As the yen weakens, GBP rises for a second day and tests resistance at 209.60
GBP/JPY rose for a second day. It bounced from near 207.50 and climbed from a low of 207.57 to test resistance at 209.60. The 209.60 level also blocked gains last Thursday and Friday.
The rise followed weak Japanese GDP data, which eased recent Yen strength. Japan’s economy grew just 0.1% in Q4 2025, below the 0.4% forecast. The annualised rate was 0.2%, far under the 1.6% forecast.
AUD/USD climbs toward 0.7090 in Europe as the Australian dollar rebounds; investors await the RBA minutes release
The Australian Dollar rose against the US Dollar after a two-day pullback. AUD/USD was up 0.2% to around 0.7090 in European trading on Monday.
Markets are waiting for the Reserve Bank of Australia (RBA) minutes on Tuesday. At its previous meeting, the RBA raised the Official Cash Rate by 25 basis points to 3.85%.
Australian Jobs Data In Focus
Australian jobs data for January is due on Wednesday. Forecasts point to 20K new jobs, down from 65.2K in December. The Unemployment Rate is expected at 4.2%, up from 4.1%. In the US, trading was quieter because of President’s Day. The US Dollar Index was slightly higher, near 97.00. Attention also turns to the Federal Open Market Committee (FOMC) minutes from the January meeting, due on Wednesday. Central banks aim to keep prices stable and often target inflation near 2%. They mostly use interest rates. They raise rates to tighten policy and cut them to loosen policy. Policy boards, led by a chair or president, make these decisions. Public communication is also limited during the blackout period.Central Bank Expectations Shift
In February 2025, markets expected the RBA to stay hawkish. That helped keep the Aussie dollar supported near 0.7100 against the US dollar. Today, the picture is very different. AUD/USD is trading much lower, closer to 0.6600. This shows how central bank expectations have shifted over the past year. A year ago, the RBA cash rate was 3.85%, and Governor Bullock signaled more hikes were possible. Now the cash rate is lower, at 3.60%, after cuts in late 2025. Meanwhile, the US Federal Reserve rate is 4.00%. This gap in rates now makes holding US dollars more attractive than holding Australian dollars, compared with a year ago. Australia’s labor market also looks weaker. In February 2025, markets were looking for a solid gain of 20,000 jobs. But the latest data for January 2026 showed a smaller increase of only 12,000. The unemployment rate has also risen from 4.2% a year ago to 4.5% now. This reduces the need for the RBA to consider rate hikes. Meanwhile, the US Dollar Index (DXY) was steady around 97.00 in February 2025. Today, it is much stronger, trading near 104.50. The US economy has held up better than many other developed economies. This strength in the greenback is a major headwind for AUD/USD. Given this backdrop, we think the Aussie dollar has limited upside in the coming weeks. Derivatives traders may consider strategies that benefit if AUD/USD stays in a range or drifts slightly lower, such as selling call spreads. Implied volatility is also lower than it was during the 2025 hiking cycle, which makes options strategies cheaper to put on. The upcoming RBA minutes and the quarterly inflation report will be key for any sign the central bank is shifting away from its neutral stance. Stronger-than-expected Australian data could still trigger a short-term rally, but the broader trend looks capped. For now, we prefer selling into strength rather than chasing rallies. Create your live VT Markets account and start trading now.OCBC strategists say equity market turmoil is boosting the Swiss franc as EUR/CHF stabilises well below 0.92
OCBC said recent equity market volatility has come with more Swiss franc gains. EUR/CHF is now holding well below 0.92. It said continued CHF strength could raise the risk that inflation falls below Swiss National Bank (SNB) forecasts.
It noted that last week’s Swiss CPI was in line with the 0.1% year-on-year forecast for 1Q26. It added that more CHF gains could still push inflation below those forecasts.
Snb Tolerance For A Stronger Franc
OCBC said a long run of franc appreciation could test the SNB’s current tolerance for a stronger currency. It also said the bar for a return to negative interest rates remains high. The report pointed to recent Riksbank minutes. These minutes said Swedish krona strength is a downside risk to inflation. OCBC said Switzerland could face the same issue. If CHF strength continues, the SNB may shift to a softer policy stance. Recent equity market swings have pushed the VIX volatility index above 20% over the past month. This has driven safe-haven demand for the Swiss franc. As a result, EUR/CHF has dropped below 0.9200. That is a clear move away from the 0.95–0.97 range seen for much of 2025. This ongoing CHF strength is becoming a key problem for Swiss policymakers. A strong franc threatens the SNB’s inflation goals. It makes imports cheaper and can pull down local prices. With January 2026 inflation at just 0.1% year over year, the SNB has little room for further downside. This reading is close to the lower end of the SNB’s 0–2% target range. Any extra CHF strength would add to the risk of very low inflation.March 19 2026 SnB Meeting
We think this makes it more likely the SNB will signal a softer policy stance. That would be similar to how Sweden’s Riksbank has discussed the krona. For derivatives traders, this raises the case for positioning for a rebound in EUR/CHF. If the SNB hints at a shift, EUR/CHF could jump. One way to express this view is to buy EUR/CHF call options that expire after the next SNB meeting. The key event is the SNB policy assessment on March 19, 2026. Any verbal intervention or more dovish comments ahead of the meeting could weaken the franc. Traders should also watch option volatility. If it rises, it may show the market is pricing in a higher chance of a policy change. Create your live VT Markets account and start trading now.India’s January trade deficit beat forecasts, hitting $34.68B vs. $26.14B expected
India’s merchandise trade deficit rose to $34.68bn in January, above the expected $26.14bn.
The trade deficit is the gap between imports and exports. A larger deficit means the country bought more from abroad than it sold overseas during the month.
Implications For The Indian Rupee
A January deficit this far above forecasts creates immediate downside pressure on the Indian rupee. We see this as a strong signal to consider short INR positions versus the U.S. dollar. Traders can use USD/INR futures or buy call options to position for potential rupee weakness in the weeks ahead. The wider deficit is being driven by high import costs. Brent crude has recently firmed around $95 per barrel, well above the $85 average seen in the last quarter of 2025. At the same time, export growth has been weak as manufacturing PMI readings from Europe soften. Costly imports combined with weaker external demand typically lead to a larger deficit. This puts the Reserve Bank of India in a tough spot. A weaker rupee can raise imported inflation. As markets start to price in a higher chance of a hawkish stance, bond market volatility may increase. Interest-rate derivatives, such as paying fixed on overnight index swaps, could become more appealing. For equity derivatives, the move may split sectors. Import-heavy businesses—such as autos and consumer durables—could see margin pressure, which may support short positions in related futures. Export-focused sectors like IT and pharmaceuticals often benefit from a weaker rupee, which may support long positions in their index futures.Policy Response And Market Reaction
We are monitoring this closely. It echoes the third quarter of 2025, when a smaller deficit spike sparked notable currency jitters. At that time, the central bank mainly used verbal intervention to steady markets. With the current deficit nearly 33% above expectations, a more direct policy response cannot be ruled out. Create your live VT Markets account and start trading now.Oil prices stay buoyed by a risk premium as markets await Geneva talks, but easing tensions could revive bearishness and push prices lower
Oil prices stayed firm because of a large risk premium. Markets are waiting for US-Iran talks and Russia-Ukraine talks, which are due to start in Geneva on Tuesday. ICE Brent edged higher on Friday after US CPI came in lower than expected, but it still ended the week lower.
Uncertainty about US-Iran relations kept the risk premium in place after President Trump said regime change would be best for Iran. If the Geneva talks take a calmer, de-escalatory turn, the risk premium could fade. That would leave weaker supply-and-demand conditions to pull prices lower.
Geopolitical Risk Premium
Attention has also shifted to OPEC+ ahead of its 1 March meeting, where the group will decide April production levels. OPEC+ had paused supply increases in the first quarter because of seasonal demand patterns. Analysts’ balance sheet forecasts point to a large surplus in the second quarter. This suggests there is no need to add supply from April. Reports say some OPEC+ members believe the market can absorb extra output. If the group raises production, surplus expectations would grow even more. The article was produced using an Artificial Intelligence tool and reviewed by an editor. The current market looks similar to early 2025, when a large risk premium helped support oil prices. With Brent near $88 a barrel, that support looks fragile. It seems driven more by geopolitical headlines than by market fundamentals. If tensions ease, this price floor could disappear quickly.Options Positioning
We remember following the US-Iran and Russia-Ukraine talks in Geneva in February 2025, which created a very similar setup. Once those meetings produced a more de-escalatory tone, the risk premium fell away fast. In the weeks that followed, Brent dropped by more than 12% as the market focused again on a growing supply surplus that had been overlooked. Today’s fundamentals also look bearish. U.S. crude inventories, reported by the EIA, have risen for five straight weeks to more than 449 million barrels. This is reinforced by talk that OPEC+ may ease production limits at its March meeting. The International Energy Agency’s latest report also expects a surplus to build through the second quarter of this year. This parallel suggests that any sign of easing geopolitical tensions could again trigger a sharp sell-off. Traders may want to consider buying put options on Brent or WTI futures with April or May 2026 expirations. This approach can benefit from a possible price drop, while keeping the maximum loss limited to the option premium. For a lower-cost alternative, a bear put spread may be more efficient. This means buying a put at a higher strike price and selling a put at a lower strike price with the same expiration. This reduces the upfront cost and can work well if oil prices fall moderately, rather than collapsing. Create your live VT Markets account and start trading now.WTI crude stays below $63 as traders watch US-Iran talks, with prices holding within Friday’s range
WTI crude traded in a tight $62.00–$63.00 range on Monday. Moves above $63.00 were limited, while support near $62.00 held. Prices were still about 4% below last week’s high of $65.65.
Markets waited for updates on US-Iran nuclear talks. Trading was also quiet because many Asian markets were closed for Lunar New Year, and US banks were shut for the President’s Day holiday. Iranian officials said talks included possible deals in energy, mining, and aircraft.
Geopolitical Risks And Market Positioning
US Secretary of State Marco Rubio said the US prefers a negotiated outcome, but did not rule out military action. The US sent a second aircraft carrier to the Middle East. Reports also said President Trump would support Israeli strikes on Iran’s missile program if talks fail. Rumours that OPEC+ could restart output increases from April also pressured prices. The idea is that supply would rise in response to expectations of stronger global demand during the western summer. WTI stands for West Texas Intermediate. It is a US “light” and “sweet” crude, distributed through the Cushing hub. Its price is influenced by supply and demand, geopolitics, OPEC decisions, the US Dollar, and weekly inventory reports from the API (Tuesday) and the EIA (Wednesday). The two reports are within 1% of each other about 75% of the time. WTI is showing a familiar pattern: a narrow range, held back by geopolitical uncertainty. In 2025, markets saw similar price action while waiting for clear signals on major supply events. For now, the US-Iran negotiations remain the main catalyst that could break this consolidation. Recent Energy Information Administration (EIA) data adds uncertainty. In the report for the week ending February 13, 2026, inventories unexpectedly fell by 2.1 million barrels, despite forecasts for a small build. This points to tighter physical supply. At the same time, global demand figures for January 2026 showed a 1.5% year-over-year increase. Together, these factors are helping support prices.Options Strategies For A Breakout
For derivatives traders, this setup suggests implied volatility may be too low ahead of a major news event. One possible strategy is a long straddle: buying a call and a put with the same strike price and expiration. This can benefit from a large move in either direction—down if talks succeed, or up if talks fail. OPEC+ also recently kept production steady at its late-January meeting, saying market risks look balanced. This is more cautious than in parts of 2025, when the group was quicker to raise output to cool prices. Their pause suggests they may also be waiting for clarity on Iran before acting. The near-term focus is on options that expire after the expected conclusion of the nuclear talks. Any sign of a breakthrough could increase downside risk below the $62.00 support level. On the other hand, signs the talks are failing could make calls targeting the prior resistance near $65.65 more attractive. Create your live VT Markets account and start trading now.USD/JPY rises 0.54% to 153.60 as weak Japanese GDP and thin holiday liquidity lift the pair
USD/JPY traded near 153.60 on Monday, up 0.54%. Trading was quieter because several Asian markets were closed for the Lunar New Year, and US markets were closed for President’s Day. The US Dollar stayed fairly steady, which helped support the pair during the long US weekend.
The US Dollar Index (DXY) hovered near 97.00, showing a small gain against a basket of six major currencies. Markets remained cautious ahead of a busy week of economic data and a speech from Federal Reserve Vice Chair for Supervision Michelle Bowman, which could provide clues about future policy.
Japan GDP Miss Weighs On Yen
In Japan, preliminary fourth-quarter GDP data weighed on the yen. The economy grew just 0.1% quarter-on-quarter, below the 0.4% forecast. Annualised growth was 0.2%, well under the 1.6% forecast. In the previous quarter, Japan’s GDP fell 0.7%, equal to a 2.6% annualised decline. The latest numbers lowered expectations for a Bank of Japan rate hike as early as March. Markets also focused on a meeting between the Prime Minister and BoJ Governor Kazuo Ueda. Ueda said the discussion was about general economic and financial conditions and did not include any direct request about interest rates. Attention now shifts to central bank remarks and scheduled data releases this week. Looking back at early 2025, disappointing Japanese data quickly weakened the yen. The Q4 2024 GDP report came in far below expectations, which reduced the chances of a Bank of Japan rate increase at the time. This is a clear reminder that the yen can react quickly to signals about domestic growth.Rate Differential Drives Trade
The main driver today is the wide interest rate gap between the United States and Japan. The US Federal Reserve funds rate is holding near 4.50% as inflation remains sticky. Inflation recently rose 2.8% year-on-year in January, keeping pressure on the Fed to stay restrictive. This gives the dollar a strong yield advantage. By contrast, the Bank of Japan policy rate remains near 0.10%, even after ending negative rates last year. For derivatives traders, this setup can make selling JPY call options appealing as an income strategy. By selling calls with strike prices well above the current market, traders collect premium based on the view that the large rate gap will limit any sharp yen rally. In other words, it is a bet that USD/JPY will keep drifting higher or trade in a range. Still, caution is important. With USD/JPY trading closer to 158.00, a level that has previously prompted warnings from Japanese officials, downside protection can be valuable. Buying far out-of-the-money USD/JPY put options can be a relatively low-cost hedge against a sudden policy change or direct intervention by Japanese authorities. This can help protect against a fast, unexpected drop in the pair. Create your live VT Markets account and start trading now.In Europe, sterling steadies near 1.3645 against the dollar as traders await UK December jobs data
The Pound Sterling traded near 1.3645 against the US Dollar during the European session on Monday. GBP/USD was steady as focus shifted to UK labour market data for the three months to December.
The UK ILO unemployment rate is expected to hold at 5.1%, the highest since January 2024. Average earnings excluding bonuses are forecast to rise 4.2% year on year, down from 4.5%.
Uk Inflation And Labour Data Focus
UK CPI data for January is due on Wednesday. Headline inflation is forecast at 3.0% year on year, down from 3.4% in December. The US Dollar was steady during an extended US weekend, with markets closed on Monday for a holiday. The US Dollar Index (DXY) edged up to around 97.00. Markets are also watching comments from Federal Reserve Governor Michelle Bowman on Monday. Her remarks could shift expectations for US interest rates. At the same time in 2025, the Pound was holding near 1.3645 against the Dollar as traders waited for key data. Today, the pair is much lower, near 1.3150. The calm of that period now feels far away. The sharp drop over the past year has been driven by the economic split that was starting to form back then.Rate Differentials And Strategy Implications
Expectations for a weaker UK labour market proved accurate. Official 2025 data later showed the unemployment rate rose to 5.2% for that period. Wage growth also slowed more than expected, giving the Bank of England a clear signal. That trend continued, and the latest figures from January 2026 show wage growth has eased to 3.1%. This slowdown gave the Bank of England room to start cutting rates in August 2025, which was a key reason for the Pound’s decline. Since then, the BoE has delivered three rate cuts, taking the base rate down sharply. This is very different from the path followed by the US Federal Reserve. In February 2025, the US Dollar Index was steady near 97.00. Today, it is much higher, around 104.50, showing a major shift in policy expectations. The move has been supported by January 2026 US inflation data, which came in hotter than expected at 3.4%. That reduced the pressure for aggressive US rate cuts. In early 2025, markets were looking for signs of US rate cuts. Instead, the Fed kept rates unchanged for longer than expected because service-sector inflation stayed firm. This widened the interest-rate gap and has strongly favoured the US Dollar over the Pound. The Fed only made its first small cut in December 2025, well after the BoE began easing. Given this backdrop, it may make sense to consider strategies that benefit if the Pound stays weak against a more resilient Dollar in the weeks ahead. One approach is buying GBP/USD put options, which could gain if the pair falls toward the 1.3000 psychological level. Another is selling out-of-the-money call options to collect premium while taking the view that a strong rally is unlikely. Create your live VT Markets account and start trading now.Eurozone industrial production beat forecasts month on month, falling 1.4% (seasonally adjusted) versus the expected 1.5% drop
Eurozone industrial production fell by 1.4% month on month in December. That was slightly better than expected, as the forecast was a 1.5% drop.
The result was 0.1 percentage points less negative than the estimate. In other words, output fell a bit less than the market expected.
Industrial Output Surprise
December’s figure was still negative, but it beat the market’s more pessimistic view. This points to a small amount of resilience in the Eurozone economy, which may ease the most bearish views for a short time. We do not see it as a sign of strength. Instead, it slightly reduces near-term downside risk for European assets. This also matches other recent data. For example, January’s manufacturing PMI rose a little, but at 45.1 it stayed deep in contraction. That suggests the industrial weakness seen in late 2025 has continued into the new year. Because of this, any rally in industry-heavy equity indices, such as Germany’s DAX, should be treated cautiously. The European Central Bank is unlikely to change course based on one release, especially while core inflation remains sticky at 2.4% in January. Inflation is still the main focus, so rate cuts do not look close, even with weak growth. This tension should limit how far markets can rise. For equity index derivatives, this may be a chance to sell out-of-the-money call options on the Euro Stoxx 50. This approach can benefit if the market stays range-bound and fails to break out. We think implied volatility still offers attractive premiums for this type of view. In FX markets, the euro may hold steady in the very short term, but the broader backdrop is still weak versus the US dollar. We are looking at EUR/USD put option spreads to position for a gradual move back toward 1.07. This defined-risk strategy can profit if the euro’s recent strength fades.Positioning And Market Implications
We saw a similar setup in Q4 2025: data that was “less bad” led to short-lived rallies that later faded. That history suggests any strength over the next week or two could be used to position for the wider slow-growth trend to continue. The main problem—a weak industrial sector—has not gone away. Create your live VT Markets account and start trading now.Geoff Yu expects the RBNZ to keep rates at 2.25%, but markets anticipate tightening amid persistent inflation pressures
BNY’s EMEA Macro Strategist Geoff Yu expects the Reserve Bank of New Zealand to keep the policy rate at 2.25% on 18 February. However, he notes that markets are increasingly pricing in tighter policy, as inflation remains stubborn.
BNY says that confirmation of a policy shift could support higher NZD valuations. It adds that the currency is relatively underheld, which may affect positioning in NZD crosses.
