US consumer credit rose by $8.05B in January, compared with expectations of $12B. The increase was $3.95B lower than forecast. The data points to slower growth in total borrowing by households during the month. This release focuses on consumer credit, which typically includes revolving credit such as credit cards and non-revolving loans such as auto and student borrowing.

Consumer Pullback Signals

The January consumer credit miss is a clear warning sign that the consumer is finally pulling back after a strong 2025. We saw this confirmed in the most recent February jobs report, which showed the unemployment rate ticking up to 4.1% and weaker wage growth. This data directly challenges the soft-landing narrative that has propped up markets. This cooling trend puts the Federal Reserve in a difficult position, increasing the odds of a rate cut sooner than anticipated. The market is now pricing in a greater than 50% chance of a rate cut by the June meeting, a sharp increase from just 20% a month ago. We should position for increasing dovishness from the central bank. With uncertainty growing, we should anticipate higher market volatility. The VIX has already climbed from the low teens to over 18 in the past few weeks, and buying VIX call options with May expirations is a direct way to hedge against or profit from a coming spike in fear. This is a cost-effective strategy to protect against sudden market drops. Given the pressure on the consumer, we should look to express a bearish view on consumer-focused equities. Buying put options on the consumer discretionary ETF (XLY) offers direct exposure to this weakness. Looking back at similar slowdowns in 2023, this sector consistently underperformed the broader market when credit conditions tightened.

Rates And Bond Opportunities

In contrast, as the likelihood of rate cuts increases, government bonds become more attractive. The U.S. 10-year Treasury yield has already dipped below 3.8% in response to this recent string of weak data. We should consider buying call options on long-duration Treasury bond ETFs, such as TLT, to profit from a further decline in yields. Create your live VT Markets account and start trading now.

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BNY’s Head of Markets Macro Strategy Bob Savage reported a wide gap between CNY forwards and the spot rate, pointing to hedge unwinding alongside asset outflows. The yuan has outperformed peer currencies, but spot flow data show large outflows linked to expatriation. Flow data showed very large outflows over the past two days, described as likely tied to asset expatriation or direct currency transactions after recent developments. Over the past three sessions since the conflict began, CNY forward and swap activity produced the largest year-to-date flows, extending earlier strong moves.

Policy Commitment To Currency Stability

PBoC governor Pan Gongsheng said China does not need or plan to use currency depreciation to gain trade competitiveness. He reiterated that the renminbi will be kept broadly stable and not used as a tool in trade disputes. We are seeing a notable divergence between the Chinese yuan’s forward contracts and its spot price, which is being pushed lower by capital outflows. Recent data from February 2026 showed China’s Caixin Manufacturing PMI slipping to 49.5, fueling these concerns. This suggests a conflict between market flows and future expectations. The spot market weakness seems directly tied to asset expatriation, with some of the largest outflows this year occurring in the last week. The latest figures from China’s State Administration of Foreign Exchange (SAFE) support this view, showing net portfolio outflows picked up to over $32 billion in the fourth quarter of 2025. We question the currency’s ability to act as a safe haven when faced with such pressure. Despite this, forward and swap flows are pricing in a stronger yuan, possibly because traders believe authorities will intervene to ensure stability. The People’s Bank of China has been backing its verbal commitments with action, consistently setting the daily USD/CNY reference rate stronger than market expectations over the past month. This official stance is the main force preventing a sharper decline.

Trading Implications For Volatility Strategies

This situation is reminiscent of the playbook we observed through much of 2025, where authorities leaned against depreciation without halting it completely. Looking further back, the managed devaluations in 2015 and 2023 showed that while stability is the goal, a gradual slide is tolerated during periods of economic stress. The current outflows are testing this long-held policy. For derivative traders, this tension creates opportunities in volatility rather than direction. Buying options, such as USD/CNH call spreads, could be an effective way to position for a potential sharp move if the PBoC’s control slips. The cost of volatility remains relatively low, pricing in a stability that current capital flows are challenging. Selling USD/CNH forwards to collect the premium is tempting but carries what we see as asymmetric risk if spot weakness accelerates suddenly. A more prudent approach for the coming weeks would be to use option structures that define a clear risk range, such as collars. This allows traders to navigate the choppy environment where official policy is directly fighting against market flows. Create your live VT Markets account and start trading now.

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USD/CHF fell 0.53% to 0.7771 on Friday in the North American session after weak US jobs data. The pair moved to a four-day low below 0.7800, but was still up by more than 1% for the week. The pair remains downward biased after failing to break above 0.7800 and dipping below the 50-day SMA. The RSI is moving lower and is near its neutral level, which points to weaker momentum.

Key Technical Levels

Support sits in the 0.7670 to 0.7700 zone, where a trendline from this year’s low near 0.7601 runs. A break below 0.7700 could open the way to the January 28 swing low at 0.7606. If USD/CHF climbs back above 0.7800, it may test the March 3 swing high at 0.7878. Further gains could then target the 100-day SMA at 0.7905. Looking back to March 2025, we saw the dollar weaken against the franc due to a poor jobs report, causing the pair to dip below 0.7800. The US jobs data released yesterday for February 2026, however, showed a robust addition of 245,000 jobs, reinforcing the dollar’s current strength. This is a starkly different economic picture than the one we faced a year ago. At that time, the technical bias was clearly tilted to the downside, with many expecting a test of support near 0.7670. That downward move proved to be a bottom, as the pair has since rallied significantly, now trading around 0.8960. The failure to reclaim 0.7800 back in early 2025 was a false signal for a prolonged downturn. For the coming weeks, this sustained bullish momentum suggests traders should consider strategies that profit from a rising USD/CHF. We believe buying call options with strike prices at or above 0.9000 could be a viable play to capture further upside. This approach allows participation in the rally while defining the maximum risk to the premium paid.

Fundamental Drivers And Options Strategies

This outlook is supported by the divergence in central bank policy that was not as clear last year. The Federal Reserve is holding firm with rates given that inflation remains sticky at 3.1%, while the Swiss National Bank has signaled a more dovish stance to counter franc strength. This fundamental difference is a powerful tailwind for the currency pair. Given the strong trend, selling out-of-the-money put options could also be an effective strategy for collecting premium. For example, a trader could sell puts with a strike price around 0.8850, a level that could act as new support. This benefits from both a rising price and the passage of time. Create your live VT Markets account and start trading now.

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Beth Hammack, President of the Federal Reserve Bank of Cleveland, said inflation in the US is too high at the US Monetary Policy Forum in New York City on Friday. She said inflationary pressures are broad based and not limited to tariffs. Hammack said Fed rate policy is likely to remain on hold for quite some time. She said the Fed’s current policy stance is well placed to address inflation and jobs, and she remains committed to the Fed’s employment and inflation mandates.

Dollar Role Likely To Persist

She said it would take a lot to remove the dollar from its global role. She said she is not hearing from contacts about a notable move away from the dollar. Hammack said stablecoins could increase demand for the dollar. She also said the euro is still not ready to replace the dollar, and that the dollar’s status is supported by US fundamentals, the legal system, and credibility. We are seeing clear signs that inflation remains stubbornly high, making the Federal Reserve’s job more complex. The latest Consumer Price Index report for February 2026 showed a year-over-year increase of 3.4%, well above expectations and a reversal of the cooling trend we observed through much of 2025. This broad-based price pressure means any bets on near-term interest rate cuts should be unwound. Given that policy is likely to remain on hold, traders should look at derivatives that profit from this stable but high-rate environment. The market has been forced to price out the two rate cuts it anticipated for the second half of the year, a major shift in sentiment. We see value in selling out-of-the-money call options on SOFR futures for late 2026 expirations, capitalizing on decaying hope for lower rates.

Positioning For Higher Rates

This “higher for longer” stance is reinforced by a surprisingly strong labor market, with the recent Non-Farm Payrolls data showing 250,000 jobs added last month. This gives the Fed cover to stay restrictive, likely putting a ceiling on equity indices like the Nasdaq 100 for the coming weeks. We believe buying put spreads on the QQQ exchange-traded fund is a prudent way to hedge against downside in rate-sensitive technology stocks. The U.S. Dollar continues to be the primary beneficiary of these dynamics, with the Dollar Index (DXY) now trading firmly above 107. The fundamental strength of the U.S. economy, especially when compared to recent sluggish PMI data from the Eurozone, supports a strong dollar narrative. Consequently, long-dated call options on the UUP ETF appear attractive to play continued dollar dominance. Create your live VT Markets account and start trading now.

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USD/MYR has been trading in a tight range near recent highs after rising earlier in the week. The move has been supported by broader US dollar strength and weaker risk appetite, which has weighed on Asian currencies including the Malaysian ringgit. Geopolitical developments linked to Iran and energy markets have been a main driver, with conditions described as changeable. Further escalation could lead to risk-off trading, equity declines, outflows from emerging markets, and demand for US dollar liquidity, which could pressure higher-beta Asian currencies such as MYR.

Technical Momentum And Key Levels

USD/MYR was last reported around 3.9450. Daily-chart momentum remains positive, while the RSI increase has eased, suggesting two-way trading. Resistance levels are listed at 3.95, 3.9630 (23.6% Fibonacci retracement from the October high to the February low), and 3.9865 (50-day moving average). Support is cited at 3.9180 (21-day moving average) and 3.88. Looking back at the analysis from 2025, we can see that the warnings about upside risks in USD/MYR were accurate, as the pair has moved significantly higher than the 3.95 level discussed then. The combination of sustained US dollar strength and periods of risk-off sentiment indeed weighed on the ringgit. Today, with the pair trading closer to 4.75, the dynamics have evolved but the core drivers remain relevant for derivative strategies. The US Federal Reserve’s commitment to keeping interest rates higher for longer, with the Fed funds rate currently at 5.25% to combat persistent inflation running at 3.4%, continues to fuel broad dollar demand. This fundamental backdrop suggests that any significant strengthening of the ringgit will be challenging. Therefore, traders could consider buying USD call options to speculate on further upside, or use call spreads to define risk and cheapen the cost of the position. On the other hand, Malaysia’s domestic economy shows resilience, with GDP growth for 2026 forecast around 4.5% and a consistent trade surplus, which hit MYR 11.8 billion in January 2026. This fundamental strength may provide a floor for the ringgit, preventing a runaway depreciation from current levels. This scenario makes selling out-of-the-money, cash-secured USD puts an interesting strategy for traders wanting to collect premium while betting that the pair will not collapse below key support levels.

Options Volatility And Hedging Approaches

Given these opposing forces, implied volatility in the USD/MYR options market could increase, making long volatility strategies like straddles potentially profitable if a major economic data release or geopolitical event triggers a sharp move in either direction. Historically, geopolitical flare-ups, like those we saw in 2025, can cause rapid moves that reward holders of long options. Traders should watch key technical levels and be prepared for the consolidation to break. Currently, broad market risk sentiment, as measured by the VIX index holding near a relatively calm level of 14, is not in the “soggy” or panicked state described in the 2025 outlook. This suggests that a sudden spike in risk aversion could catch the market off guard, causing a flight to the dollar and pushing USD/MYR higher. A simple hedge for those with ringgit exposure would be to buy far out-of-the-money USD calls as a low-cost insurance policy against such an event. Create your live VT Markets account and start trading now.

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Argentina’s year-on-year industrial output change, not seasonally adjusted, was -3.2% in January. This was an improvement from the previous reading of -3.9%.

Industrial Contraction Shows Early Stabilization

We are seeing the contraction in Argentine industrial output ease, which is a key signal. This is not a sign of growth, but it suggests the deep economic adjustment may be finding a floor. For us, this is a critical data point that indicates the worst may be in the past. This reading reinforces the broader narrative of stabilization we’ve been tracking. After the hyperinflationary shocks of 2024 and 2025, monthly inflation has fallen to a more manageable 4.8% as of last month’s data. This sustained disinflation gives the central bank credibility and supports the case for recovering asset prices. We recall the Merval index rallied significantly in the final months of 2025 as the market anticipated this kind of stabilization. That rally was based on hope, whereas this industrial output number provides a tangible, albeit small, piece of evidence that the recovery thesis is intact. This could justify adding to long positions in index futures.

Options Strategy Considerations For Argentine Risk

Implied volatility on options for Argentine assets, like the ARGT ETF, remains high due to the recent history of turmoil. This environment makes selling out-of-the-money puts an interesting strategy to consider in the coming weeks. Such a position would benefit from a slow grind higher or even sideways price action as volatility is likely to compress if this stability continues. Create your live VT Markets account and start trading now.

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The Middle East conflict widened after the Supreme Leader of Iran was assassinated on 28 February, followed by Iranian strikes on Israel and US bases around the Persian Gulf. Iranian forces blocked the Strait of Hormuz, disrupting Asia’s main oil supply route. The US Dollar Index (DXY) traded near 99.70 during the week, then eased to 99.00 on Friday. US Nonfarm Payrolls showed a 92K fall in February versus an expected 59K rise, with January revised to 126K from 130K and unemployment up to 4.4% from 4.3%.

Energy Price Shock And FX Repricing

EUR/USD traded near 1.1600, with the euro affected by oil and gas price swings, despite full European storage ahead of winter. GBP/USD was near 1.3400 as markets priced a 20–30% chance of a 25-basis-point BoE cut in March, down from about 80% before the conflict. USD/JPY hovered around 157.70, while AUD/USD traded near 0.7030 as gold firmed. Oil rose to $90.20 per barrel, and gold traded at $5,147 while testing $5,200. Scheduled items include speeches from ECB, Fed and BoE officials on 9–12 March, plus data such as China CPI/PPI, US CPI, and UK GDP. Central banks added 1,136 tonnes of gold worth about $70 billion in 2022. The immediate focus for us must be on oil, with the Strait of Hormuz blocked, cutting off roughly 20% of the world’s daily oil supply. We have seen prices jump to $90, but historical precedent from geopolitical shocks like the 1973 oil crisis suggests prices could see a much more significant and sustained rally. Derivative traders should consider that call options on crude oil futures and energy-sector ETFs will likely see a surge in implied volatility and demand. We see a complicated picture for the US Dollar, which initially benefited from a flight to safety. However, the deeply negative Nonfarm Payrolls report, showing a loss of 92,000 jobs, signals a sharp economic downturn that could force the Federal Reserve’s hand. This conflict between safe-haven demand and weakening fundamentals means traders might use options like straddles or strangles on the DXY to profit from large price swings in either direction.

Gold Dollar And Rates Volatility

Gold’s spectacular rise to over $5,100 is the clearest signal of a major shift toward hard assets amid geopolitical and economic fear. This move is supported by a long-term trend of central bank accumulation, which saw record purchases in recent years to de-dollarize reserves. We can look to the stagflationary period of the 1970s, when gold was a top-performing asset, as a historical guide for its potential performance in the current climate. In currency markets, we should watch for divergences in central bank policy driven by this crisis. The market is now pricing out a Bank of England rate cut, strengthening the pound, while the weak US jobs data pressures the Fed. This divergence supports strategies like buying GBP/USD call options, positioning for the pound to continue outperforming the dollar. The Japanese Yen is breaking from its traditional safe-haven role because Japan is extremely dependent on imported energy, making the oil shock a direct hit to its economy. The Bank of Japan is already on high alert, but we don’t expect the yen to strengthen significantly in this environment. Therefore, we should be cautious about buying JPY and might even consider strategies that benefit from further weakness, like USD/JPY call spreads. The Australian Dollar is finding support from soaring gold prices, reflecting its status as a major commodity exporter. This presents an opportunity for us to look at currency crosses that pit commodity strength against energy import weakness. A trade like buying AUD/EUR call options could be an effective way to play this dynamic, as Europe’s economy is highly vulnerable to the energy price surge. All eyes must be on next week’s inflation data, especially the US Consumer Price Index (CPI) on Wednesday. If inflation comes in high while growth is clearly faltering, it will confirm a stagflationary environment, dramatically increasing market volatility. We should prepare for sharp moves around these data releases, as they will heavily influence central bank decisions in the coming weeks. Create your live VT Markets account and start trading now.

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Silver (XAG/USD) edged higher on Friday as the US Dollar and US Treasury yields eased after softer-than-expected US Nonfarm Payrolls data. Despite the bounce, Silver is still set for its first weekly fall in three weeks. XAG/USD traded near $84.27 at the time of writing, up about 2.73% after rebounding from a daily low around $80.17. The US-Iran conflict offered some support for safe-haven demand, limiting further drops.

Drivers Behind The Silver Bounce

Rising Oil prices linked to supply disruption through the Strait of Hormuz added to global inflation worries. This has reduced expectations for Federal Reserve rate cuts, which can weigh on a non-yielding asset such as Silver. Technically, Silver is consolidating after pulling back from the upper Bollinger Band earlier in the week. Price action is trying to hold near the middle Bollinger Band around $83, which also matches the 20-day Simple Moving Average. The RSI is near 50, while the MACD is flattening close to zero with the MACD line slightly below the signal line. The ADX is near 18, pointing to weaker trend strength and a range-bound market. A break below the middle Bollinger Band could bring $72 into view, then $64.08. A move above $93.86 could target $100 and then $121.66.

Strategy And Risk Considerations

We are seeing silver caught between conflicting signals, with the softer-than-expected jobs report providing a temporary lift. The latest US Nonfarm Payrolls showed headline strength but contained significant downward revisions for prior months, a pattern of uncertainty we also saw throughout early 2024. This economic ambiguity supports a range-bound environment for now. However, the major headwind remains inflation, driven by rising oil prices from supply disruptions in the Strait of Hormuz. With core inflation still stubbornly holding above the 3% level we struggled with in 2025, the market is reducing bets on Federal Reserve rate cuts. The CME FedWatch tool now shows a diminished probability for a rate cut in the next two meetings, which caps the upside for non-yielding silver. The technical indicators confirm this lack of direction, pointing to consolidation between the key support around $72 and resistance near $94. The low reading on the Average Directional Index (ADX) suggests this sideways trading action is likely to persist in the immediate future. This environment makes selling volatility an attractive option for generating income. Given this outlook, we should consider implementing strategies like an iron condor for the coming weeks, selling out-of-the-money call options above $95 and put options below $70. This approach profits if silver remains within this defined range, capitalizing on the current market indecision and time decay. On the other hand, the US-Iran conflict is a significant risk that could cause a violent price breakout. We saw silver’s implied volatility spike above 30% during similar geopolitical tensions in 2024, so we must be prepared for a sudden move. Traders anticipating a sharp breakout, but uncertain of the direction, could look to buy long strangles to profit from a surge in volatility. Create your live VT Markets account and start trading now.

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Susan Collins, President of the Federal Reserve Bank of Boston, said the Fed would need clear evidence that inflation is easing before cutting interest rates again. Speaking in Springfield, Massachusetts on Friday, she said there was no urgent need to change the current policy stance. She expects the Fed’s rate target to hold steady for some time and said now is a time to be patient and deliberative. She described current Fed policy as well positioned and said the economic outlook is fairly benign, with financial conditions supporting expansion.

Policy Patience And Inflation Proof

Collins said the job market appears relatively stable, and that hiring could pick up but is likely to remain modest. She expects solid growth and said inflation is expected to ease later this year. She said the inflation outlook is uncertain and includes upside risks, with inflation expected to ease slowly towards the 2% target. She added that the latest developments on tariffs could add further inflation pressure, and that the outlook is attended by considerable uncertainty. The message for the coming weeks is that we should not expect interest rate cuts. This view is reinforced by the latest February 2026 CPI data, which showed core inflation holding stubbornly at a 3.1% annual rate. Policy is likely to hold steady for some time until we see clear evidence of inflation ebbing. There is no urgent need to change the current monetary policy. The job market appears relatively stable, with the most recent report showing a solid 190,000 jobs added in February 2026 while the unemployment rate held at 3.8%. This gives policymakers the flexibility to be patient and deliberative with rate policy.

Market Positioning Under Fed Steadiness

The outlook for inflation remains uncertain, especially with potential upside risks. Recent discussions about reviewing tariffs on imported goods, which surfaced in late February, could bring more inflation pressure. This suggests that options pricing, particularly for interest rate-sensitive instruments, may not fully reflect this considerable uncertainty. Given this, we should consider that bets on near-term rate cuts are likely to be unprofitable. Strategies that benefit from a stable or higher rate environment, such as selling out-of-the-money call options on June 2026 SOFR futures, could be advantageous. The current policy is seen as well positioned for the economic outlook. With the central bank on hold, the threshold for them to step in and support markets is higher than it has been. This implies that hedging strategies, such as buying puts on major equity indices, might be prudent. Financial conditions are still seen as supporting expansion, but this patience reduces the safety net. We need to remember the lessons from the past. Looking back at 2025, Fed funds futures markets consistently priced in several rate cuts that ultimately did not happen as inflation eased more slowly than expected. History suggests caution is warranted when betting against a patient central bank. Create your live VT Markets account and start trading now.

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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.

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