported by strong fundamentals, with industrial demand for silver projected to rise by 4% in 2026, largely due to solar and EV manufacturing.

Options Positioning And Next Resistance Levels

With the market having broken past the 2025 high of $83.75, our focus shifts to the next major resistance levels noted last year, like the $90 mark. Implied volatility has been rising, so selling cash-secured puts below current support could be a strategy to collect premium while waiting for a pullback. We are also seeing significant open interest in call options at the $95 and $100 strike prices for the end of the year, indicating where some traders expect the price to go.

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China’s exports to the US have fallen, increasing the role of Japan, South Korea and Taiwan in providing trade surpluses to the US. Across all trading partners, the three economies recorded a combined $40bn surplus in January, with a rolling three-month average of $30bn.

The Bank of Korea has warned the current supply shock could be worse than 2022–2023. This could shift the region from large surpluses into trade deficits and reduce capital outflows linked to surplus recycling.

Capital Flow Reversal Scenarios

If the combined position moved from a $40bn surplus to more than $30bn in deficits, that would be a $70bn single-month change in capital outflows, assuming full recycling. On a three-month rolling basis, the swing could reach $150bn, moving from a $30bn positive average to -$20bn.

The combined surplus drop for China, Taiwan and South Korea for intervention purposes exceeded $100bn in March alone. This is cited as evidence that a $150bn fall in recycling flows is possible.

We should be preparing for a significant reversal of capital flows from Asia, which could spark major currency moves in the coming weeks. The concern is that the large trade surpluses from South Korea, Taiwan, and Japan are about to flip into deficits, removing a key pillar of support for global markets. This suggests we should position for weakness in the Korean won (KRW), Taiwanese dollar (TWD), and Japanese yen (JPY) against the U.S. dollar.

This warning is already being validated by recent data. South Korea’s trade surplus for March 2026 just came in at a razor-thin $0.8 billion, a steep drop from the $4.3 billion surplus seen in February, as rising energy import costs bite into export gains. Looking back, we saw similar pressures build in late 2025, but the current pace of deterioration appears much faster.

Trading And Hedging Implications

For traders, this points towards buying U.S. dollar call options against these Asian currencies to profit from their potential decline with managed risk. The expected capital flow swing, potentially reaching a $150 billion reversal on a three-month basis, will almost certainly spike foreign exchange volatility. Therefore, buying straddles or strangles on currency ETFs is a viable strategy to trade this expected increase in price movement.

The situation in Japan is particularly acute, where the yen has continued to weaken past 162 to the dollar this month, despite the Bank of Japan’s minor rate hike in February 2026. This shows that monetary policy is failing to counter the larger trade and capital flow dynamics. This reinforces the case for long USD/JPY positions.

A reduction in these Asian surpluses means less money being recycled into U.S. government bonds. We are already seeing the 10-year Treasury yield creep back up towards 4.50%, a level not seen since the brief scare in the third quarter of 2025. We should consider using derivatives to position for higher U.S. interest rates, such as shorting Treasury note futures.

This potential trade shock would also directly impact the equity markets of these export-driven nations. Their benchmark indices, like the KOSPI and Nikkei, have already shown signs of stalling in early April 2026 after a strong first quarter. Hedging strategies, such as buying put options on ETFs like EWY for South Korea or EWJ for Japan, should be considered to protect against a downturn.

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The US Dollar Index (DXY) traded near 98.20 amid disrupted shipping in the Strait of Hormuz, including reports of a “double blockage” and partial tanker movement. Iran proposed a transit toll paid through its domestic banking system, while talks between Washington and Tehran remained unconfirmed, with President Donald Trump indicating a possible weekend meeting.

A 10-day ceasefire between Israel and Lebanon was due to start at 5:00 pm EST on Thursday. Israel said forces would remain in the South Lebanon buffer zone, while Hezbollah said any continued presence would justify resistance and should not allow Israeli operational freedom in Lebanon.

Major Currency Moves And Market Focus

EUR/USD eased near 1.1780 after eight consecutive days of gains, while GBP/USD drifted lower near 1.3530. USD/JPY rose towards 159.10, and AUD/USD traded near 0.7160, with markets focused on risk conditions and energy-route uncertainty.

WTI traded around $93.90 per barrel as supply concerns persisted. Gold was near $4,789, with attention on potential de-escalation.

Next on the calendar was the US IMF Meeting on Friday, April 17. WTI is a US crude benchmark from the Cushing hub, with prices affected by supply and demand, US dollar moves, inventories from API and EIA (within 1% of each other 75% of the time), and OPEC’s 12-member quotas plus OPEC+ including 10 extra members.

Given the strength in the US Dollar, we should consider options that favor its continued rise against other major currencies. The geopolitical instability is creating a clear flight to safety, and the dollar remains the primary beneficiary. Looking back at how the DXY surged to 20-year highs during the geopolitical uncertainty of 2022, the current level near 98.20 seems to have further room to run if tensions do not de-escalate.

Oil Options Strategies For Supply Shock

The disruption in the Strait of Hormuz, a chokepoint for roughly 20% of global oil consumption, presents a clear opportunity for bullish oil strategies. With West Texas Intermediate (WTI) already above $93, long call options could prove profitable if the blockage worsens or if diplomatic talks fail. This supply shock is particularly potent as it hits a market that we’ve seen tightened by disciplined OPEC+ production quotas over the past couple of years.

We should anticipate continued weakness in currencies sensitive to risk and energy prices, particularly the Euro and the Australian Dollar. The Eurozone’s high dependency on energy imports, with recent data showing over 50% of its energy is imported, makes it uniquely vulnerable to this Mideast crisis. Therefore, buying put options on EUR/USD and AUD/USD could serve as a direct play on escalating tensions.

Gold’s muted response near a historically high price of $4,789 suggests the market is undecided, caught between safe-haven flows and hopes for a ceasefire. This indicates that a volatility play, such as a long straddle, could be an effective strategy to capture a sharp price movement once the direction becomes clearer over the weekend. The current high price already reflects significant fear, meaning any genuine de-escalation could trigger a rapid pullback.

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China’s latest monthly data showed mixed trends, with stronger output but weak consumer demand. Q1 GDP rose 5.0% year on year, above the 4.8% consensus forecast.

Industrial production increased 5.7% year on year, beating the 5.3% consensus and supported by export growth. Retail sales in March rose 1.7% year on year, down from an average of 2.8% across the first two months.

Key Domestic Indicators

House prices fell -0.21% month on month, a smaller drop than in recent periods. The unemployment rate rose to 5.4% in March from 5.3% in February, the highest since February last year.

Policymakers in Beijing are expected to monitor whether the Iran war affects exports and domestic demand. Further economic stimulus may be considered over coming quarters if conditions weaken.

After the data release, Chinese stocks saw improved risk appetite and the CNY strengthened slightly. The article was produced using an AI tool and reviewed by an editor.

We are seeing a clear divergence in the Chinese economy, which presents specific opportunities. The strong 5.0% Q1 GDP and industrial production figures are propping up the market, but the weak 1.7% growth in March retail sales shows the domestic consumer is still struggling. This two-speed reality suggests favoring sectors tied to global trade over those dependent on local spending.

Potential Positioning And Catalysts

This production strength is reinforced by recent data from the General Administration of Customs, which showed exports grew by 7.1% in March, beating expectations. Given this, traders should consider call options on China-focused industrial and export-oriented ETFs. This trend appears solid, especially as global supply chains continue to normalize.

Conversely, the consumer weakness is a persistent headwind, reminding us of a similar pattern in mid-2025. That period of weak consumer data preceded targeted stimulus measures from Beijing in the fourth quarter of that year. Therefore, buying put options on consumer discretionary stocks could be a valuable hedge against further domestic slowdown.

The key catalyst to watch for is a potential stimulus package from policymakers, especially if geopolitical tensions related to Iran begin to impact exports more severely. The rise in unemployment to 5.4% adds pressure on Beijing to act sooner rather than later. We should anticipate increased market volatility around major policy meetings in the coming weeks.

The slight strengthening in the CNY is likely temporary, as the prospect of economic stimulus and potential rate cuts will weigh on the currency. We see this as an opportunity to position for future yuan weakness. The positive sentiment in Chinese stocks also feels fragile and highly dependent on government follow-through.

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Commerzbank’s Michael Pfister says G10 and emerging market (EM) carry trades have shown strong paper gains since the start of 2025. He links this to Iran-related market moves and to high-yield currencies such as the Brazilian real and Mexican peso.

He says a G10 carry strategy outperformed pure interest income in the first quarter. He attributes this to exchange rate moves that supported the trade, alongside interest income.

Carry Performance Depends On Market Conditions

Pfister says there is no empirical evidence that carry strategies deliver systematic long-term outperformance. He notes that carry can do well in the short term when currency moves align with the position.

He adds that EM carry strategies have become more popular in recent years. The Bloomberg EM Carry Trade Index has posted exceptionally strong performance since the beginning of 2025.

He warns that recent EM carry returns are largely driven by interest income. He says the exchange rate component is still recovering from weak performance in 2024.

We have to remember that the strong paper gains from carry trades in early 2025 were helped by specific geopolitical events and a favorable interest rate environment. That landscape is now changing as major central banks have shifted their policy stance from the aggressive hikes we saw previously. This narrows the yield gaps that make the strategy attractive in the first place.

Hedging Carry Trades In Higher Volatility

For emerging market trades, we must be especially cautious because performance was largely due to high interest income, while the currencies themselves were just recovering from a poor 2024. That recovery now appears to be fading, as we see that the Mexican Peso, a favorite for this strategy, has weakened by over 3% against the dollar year-to-date. This currency depreciation is starting to eat into the high interest rate gains.

The low-volatility environment that helps these trades has also shifted, with the VIX index now consistently holding above 18, a notable increase from the calmer periods of 2025. In such an environment, sudden exchange rate moves can quickly erase months of accumulated interest payments. Historically, carry trades perform poorly when market volatility rises unexpectedly.

Therefore, we should consider using options to hedge our exposure in popular pairs like the USD/MXN. Buying put options on the high-yield currency provides a clear floor, limiting our downside if the currency suddenly weakens in the coming weeks. This allows us to define our risk while still participating in the trade, which is prudent given the changing market conditions.

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