LME aluminium is trading near four-year highs, with prices supported by the risk of supply disruptions linked to conflict in the Middle East. Ongoing instability has kept the market sensitive to geopolitical news and increased price swings. Indicators of tight physical supply have strengthened, including higher cancelled warrants and faster stock withdrawals, especially at Port Klang. Cancelled warrants rose by 96,050t to 178,600t earlier in the week, the largest daily increase since May 2024. Cancelled warrants now account for about 40% of total LME aluminium inventories, up from 9% at the start of the month. Aluminium is described as tighter than other base metals, which points to limited downside even as wider macro conditions remain a headwind. We are seeing aluminum prices holding near $3,350 per tonne, sustained by ongoing supply fears linked to Middle East tensions. The market is extremely sensitive to geopolitical headlines, which is keeping volatility high. This environment suggests that traders should be prepared for sharp price movements based on daily news flow. The physical market tightness is becoming more obvious, supporting the view that prices have a solid floor. Data released this morning, March 12, 2026, showed on-warrant LME stocks fell below 250,000 tonnes, a level we haven’t seen since the fourth quarter of 2025. This continued draw on inventories, with cancelled warrants representing around 40% of total stock, signals strong real-world demand. This setup favors derivative strategies positioned for upward price pressure or continued high volatility in the coming weeks. Given the perceived limited downside, selling put options to collect premium appears attractive, as this strategy profits if prices remain stable or increase. The high volatility also means option premiums are expensive, which presents both opportunities for sellers and higher costs for buyers. We saw a similar pattern of tightening stocks and geopolitical risk in the third quarter of 2025, which preceded a rapid 15% price spike over the following month. The structural tightness in aluminum, especially when compared to the growing inventories we’ve recently seen in the copper market, strengthens the case for this upward bias. Therefore, positioning for price stability or a sudden increase seems more prudent than betting on a significant decline.

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Ireland’s Consumer Price Index (CPI) rose by 0.9% month-on-month in February. This followed a month-on-month fall of 0.9% in the previous period. The data show a change from negative to positive monthly inflation. No further breakdown was provided in the release.

Irish Inflation Reversal Signals Shift

This sharp reversal in Irish inflation from -0.9% to +0.9% month-over-month is a significant signal. It directly challenges the narrative that price pressures were definitively cooling across the Eurozone. We must now question the market’s pricing for European Central Bank rate cuts later this year. We expect traders to begin selling short-term interest rate futures tied to EURIBOR, anticipating that the ECB will be forced to delay its easing cycle. This repricing reflects a bet that the disinflationary trend we saw throughout 2025 is not as entrenched as previously believed. Options activity will likely lean towards higher volatility and a renewed chance of rate stability, rather than cuts. This data is particularly concerning because recent reports showed Irish services inflation remains sticky, hitting a 12-month high of 5.1%. Paired with stronger-than-expected wage growth figures from Q4 2025, the underlying inflationary pulse appears robust. This makes the February CPI number look less like an anomaly and more like a renewed trend. In currency markets, we should see renewed strength in the euro. The prospect of the ECB holding rates higher for longer than the U.S. Federal Reserve or Bank of England makes the single currency more attractive. We anticipate a move to unwind short euro positions that were established late last year.

Market Implications For Rates Currencies And Equities

For equity derivatives, this introduces a headwind for the Irish stock market. Traders will likely increase hedging activity by buying put options on the ISEQ 20 index. The risk of higher borrowing costs impacting corporate earnings is now a primary concern for the weeks ahead. Create your live VT Markets account and start trading now.

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Ireland’s Harmonised Index of Consumer Prices (HICP) rose by 0.8% month on month in February. This was above the expected 0.7%. The release indicates that monthly consumer prices increased at a slightly faster pace than forecast. The figures compare actual inflation of 0.8% with a 0.7% estimate.

Irish Inflation Surprise

We’ve seen the Irish inflation data for February come in slightly hotter than expected at 0.8% month-on-month. This single data point, while small, reinforces a pattern of persistent price pressures we are watching across the Eurozone. It challenges the prevailing market narrative that the European Central Bank has a clear path to begin cutting interest rates in the near future. This follows the recent Eurozone flash HICP estimate for February, which printed at 2.7% year-on-year, just above the 2.6% consensus forecast. The services component in particular remains stubborn, a trend we remember from the difficult inflationary environment back in 2025. This puts the ECB in a difficult position, as cutting rates prematurely could reignite price pressures they have worked hard to contain. For interest rate traders, this suggests that bets on a second-quarter rate cut may be too aggressive. We should consider fading the recent rally in Euribor futures, which would mean positioning for rates to stay higher for longer. This could involve selling futures contracts or buying put options to protect against a hawkish surprise from the ECB at its next meeting.

Market And Policy Implications

In the currency space, a more hesitant ECB relative to a potentially easing Federal Reserve could provide a floor for the Euro. We see merit in looking at EUR/USD call options to position for potential upside, as interest rate differentials could move in the Euro’s favor. The increased uncertainty should also lead to a rise in implied volatility, making strategies that benefit from price swings more attractive in the coming weeks. Create your live VT Markets account and start trading now.

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South Africa’s manufacturing production index fell by 0.7% year on year in January. This compares with a year-on-year fall of 1.4% in the previous period.

Manufacturing Momentum Improving

The latest manufacturing data for January, while still showing a year-on-year contraction at -0.7%, is significantly better than the -1.4% we were anticipating. This suggests the industrial sector’s decline may be bottoming out, a notable shift from the deep struggles we witnessed throughout 2025. This positive surprise offers a window for tactical derivative plays. This data is the first potential green shoot after a difficult 2025, a year defined by severe power cuts and stubbornly high borrowing costs that crippled production. Given the slight but noticeable improvement in the energy supply we’ve seen since late last year, this manufacturing number could be the first sign of a recovery. We believe the market may be underpricing this potential turnaround. For currency traders, this could signal short-term strength for the Rand. We are looking at buying ZAR call options against the dollar, positioning for a move stronger than the 18.50 level we have seen recently. This mirrors the currency’s reaction in mid-2025 when better-than-expected current account data caused a similar, brief rally. On the equity side, this news could lift sentiment for the JSE Top 40 Index, particularly for industrial and manufacturing-linked stocks. Buying call options on the ALSI index for the next few weeks could capture a potential relief rally. We saw a similar sector-specific boost in the final quarter of 2025 when global commodity prices showed a temporary recovery.

Risks And Trade Horizon

However, we must temper this optimism with a dose of reality, as this is just one data point. With unemployment figures from late 2025 still stuck above 32% and the South African Reserve Bank holding rates firm to combat inflation that remains near 5%, any long-term recovery is far from certain. Therefore, any positions taken should be tactical and short-dated. Create your live VT Markets account and start trading now.

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AU Small Finance Bank Ltd. (AUBANK) is described as having completed a cycle correction in wave II at 477.75, followed by a new bullish cycle in wave III. From 477.75, it formed an initial three-wave rise before entering a corrective phase labelled blue wave (4). Blue wave (4) is presented as an expanding triangle, an Elliott Wave pattern. The triangle is said to have ended near 895.05, implying the consolidation phase may have finished. The next expected move is a rise in wave 5, intended to complete black wave ((1)) within a larger upward sequence. A Fibonacci projection places a target near 1138.75, described as the 0.618 extension of wave (3). A ceiling is set at 1322.35, because wave (3) is stated to be shorter than wave (1), meaning wave 5 should stay below 1322.35. A move above 1322.35 would break the rule that the third wave cannot be the shortest. After price reaches the 1138.75–1322.35 zone, a correction in wave ((2)) is outlined. This pullback is described as possibly taking 3, 7, or 11 swings, while the broader structure remains valid above 477.75. Looking back at the analysis from mid-2025, the expanding triangle pattern in AUBANK correctly signaled a strong upward move. We saw the stock break out from its consolidation near the 895 level and begin a significant rally through the end of the year. This rally was consistent with the start of a new impulsive wave. The upward momentum was largely driven by solid fundamentals reported in late 2025, including a Q3 net interest income growth of over 22% year-over-year, which helped build investor confidence. The stock ultimately reached a high of around 1115 in late January 2026, falling just short of the minimum 1138 target before losing steam. This price action confirms the bullish pressure anticipated by the Elliott Wave structure. Since the January peak, the stock has entered a period of consolidation and is now trading around the 1050 level. This pullback has caused implied volatility to decrease from the highs seen during the run-up, potentially making option premiums more attractive. Derivative traders should now assess whether this is a temporary pause before the next leg up or the start of a deeper correction. For those who believe the uptrend will resume shortly, buying out-of-the-money call options for the April or May 2026 expiry could provide leveraged upside. For instance, call options with a strike price of 1100 would benefit significantly if the stock makes another attempt toward the 1138 target. This approach defines your risk to the premium paid for the options. Alternatively, if we expect the stock to remain above a certain level but not necessarily rally immediately, selling put credit spreads is a viable strategy. A trader could sell the 1020 strike put and buy the 980 strike put for protection, collecting a net premium. This position profits if AUBANK stays above 1020 through the option’s expiration. It remains important to manage risk, as a decisive break below the current consolidation low around 1010 would suggest the corrective phase is extending. While the long-term outlook from 2025 remains valid as long as the price is above 477.75, a near-term dip below this support could invalidate the immediate bullish setup. This would force a re-evaluation of any long positions.

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ING expects the European Central Bank to keep interest rates unchanged at its 19 March meeting, while using firmer language on inflation risks. It links this shift to the Middle East conflict and rising oil prices, which recall the 2022 energy shock. The focus is expected to move away from any talk of rate cuts and towards inflation risks and inflation expectations. ING suggests the chance of inflation falling below forecasts is now less likely to shape the meeting.

Oil Prices And Inflation Risks

ING notes that oil prices were already rising and that new market moves may have made the ECB’s latest forecasts out of date soon after they were published. It says the ECB is likely to work with a range of oil price scenarios. ING says the risk of a wage‑price spiral currently looks small. It adds that a longer disruption of the Strait of Hormuz could push oil above $100 per barrel for several months, with knock‑on effects on transport, food prices, and supply chains. In that case, ING says the ECB could consider rate hikes, possibly one or two. It expects the ECB to use communication to keep expectations anchored, and does not expect Christine Lagarde to repeat the phrase “good place”. We saw this exact playbook in March of 2025 when conflict in the Middle East caused a sudden hawkish shift from the European Central Bank. The risk of an oil shock took rate cuts off the table and put the focus squarely back on inflation. That experience provides a crucial guide for the situation developing today.

Implications For Rate Volatility

A similar dynamic is now emerging as tensions in the South China Sea disrupt key shipping lanes, pushing oil prices higher. Brent crude has climbed over 12% in the last month, now trading at $87 a barrel and threatening to breach the psychologically important $90 level. This is happening much faster than markets had anticipated just a few weeks ago. This energy price pressure comes at a delicate time, as February’s Eurozone inflation data showed a sticky 2.6% annual rate, well above the ECB’s 2% target. We remember how the 2022 energy crisis led to a wage-price spiral, a scenario the ECB is desperate to avoid repeating. Therefore, any discussion of further rate cuts is likely to be shelved immediately. For derivative traders, this means implied volatility on EUR interest rate futures is likely underpriced. The market may still be positioned for a steady path of rate cuts this year, creating an opportunity to buy options that would profit from a sudden reversal or pause. The upcoming ECB press conference is now a major catalyst for a potential repricing. The focus should be on short-term interest rate options, such as those on Euribor futures. We believe traders should consider positions that benefit from a rise in volatility and a halt to the recent fall in short-term rate expectations. This strategy hedges against the risk that the central bank is forced to use hawkish language to anchor inflation expectations, just as it did last year. Create your live VT Markets account and start trading now.

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USD/JPY is trading near 159–160, with the pair close to multi-decade highs after Operation Epic Fury. It is described as a key resistance area while geopolitical risks and higher energy costs have supported the US dollar versus the yen. The Bank of Japan is expected to keep policy unchanged at its 19 March meeting while signalling a more hawkish stance as it continues towards interest rate normalisation. The BOJ may separate supply-driven inflation linked to the Strait of Hormuz from demand-led inflation associated with Shunto wage rises.

Key Risks And Support Drivers

A Trump–Xi meeting scheduled for 31 March to 2 April is cited as a possible route to ease Iran-related tensions. If tensions ease and oil prices fall, the current support level for USD/JPY could weaken, with added risk from potential Japanese Ministry of Finance intervention. The piece notes it was produced with the assistance of an AI tool and checked by an editor. It is attributed to the FXStreet Insights Team, which selects market commentary and adds analysis from internal and external sources. We recall looking at USD/JPY pressing against the 160 level this time last year, driven by the geopolitical flight to safety after “Operation Epic Fury.” The predicted Bank of Japan hawkishness and the diplomatic efforts that followed did eventually cool the rally, leading to a significant pullback. Now, with the pair once again climbing, traders should be preparing for similar dynamics as these historic highs come back into focus. The Bank of Japan did proceed with its policy normalization in mid-2025, but the pace has been glacial, leaving a vast interest rate differential compared to the US. With Japan’s core inflation recently ticking up to 2.4%, the market is questioning if the BoJ is acting fast enough, keeping the fundamental support for USD/JPY strong. This persistent policy gap is the primary reason the carry trade, which involves borrowing yen to buy dollars, remains so popular.

Options Positioning And Intervention Watch

This environment makes owning options attractive, as the risk of sudden, sharp moves is elevated. Looking back at Japan’s massive currency interventions in late 2024, we know the Ministry of Finance has a low tolerance for what it deems speculative moves above the 155 level. Therefore, buying yen call options or USD/JPY put options offers a defined-risk way to position for a surprise policy shift or direct market intervention. For those looking to stay with the uptrend, selling downside protection through put options can generate income, but this carries significant risk of a rapid reversal. A more prudent strategy could involve using call spreads to target a move toward the 158-160 resistance zone while limiting the capital at risk. This acknowledges the strong underlying trend but respects the increasing potential for a sharp correction driven by Japanese authorities. Create your live VT Markets account and start trading now.

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TD Securities forecasts the Reserve Bank of Australia will lift the cash rate by 25 bps in March and another 25 bps in May. This would unwind last year’s cuts and take the cash rate back to 4.35% by May. The reasoning cited includes GDP growth running above potential, a tight labour market, and rising inflation risks. Policy focus is described as leaning more towards inflation expectations than unemployment.

Australian Demand Signals Stay Firm

S&P Global’s Composite New Orders data show Australia’s new orders are expanding, listed as above 50, and are the highest among developed-market peers. NAB’s February Business Survey showed forward orders at their highest level since late 2022. The article notes limited spare capacity in the economy and wide variation in NAIRU estimates. Treasury is cited at 4.25%, while RBA testimony to the Economics Legislation Committee is cited at 4.6%. It also refers to developments in domestic data and Iran as factors that could affect the inflation outlook. The piece states that recent data have pointed to upside inflation information and reinforced the view that spare capacity is limited. Looking back at the analysis from early 2025, the call for the Reserve Bank of Australia to hike rates twice to 4.35% by May of that year was on the money. That move was driven by strong growth and a tight labour market, which forced the RBA’s hand. We are now seeing a similar setup unfolding in March 2026.

Trading Implications For Rates Vol And Fx

The Australian economy is once again showing signs of running hot, much like it did in early 2025. The latest Judo Bank Flash Composite PMI for March came in at a strong 52.4, indicating solid business expansion and order books. Meanwhile, the labour market remains incredibly tight, with the unemployment rate holding at a low 3.9% in the most recent report. This strength is creating renewed inflation problems, just as we saw back then. The latest quarterly CPI figure surprised many by coming in at 3.8%, a noticeable acceleration and still well above the RBA’s 2-3% target band. This data confirms that the economy has very little spare capacity left to absorb price pressures. For derivative traders, this means the market is likely underpricing the risk of further RBA rate hikes from the current 4.35% level. We believe traders should look at paying fixed on 2-year interest rate swaps. This position will profit if the RBA is forced to hike rates at least once or twice more this year to re-establish its credibility. In the options market, rising uncertainty points towards higher volatility. Buying call options on Australian 3-year bond futures offers a way to position for rising yields with a defined risk. This strategy would benefit from a hawkish shift in the RBA’s tone in the coming weeks. This environment should also be positive for the Australian dollar, especially as other major central banks are considering rate cuts. Traders could consider buying AUD/USD call options to position for a stronger currency. The widening interest rate differential between Australia and the United States makes this a compelling trade. Create your live VT Markets account and start trading now.

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Market sentiment turned risk-averse in the second half of the week as conflict in the Middle East widened. The US calendar on Thursday includes January Housing Starts, January Goods Trade Balance, and weekly Initial Jobless Claims. On Wednesday, the International Energy Agency said its 32 member countries unanimously agreed to release 400 million barrels of oil from emergency reserves. Later Middle East reports renewed supply concerns.

Middle East Conflict And Supply Risk

Iraq reportedly shut down oil port operations after Iran attacked two foreign oil tankers. Bahrain, Kuwait, and the United Arab Emirates reportedly intercepted Iranian missiles and drones, while Saudi Arabia said two drones heading towards the Shaybah oilfield were destroyed over the Empty Quarter desert. China has effectively banned refined fuel exports for March “with immediate effect”, Reuters reported on Thursday. The report linked the move to efforts to prevent a domestic fuel shortage tied to the US‑Israeli war on Iran. WTI traded at $90.40, up about 3.5% on the day, while Brent rose 3% to $94.40. The US Dollar Index held just below 99.50 as US stock index futures fell 0.7% to 0.9%. EUR/USD traded near 1.1550 and GBP/USD fell below 1.3400. USD/JPY earlier reached above 159.20, then eased to slightly below 159.00, while gold moved below $5,200.

Market Outlook And Positioning

The widening conflict in the Middle East has injected significant fear into the markets, setting a clear risk-off tone for the weeks ahead. We are seeing a classic flight to safety, with volatility expected to remain high. The CBOE Volatility Index (VIX) has already surged to over 28 this week, a level not seen since the banking turmoil in late 2025, and we expect it to stay elevated. With WTI crude pushing past $90, the immediate bias is to the upside despite the IEA reserve release, as war premiums are building rapidly. This situation is reminiscent of the initial supply shocks we saw in 2022, when prices briefly surged over $120 a barrel. We should be using call options to position for further gains while defining our risk, as a sudden de-escalation could reverse prices quickly. The US Dollar is the clear beneficiary of this mood, and we anticipate the Dollar Index will test higher levels in the near term. We saw the index rally well above 106 during the risk aversion of last year, showing there is significant room for it to run if this crisis deepens. Therefore, we are looking at short positions in EUR/USD and GBP/USD futures as the primary expression of this view. We expect continued pressure on US stock indices as capital flows from equities into safer assets like the dollar. During the onset of the conflict in Eastern Europe in 2025, major indices experienced a swift correction of nearly 10% in just over a month. To manage this downside risk, we are buying put options on the S&P 500 and Nasdaq 100. The Japanese Yen’s weakness, pushing USD/JPY toward 159, is a special situation driven by diverging central bank policy rather than typical risk flows. We see this powerful trend continuing and will avoid fighting it. Gold’s price, while elevated above $5,200, seems to have already priced in a significant amount of this risk, so we will be cautious about adding aggressive new long positions at these levels. Create your live VT Markets account and start trading now.

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USD/JPY rallied to just under 159.00, supported by higher US yields. The pair remains overbought, which may limit further gains. Over the next 24 hours, the pair may test resistance at 159.45 if 158.55 holds. Minor support is at 158.75, and a move towards 160.00 is seen as unlikely in the near term.

Near Term Outlook

Over the next 1–3 weeks, a break above 159.45 would turn attention to 160.00. A drop below 158.00, with earlier strong support noted at 157.20, would suggest fading upside risk. Over the next 1–3 months, USD/JPY may move above 159.45, but momentum is described as weak. Any further rise is not expected to challenge the 2024 high of 162.00, with a reference level of 157.45 dated 06 Mar 2026. The article notes it was produced using an AI tool and reviewed by an editor. It also states that FXStreet’s Insights Team selects market observations and adds internal and external analysis. The upward push in USD/JPY has continued, driven by higher US yields after last year’s surprising economic resilience. The latest US inflation data for February 2026 came in hotter than expected at 3.4%, reinforcing the idea that the Federal Reserve will not be rushed into cutting rates. This keeps the immediate focus on the 159.45 resistance level.

Options Strategy Considerations

Given this momentum, traders should consider buying short-dated call options with a strike price near 160.00. This strategy provides a defined-risk way to profit from a potential break above the 159.45 resistance. As of this week, implied volatility remains relatively contained, making option premiums affordable for this trade. However, we must note that conditions are deeply overbought, and the 160.00 level is a major psychological barrier that drew intervention from Japanese authorities back in 2024. Officials have already begun verbal warnings this week, increasing the risk of a sudden, sharp reversal. This makes protective put options or bear put spreads a sensible hedge against long positions. A more balanced strategy could involve a bull call spread, such as buying a 159.50 call while simultaneously selling a 160.50 call. This approach lowers the upfront cost and profits from a move towards 160.00, aligning with the view that a major surge beyond that point is unlikely in the next few weeks. The probability of the Fed cutting rates by June has now fallen below 40%, supporting the dollar but also capping extreme moves. The level of 158.00 remains a critical support floor, and a breach of it would signal that the immediate upside risk has passed. Selling cash-secured puts with a strike price below 158.00 could be a way to collect premium. This expresses the view that even if the pair pulls back, the fundamental interest rate difference will prevent a significant collapse. Create your live VT Markets account and start trading now.

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