South Africa’s unemployment rate fell to 31.4% in Q4 from 31.9% in the previous quarter
South Africa’s unemployment rate fell to 31.4% in the fourth quarter. This was down from 31.9% in the previous quarter.
The latest figures show South Africa’s unemployment rate dropped to 31.4% in the fourth quarter of 2025. This is a positive sign for the local economy. A stronger job market can support higher consumer spending. It also puts the South African Reserve Bank’s (SARB) next decision in focus, since stronger growth can keep inflation pressures in place.
BBH’s Elias Haddad expects January inflation to ease, keeping Canadian rates at 2.25% and Q1 price growth near target
BBH’s markets strategy team expects Canadian inflation to cool in January. They also expect the Bank of Canada to keep its policy rate unchanged at 2.25% for a while. In BBH’s projections, inflation is close to the target in Q1.
Headline inflation is forecast at 2.4% year over year for a second straight month. Core inflation (the average of trimmed and median CPI) is expected at 2.55% year over year, down slightly from 2.6% in December.
In foreign exchange, USD/CAD is expected to trade in a 1.3500 to 1.3800 range in the near term. The article says it was produced using an artificial intelligence tool and reviewed by an editor.
Looking back to the start of 2025, easing inflation puts the Bank of Canada in a good position to keep rates on hold. Last January’s data showed headline inflation fell to 2.9%, down sharply from 3.4% at the end of 2024. This supports the case for the Bank to keep its rate steady at 5.0% for some time.
If the central bank stays steady, USD/CAD may also stay in a tight range in the near term. We expect the pair to trade mostly between 1.3500 and 1.3800, a range it followed for much of January 2025. As a result, implied volatility on USD/CAD options should stay low. That makes it costly to bet on big price moves.
For traders, this kind of market can suit strategies that benefit from low volatility and time decay. One approach is to sell an out-of-the-money strangle, such as puts near 1.3450 and calls near 1.3850, to collect premium. The aim is for both options to expire worthless if the pair stays in range.
If you want more defined risk, you could use an iron condor around the same levels. This strategy also benefits from limited price movement and earns income from option premium. It creates a profit zone inside the expected 1.3500–1.3800 channel while capping potential losses.
During European trading, AI-related risk aversion nudges US index futures slightly lower overall
Dow Jones futures slipped 0.03% to around 49,550 during European trading on Tuesday. S&P 500 and Nasdaq 100 futures fell 0.16% and 0.48%, to about 6,850 and 24,700.
US index futures edged lower as risk appetite weakened, extending last week’s decline tied to worries about AI-driven disruption. Software stocks led the drop, while semiconductor shares held up better on hopes that demand for high-performance computing and advanced chips will stay strong.
Fed Minutes In Focus
Markets remained cautious ahead of the Federal Open Market Committee meeting minutes due on Wednesday. Softer January US Consumer Price Index data and a steady labour market kept expectations for rate cuts later this year intact. The CME Group’s FedWatch tool shows a 52.7% chance of a 25-basis-point cut in June and 42.7% in July. Traders are also watching earnings later this week from Walmart, Warner Bros. Discovery, and Booking Holdings. Key data due on Friday include Q4 annualised Gross Domestic Product and the core Personal Consumption Expenditures price index. These reports may shape expectations for the Fed’s next moves. With futures pulling back, the week is starting on a cautious note. One approach is to consider protective put options on broad indices like the SPX or QQQ to hedge against further downside. A simple idea is to buy near-term puts to benefit from short-term fear ahead of major economic releases.Options Strategies To Consider
The gap between software and semiconductor stocks is creating a potential pairs-trade setup. This pattern built through 2025, with semiconductor ETFs consistently beating software-focused funds by a wide margin. One way to express this view is to buy call options on a semiconductor index while also buying put options on a software index, aiming to capture continued divergence. Uncertainty about the Fed’s next step is lifting short-term volatility. The VIX has recently moved above 15. With the market split between a June and July cut, option premiums on index ETFs are higher than usual. If you expect prices to stay in a range after the FOMC minutes, selling premium could make sense—for example, using an iron condor on the SPY. Upcoming earnings from names like Walmart also create event-driven opportunities. Historically, Walmart can move about 4–5% after earnings, so a straddle could be a way to trade that expected volatility in either direction. Friday’s core PCE data will also be important, since a surprise reading could quickly change the current rate-cut odds. Create your live VT Markets account and start trading now.Italy’s EU trade deficit widens to €2.447B, down from €1.959B previously
Italy’s trade balance with the EU posted a deficit of €-2.447B in December. This was worse than the prior period’s deficit of €-1.959B.
The figure measures the difference between exports and imports with EU partners. The December reading shows Italy imported more than it exported, and the gap widened versus the previous report.
Implications For Italy Economy And Markets
Italy’s trade deficit with the EU widened in December 2025. That can signal weaker momentum in the economy. It may reflect softer export performance, stronger import demand, or both. Markets may view this as negative for near-term growth expectations, which can also pressure the Euro. This result also fits with other recent data. ISTAT reported in early February 2026 that Italian industrial production fell 0.5% in December 2025. Taken together, these releases raise the risk of weaker earnings for Italian firms. One way to position for this is to buy put options on the FTSE MIB, aiming to benefit if Italian stocks fall in the coming weeks. Bond markets are also showing more caution. The spread between the Italian 10-year BTP and the German Bund has widened by 15 basis points this month, reaching 1.65%. Traders can use futures to express a view that the spread will widen further, which effectively means shorting Italian debt relative to German bonds. A similar pattern played out during the 2022 energy crisis, when Italian risk was repriced sharply. This softness in Italy complicates the European Central Bank’s job. January 2026 Eurozone data showed core inflation still elevated at 2.8%. If inflation stays high, the ECB may keep policy tight, even if parts of the economy weaken. That tension can raise volatility across markets, which can make volatility-focused strategies—such as EUR/USD straddles—more attractive.Key Risks And Trading Considerations
Create your live VT Markets account and start trading now.MUFG’s Derek Halpenny says stronger JGBs are easing fiscal worries, but risk-off still dominates as the yen leads G10 on lower yields
Global markets turned cautious. US Treasury yields fell and equities weakened. In G10 FX, the Japanese yen outperformed, while gold and silver prices dropped.
The yen got a lift from a strong rally in Japanese government bonds (JGBs). A 5-year JGB auction also showed healthy demand, with a bid-to-cover ratio of 3.1 versus a 12-month average of 3.48.
Japan Fiscal Signals And Market Reaction
Reports say Prime Minister Takaichi is expected to give a speech outlining steps on fiscal management. The reporting suggests the goal is to calm market worries about Japan’s fiscal direction. The article said yen-linked fiscal risk premiums have been falling as concerns fade. It also noted the piece was produced with help from an AI tool and reviewed by an editor. As risk aversion spreads, the Japanese yen is strengthening as a safe-haven. USD/JPY is now testing 147.50, down sharply from recent weeks, and the move could extend. Derivatives traders may want to prepare for further yen gains while global equity markets remain fragile. In this setup, consider buying JPY call options or selling USD/JPY call spreads to position for more downside in USD/JPY. Given the momentum, strikes below 145.00 for March and April expiries may make sense. Easing fiscal worries remove a key obstacle that had been holding the yen back.Jgb Stability And Boj Optionality
Stability in the JGB market supports this move, with 10-year yields holding near 0.74%. A firmer bond market gives the Bank of Japan more room to step away from ultra-loose policy later this year. Markets are now pricing a higher chance of a policy shift, which is supportive for the yen. Looking back from 2025, we remember how weak the yen was in prior years, when USD/JPY pushed above 151 on policy divergence and fiscal fears. The current backdrop looks more like a shift away from that regime. This raises the chance that the multi-year weak-yen trend is starting to reverse. Yen volatility has also been high. If fiscal risks keep fading, longer-dated implied volatility in pairs like EUR/JPY and USD/JPY may drift lower. Selling longer-term volatility with strategies such as strangles could help generate premium. Create your live VT Markets account and start trading now.Traders watch FOMC minutes as the Dollar Index holds above 97.00 near 97.20 in Europe
The US Dollar Index (DXY) stayed above 97.00 and traded near 97.20 during European trading on Tuesday. It was firmer for a second day as markets waited for the FOMC meeting minutes, due on Wednesday.
Next, traders will focus on the Q4 annualised GDP and the core PCE Price Index, both due on Friday. Softer US CPI data for January has raised expectations for rate cuts later this year.
Fed Minutes And Near Term Catalysts
CME Group’s FedWatch shows a 52.7% chance of a 25-basis-point cut in June and a 42.7% chance in July. January Nonfarm Payrolls rose by the most in over a year, and the Unemployment Rate fell unexpectedly. The PCE Price Index has stayed closer to 3% than the Fed’s 2% target. Disinflation has also been uneven since mid-2025. The USD is the US currency and is widely used outside the US. It accounts for over 88% of global FX turnover, or about $6.6 trillion a day (2022). Fed policy is a major driver of the USD, mainly through interest rates set to manage inflation and employment. Quantitative easing increases credit and often weakens the USD. Quantitative tightening reduces bond buying and tends to support the USD. The US Dollar Index is holding up, creating a difficult setup. Markets expect the Fed to start cutting rates around mid-year, but the dollar’s current strength suggests traders are not fully convinced. This push and pull may create opportunities for derivative traders in the coming weeks.Options Positioning And Volatility
Recent data has made the outlook less clear, but it supports the dollar for now. Final Q4 2025 GDP was revised slightly higher to 3.1%. More importantly, January core PCE inflation was a stubborn 2.9%. This matches the uneven disinflation seen in late 2025 and gives the Fed less reason to cut rates quickly. The chance of a June rate cut, which was above 50%, has now eased as traders adjust positions. A similar pattern played out in early 2024, when markets priced in large cuts that the Fed did not want to deliver. That led to a rebound in yields and the dollar. This history argues for caution, and implied volatility in interest rate futures is likely to rise. With this level of uncertainty, we think options strategies offer the best risk-reward. Traders who expect the Fed to delay cuts could consider buying call options on the US Dollar Index to position for more strength. Alternatively, a long straddle on a major pair like EUR/USD could benefit from a large move once the Fed’s policy path becomes clearer. The labour market remains the main reason the Fed can afford to wait. January’s strong jobs report, along with weekly jobless claims holding below 210,000, suggests there is little urgency to ease policy. We will watch closely for any change in tone from Fed officials, as their comments are likely to drive sentiment before the next meeting. Create your live VT Markets account and start trading now.Deutsche Bank’s Raja says weak UK labour market supports BoE rate cuts as slack rises and unemployment climbs
UK labour market data still look weak. HMRC payrolled employees fell for a fifth straight month. The January flash estimate shows an 11k drop.
Redundancies are still high, at 145k in the three months to Dec-25 (LFS data). The unemployment rate rose to 5.2% over the same period.
Labour Market Slack Increasing
The single-month unemployment rate is 5.4%. Youth unemployment hit 16.1% in the three months to December. Among economically inactive people aged 16–64, 23% say they want a job. Surveys also suggest hiring plans are limited. Deutsche Bank expects slack in the labour market to rise further. It forecasts two more Bank of England rate cuts this year, likely by summer. This view is based on wage growth cooling and CPI moving closer to target by spring.Implications For Rates
Ongoing weakness in the UK jobs market points to a clear direction for our strategy. As slack builds—shown by the unemployment rate reaching 5.2% in December 2025—we should expect the Bank of England to act sooner rather than later. We can position for lower rates using SONIA futures, which tend to rise as rate-cut expectations firm up. This view is backed by fresh data released this week. The Office for National Statistics said the unemployment rate remains high at 5.3%. At the same time, wage growth has slowed to 4.0%, well below the highs seen in 2025. This gives the Bank of England more reason to start easing policy to support the labour market. Rate cuts usually pressure the British Pound. We should consider trades that can benefit from a weaker sterling, such as buying GBP/USD put options. This could profit if sterling falls as the interest-rate gap with the US narrows. We saw a similar pattern in earlier easing cycles, including after the 2008 financial crisis. Large rate cuts were followed by a weaker pound. Today’s backdrop—slower inflation and a flat jobs market—looks similar to past periods of currency weakness. So we should not assume this time will be different. On the other hand, lower rates often support equities. We could consider buying call options on the FTSE 250, which is more focused on the UK economy. Rate cuts reduce borrowing costs for these firms and could help lift the market by summer. Finally, a change in central bank policy can raise market volatility. Uncertainty about the timing and size of cuts can cause larger moves in both FX and equities. We may want to buy options that benefit from higher volatility, which can also act as a hedge regardless of market direction. Create your live VT Markets account and start trading now.BNP Paribas expects 2026 eurozone growth of 1.6%, helped by Germany’s stimulus and defence spending, with inflation below 2%
BNP Paribas forecasts Eurozone growth of 1.6% in 2026, up from 1.5% in 2025. It expects quarterly growth of around 0.5% throughout 2026.
Inflation is expected to stay below the 2% target in 2026. BNP Paribas sees inflation rising in 2027, but only gradually.
Eurozone Growth Outlook
The outlook depends on stronger growth and fiscal support in Germany, along with higher military spending. BNP Paribas expects these factors to lift European growth compared with the United States. Based on this view, it expects the US dollar to keep weakening against the euro. It also forecasts EUR/GBP will rise steadily to 1.20 by Q4 2026. BNP Paribas expects the European Central Bank to raise rates in the second half of 2027. This would take the deposit facility rate to 2.5%. Overall, the Eurozone outlook remains firm. The 2026 growth forecast is unchanged at 1.6% after a resilient 2025. Recent data supports this steady trend. For example, the January 2026 S&P Global Eurozone Composite PMI came in at 51.5, pointing to continued expansion. This suggests derivative traders may want to consider trades that benefit from stable, positive momentum in Europe.Trading Implications
Inflation is still under control. Eurostat’s flash estimate for January 2026 puts headline inflation at 1.8%, comfortably below the 2% target. This supports the view that the ECB is unlikely to hike before the second half of 2027. A steady policy outlook may favor long-dated options strategies that benefit when volatility stays lower than expected. This contrasts with a cooling US economy. Q4 2025 GDP growth was slightly below forecasts, and recent jobs data shows wage pressure is easing. This gap in economic momentum is likely to be a key theme in the coming weeks. As a result, the dollar may continue to weaken against the euro. For traders, this favors a long EUR vs. USD view. Buying EUR/USD call options or selling put options are possible ways to express this. Because the forecast implies a gradual rise, traders may prefer structures that profit from a steady climb rather than a sudden jump. A similar move is expected in EUR/GBP. BNP Paribas expects a moderate rise toward 1.20 by the end of 2026. The Bank of England has sounded more dovish than the ECB, as the UK posted weaker growth in late 2025. This policy gap should continue to support the euro against the pound. The Eurozone’s 1.5% growth in 2025, despite global uncertainty, helped set up today’s stronger base. Supportive German fiscal policy and coordinated increases in military spending are now adding to growth. This underlying strength suggests that short-term dips in the euro could offer buying opportunities. Create your live VT Markets account and start trading now.GBP/JPY falls 0.85% to around 207.50 after weaker UK jobs data sparks heavy selling pressure
GBP/JPY fell nearly 0.85% to around 207.50 during Tuesday’s European session. The drop followed UK labour market data for the three months to December.
The ILO unemployment rate rose to 5.2%, its highest level in five years, versus expectations of 5.1%. Job growth came in at 52K, down from 82K previously.
Uk Labour Market Weakness Pressures Pound
Average Earnings Excluding Bonuses eased to 4.2% year-on-year from 4.4%, after the prior reading was revised to 4.4% from 4.5%. Average Earnings Including Bonuses slowed to 4.2% from 4.6% in the three months to November. These figures strengthened expectations that the Bank of England could cut rates soon. UK CPI data for January is due on Wednesday. Meanwhile, the Japanese yen traded broadly stronger after recovering Monday’s losses. Japan’s GDP grew 0.1% in Q4 2025, below forecasts of 0.4%, following a 0.7% decline in Q3 2025 (revised from -0.6%). The sharp fall in GBP/JPY reflects a weakening UK labour market. With unemployment rising to a five-year high of 5.2% for the period ending December 2025, the data points to a cooling economy. This has shifted expectations for the Bank of England’s next policy move.Derivative Strategy For Further Gbp Jpy Downside
Rate cuts now look more likely in the near term. The SONIA futures market is pricing an 85% chance of a 25-basis-point cut by the May meeting. This backdrop suggests the Pound could remain under pressure. For derivatives traders, this supports bearish GBP positioning in the weeks ahead. One defined-risk approach is buying GBP/JPY put options with strikes below the 207.00 level. These can gain value if the pair continues to fall as rate-cut expectations build. A similar pattern appeared in 2019. A run of weak labour reports was followed by a more dovish BoE stance, and the Pound weakened over the next quarter. The current setup shows clear similarities. On the other side, the yen has stayed firm despite weaker GDP growth in late 2025. Part of this resilience appears tied to expectations that the Bank of Japan is slowly moving toward policy normalization. A soft Pound alongside a steadier yen supports a bearish GBP/JPY view. Attention now turns to Wednesday’s UK CPI release for January. A softer inflation print would likely reinforce expectations for BoE cuts and could trigger another move lower in the Pound. That makes positioning for further GBP weakness especially relevant ahead of this key data. Create your live VT Markets account and start trading now.WTI trades above $63 as markets calm, with traders watching US-Iran talks and rangebound prices
Crude oil prices dipped slightly on Tuesday in quiet trading, but they stayed within February’s range. The US benchmark WTI eased from Monday’s $63.70 high and was holding above $63.00 at the time of writing.
With many Asian markets closed for the Lunar New Year and the US returning from a long weekend, trading volumes were low. Focus stayed on US–Iran talks, set to resume in Geneva later on Tuesday.
