HSBC Asset Management expects Asia-Pacific equities excluding Japan to rise, supported by reforms, resilient demand and AI-led technology dominance
Asia Pacific equities excluding Japan rose 32% in USD terms last year. That was their best annual result since 2017. This happened even with trade and geopolitical tensions, and higher policy uncertainty.
The rise was helped by a weaker US dollar, tariff rates that were lower than feared, and a US–China trade truce. The report says recent gains are now being driven more by regional fundamentals.
EUR/GBP slips below 0.8700 as buyers weaken, nearing 0.8685 after rejection near 0.8720
EUR/GBP dropped below 0.8700 on Monday after failing near 0.8720. It then moved toward 0.8685, the low end of last week’s range. The wider downtrend channel still has resistance near 0.8720.
The pair fell 0.3% on Friday, even after the Eurozone GDP second estimate was revised higher. Eurozone Industrial Production data due Monday is expected to show a 1.5% drop in December, after a 0.7% rise in November.
Key Drivers And Near Term Focus
The UK economic calendar is empty on Monday. Focus shifts to Tuesday’s UK jobs report, which could change expectations for the Bank of England’s next move. On the daily chart, EUR/GBP traded near 0.8695 after failing at trendline resistance. The bounce from early February lows is losing steam. MACD shows a smaller positive histogram, while RSI is slightly above 50. The pair has fallen for four days in a row and is holding just above support at 0.8675, the 6 February low. A break below that level could expose 0.8612, the 4 February low. At this point in 2025, EUR/GBP also struggled below 0.8700 as bearish momentum grew. Worries about weak Eurozone industrial data weighed on the Euro. This helped form a clear downtrend channel that traders tracked closely.Shifting Macro Backdrop
In February 2026, the Eurozone picture looks different. Recent Eurostat flash estimates show core inflation remains sticky at about 2.9% last month. That makes it harder for the European Central Bank to hint at rate cuts. This is a change from last year’s weak factory output story and gives the Euro some support. In the UK, the focus has turned to a cooling economy. Wage growth slowed to 5.6% in the latest ONS report, down from above 7% in mid-2025. UK inflation also fell faster than expected to 3.4% in January 2026. Together, this raises the chance that the Bank of England cuts rates before the ECB. This shift in policy expectations is a big change from last year. With fundamentals changing, traders may consider positioning for a break away from the old downtrend. One approach is buying EUR/GBP call options with a strike near 0.8750, expiring in six to eight weeks. This offers limited risk while targeting a move higher if the data keeps diverging. To limit the risk if this view is wrong, traders could add a hedge for a deeper drop. Buying out-of-the-money put options, such as a 0.8600 strike, can help set a floor if UK data beats expectations or sentiment turns quickly. This keeps downside risk more contained while still allowing for upside exposure. Create your live VT Markets account and start trading now.DBS’s Philip Wee says the yen steadied after Japan’s Prime Minister Sanae Takaichi won a snap election in a landslide
The Japanese yen was recently the weakest currency in Asia. It has steadied since Prime Minister Sanae Takaichi won a snap election by a large margin on 8 February. After the result, USD/JPY fell from the top of its three-year range, moving down from 160 toward 140.
Markets have focused on risks in Japanese government bonds (JGBs) and the budget impact of planned stimulus. Far less attention has gone to the inflation that stimulus could create.
Yen Stability After Election
Reports say Japan’s two largest banks may increase their JGB holdings. If they do, demand for government debt could rise, which can affect bond prices and yields. Rate expectations are also driving the yen. Markets are pricing: – a Bank of Japan rate hike in April, and – a US Federal Reserve rate cut in June. Now that politics look more settled, the yen appears to have regained stability. USD/JPY has moved down from recent highs near 160 after the Liberal Democratic Party’s win on February 8. This suggests investors may be looking past earlier concerns about government debt. The gap in central bank policy is becoming the key driver for USD/JPY. Markets are leaning toward a Bank of Japan hike at the April meeting, helped by last week’s Tokyo CPI data showing core inflation still firm at 2.7%. Meanwhile, the CME FedWatch Tool shows futures markets pricing an 85% chance of a Federal Reserve rate cut at the June meeting.Options Strategy For Usd Jpy
This view supports a bearish outlook for USD/JPY in the coming weeks. Traders could consider buying USD/JPY put options to benefit if the pair moves lower. Options expiring in late April or May may capture the period when the Bank of Japan is expected to act. For a clearer, defined-risk setup, a bear put spread may fit. This means: – buying a put at a higher strike (for example, 150), and – selling a put at a lower strike (for example, 145). This reduces the upfront cost while setting a clear maximum profit and loss. It is worth remembering that through 2025, the common trade was to bet on a weaker yen as the US–Japan rate gap widened. Today, clearer politics and a shifting policy outlook point to a break from that trend. Another support for this stability is the expectation that large domestic banks will buy more JGBs. Create your live VT Markets account and start trading now.Turkey’s budget balance swung to a 214.54B deficit in January from a 528.14B surplus previously
Turkey’s budget balance fell to **-214.54B** in January. This was down from **528.14B** in the previous period.
The latest figure shows a shift from a surplus to a deficit. The change between the two readings was **742.68B**.
Turkey’s budget swung sharply from a large surplus to a **-214.54 billion lira** deficit. This is a clear warning sign for fiscal discipline. It likely reflects a big jump in government spending, weaker revenues, or both. Either way, it adds strong and immediate pressure on the Turkish lira. We now expect **USD/TRY**, recently trading above **35.00**, to test new record highs.
This fiscal easing also works against the Central Bank’s effort to bring inflation down. The latest data shows inflation is still very high at **68.5% year-over-year**. Even with the policy rate holding at **45%**, higher government spending can add to price pressures. As a result, markets may start to price in the chance of another rate hike to offset this.
In the coming weeks, we should position for lira weakness by buying **USD/TRY call options**. This gives exposure to potential lira depreciation while keeping risk capped at the premium paid. The budget figures are a strong catalyst for a higher move in the currency pair.
Higher uncertainty can also push implied volatility in the lira higher. We can trade this by buying **USD/TRY option straddles**, which can profit from a large move in either direction. This is a practical way to benefit from instability without needing to pick the breakout direction.
Looking back at **2025**, the central bank’s aggressive rate hikes were starting to rebuild market credibility. This sudden fiscal expansion risks undoing that progress. The pattern also resembles earlier post-election cycles that have often ended in broader macro instability.
We should also be careful with Turkish equities and consider hedges for the **Borsa Istanbul**. Buying put options on the **BIST 100** index, or on major bank stocks, can help protect portfolios if markets fall. A higher country risk premium will likely weigh on the stock market.
NZD/USD holds near 0.6040 in the European session as traders await the RBNZ rate decision
NZD/USD stayed in a tight range near 0.6040 in the European session on Monday, ahead of the Reserve Bank of New Zealand (RBNZ) policy decision on Wednesday. Markets expect the RBNZ to keep the Official Cash Rate at 2.25% and to keep a hawkish stance.
New Zealand inflation has increased over the past four quarters. The Consumer Price Index rose 3.1% year-on-year in Q4 2025. Markets will also watch the Q4 Wage Price Index on Wednesday, with wage growth expected at 0.8%.
Market Focus On RBNZ Decision
The US Dollar was steady during the long US weekend for President’s Day. The US Dollar Index hovered near 97.00. US inflation cooled in January. Headline inflation slowed to 2.4% year-on-year, down from 2.7% in December. The RBNZ targets CPI inflation between 1% and 3% while supporting maximum sustainable employment. The RBNZ sets the OCR through its Monetary Policy Committee. It uses rate changes to influence borrowing and inflation. In extreme cases, it can use quantitative easing, which usually weakens the New Zealand Dollar. With NZD/USD still near 0.6040, traders are waiting for Wednesday’s RBNZ decision. A long period of calm trading often comes before a larger move. The main thing to watch is the RBNZ’s language on future rate increases.Options Strategy For A Breakout
We expect the RBNZ to stay hawkish because inflation remained high in late 2025 at 3.1%. Stats NZ data also shows January 2026 food prices rose 0.9% for the month. This suggests price pressures are not fading quickly. As a result, a firm message from the central bank seems likely. With that in mind, buying short-dated NZD/USD call options may be a sensible approach. This gives traders exposure to a possible jump after the meeting, while limiting losses if the RBNZ surprises with a dovish shift. Consider strike prices just above the current range, such as around 0.6100. On the US side, the Dollar is losing momentum as inflation shows signs of easing. With January inflation at 2.4%, the CME FedWatch Tool now shows less than a 20% chance of a Federal Reserve rate hike in March. That is a sharp drop from early in the year. This gap in policy outlook—a hawkish RBNZ versus a more patient Fed—supports NZD/USD on the upside. A similar pattern appeared in late 2021. The RBNZ started raising rates earlier than many other central banks, and the Kiwi rallied for an extended period. This week’s wage price index will also matter. Strong wage growth would reinforce the inflation story and could push NZD/USD higher. For these reasons, a break above recent highs looks more likely than a drop below support. Create your live VT Markets account and start trading now.Deutsche Bank says AI fears drove a market repricing, wiping out over $1tn and spreading volatility beyond tech
Deutsche Bank analysts said fears about AI led to a fast reset in stock prices. In just 14 days, more than $1 trillion in global market value was wiped out. They said the volatility moved beyond technology and into areas like wealth management, real estate, and financials.
They said last week marked a shift from tech-driven swings to a broader market sell-off. The week’s low came on Thursday, after a sharp drop in software stocks. They also noted double-digit declines across wealth management, real estate, and financial companies.
Market Volatility Broadens
Market breadth weakened. The equal-weighted S&P 500 fell -1.37% on Thursday, then finished the week up +0.29% after rising +1.04% on Friday. The S&P 500 fell -1.39% for the week, despite a +0.05% gain on Friday. The Nasdaq dropped -2.10% for the week and fell -0.22% on Friday. The Magnificent 7 declined -3.24% for the week and -1.11% on Friday. They said U.S. data also moved markets. They pointed to flat December retail sales, a dovish Q4 Employment Cost Index, and the Atlanta Fed lowering its Q4 growth outlook. They said these reports helped drive a rally in Treasuries and pushed yields lower across the curve. Because volatility jumped so quickly, we are positioning for continued uncertainty in the weeks ahead. The VIX spiked above 28 last week for the first time since the banking stress of 2025. It is still high at 24, which suggests options premiums may stay expensive. This setup favors strategies that hedge downside risk or benefit from high volatility, such as buying protective puts on broad indexes like the SPX. The AI-driven repricing has clearly moved beyond tech and is now hitting sectors that were seen as more stable. Last week, implied volatility on the Financial Select Sector SPDR Fund (XLF) doubled as wealth management firms saw steep sell-offs. As a result, traders may want to watch for weakness outside the usual tech names. One approach could be using put spreads on real estate (IYR) or financial ETFs to position for more disruption in those industries.Positioning For The Next Catalyst
While the Magnificent 7 took most of the initial hit, the sell-off also creates two possible paths. The Nasdaq 100 is still more than 4% below its January highs as of this morning, and we are seeing demand for protective collars to hedge long-term tech holdings against further declines. On the other hand, for those who think the sell-off has gone too far, selling cash-secured puts on fundamentally strong but beaten-down software names could be a way to collect higher premiums. Next, the market’s direction will likely depend on upcoming economic data, especially after the softer readings from a couple of weeks ago. The key release is the January CPI inflation report due this Thursday, February 19, which could either ease concerns or make them worse. We expect stronger demand for short-dated options, especially straddles on the SPY, as traders prepare for a large move in either direction after the report. Create your live VT Markets account and start trading now.Rabobank says the ECB is letting non-euro central banks borrow euros, raising questions about the euro’s global role
Rabobank’s Global Daily report covers the European Central Bank’s decision to let all non-euro area central banks borrow euros against euro-denominated collateral. It says the move is meant to support the euro’s role outside the euro area.
The report raises a key question: is global use of the euro limited by supply or by demand? It also links the policy to the need for a bigger market in euro-denominated assets.
Euro Global Liquidity
It says the change could mean a larger European trade deficit. It also says it could push the euro exchange rate higher. The report notes that a stronger euro could be politically sensitive across euro area member states. The article also states it was produced with the help of an Artificial Intelligence tool and reviewed by an editor. The European Central Bank wants to raise the euro’s profile globally. By letting central banks outside the Eurozone borrow euros, it increases the euro’s global supply and makes it more attractive. This also signals that the ECB is comfortable with a stronger euro. For traders, this could support a long euro view in the coming weeks. With EUR/USD trading near 1.0850, this news could help the pair break above the 1.09 resistance seen last month. One way to position for this is to buy euro futures or call options to benefit from a potential move higher.Managing Political Risk
Options may be the better choice because of the political risks. Buying EUR/USD call options with a strike near 1.10 could let us benefit from a stronger euro while limiting losses if some member states push back. Uncertainty in countries such as Italy could also increase currency volatility. This policy points to a structural shift that could support a stronger currency over time. A stronger euro could move the region’s trade balance into deficit from the €15 billion surplus in the final quarter of 2025, because European exports would become more expensive for the rest of the world. The ECB’s motivation is clearer when we look at global reserve data from last year. In 2025, the euro made up just over 20% of central bank foreign currency holdings, while the US dollar was near 59%. This move appears aimed at narrowing that gap. We should watch for political pushback, since that is the main risk to this trade. In 2025, disagreements over fiscal policy created headwinds for the currency. Any strong opposition from a major member state could quickly reverse euro gains. Create your live VT Markets account and start trading now.Ahead of key events this week, markets remain calm as traders await developments in major currency pairs
Major currency pairs are holding familiar ranges as traders wait for key events and data this week. US stock and bond markets are closed for Presidents Day. In Europe, December industrial production data is due on Monday.
The USD Index ended last week lower after US inflation came in softer than expected. US CPI rose 2.4% year on year in January, down from 2.7% in December and below the 2.5% forecast. The USD Index is now near 97.00.
Markets Watching Data And Event Risk
CBS News reported that Donald Trump told Benjamin Netanyahu he would support Israeli strikes on Iran’s ballistic missile programme. Markets barely reacted, with WTI near $62.80. EUR/USD is trading in a narrow range above 1.1850 after a small weekly gain. An ECB speech from Joachim Nagel is due. Japan’s GDP grew at a 0.2% annual rate in Q4 after a 2.6% contraction in Q3, below the 1.6% forecast. USD/JPY is rebounding after nearly 3% losses last week. It is up 0.4% near 153.30. AUD/USD remains below 0.7100 ahead of RBA minutes, after a 25-basis-point rate rise to 3.85%. Gold ended last week higher but is trading below $5,000. UK jobs data and Canada’s January CPI are due Tuesday. GBP/USD is near 1.3650 and USD/CAD is around 1.3600.Options Volatility And Tactical Positioning
With US markets closed today, trading is thin. That can create chances to position for the week’s data releases. Implied volatility on major pairs has fallen to its lowest level since Q3 2025. EUR/USD implied volatility is below 6.5%. That makes options relatively cheap ahead of key inflation and employment data later this week. Last week’s softer US inflation print, down to 2.4%, matters. After the Federal Reserve raised rates aggressively through most of 2025, continued disinflation increases the chance that policy moves toward neutral. Consider put options on the US Dollar Index to position for further downside, as traders price out future rate hikes. The Iran headline is being ignored for now, but it is a classic tail risk. The 2024 supply chain disruptions showed how fast markets can reprice geopolitical shocks. Out-of-the-money call options on oil futures are a low-cost way to hedge against a sudden escalation. Japan’s weak GDP report would normally support yen strength, yet USD/JPY is higher this morning. That suggests last week’s drop may have been too sharp, but this rebound still looks questionable. Selling call options with strikes above 154.50 could be a sensible way to fade sustained upside. The Reserve Bank of Australia is one of the few central banks still raising rates, yet the AUD is not gaining momentum. The RBA minutes will be important. If they hint that a pause is coming, the market could move sharply. A strangle strategy—buying both a call and a put—can capture a breakout in either direction after the release. Gold has not been able to break above $5,000 even with a softer US dollar. That points to underlying weakness and limited demand for safety. For traders holding gold futures, selling covered calls can help generate income while prices consolidate. Create your live VT Markets account and start trading now.USD/CHF holds near 0.7700 as softer Swiss CPI reinforces expectations of a dovish SNB stance
USD/CHF traded near 0.7690 in early European trading on Monday, after opening above its previous close. The pair moved in a narrow range as the Swiss Franc stayed steady.
Swiss CPI inflation was 0.1% year on year in January, unchanged from December. This is at the lower end of the SNB’s 0%–2% price-stability range.
Swiss Inflation And SNB Signals
On a month-on-month basis, Swiss CPI fell 0.1%, compared with expectations of 0.0%. SNB President Martin Schlegel said the bank is willing to tolerate short periods of negative inflation, while staying focused on its medium-term goals. Schlegel also said that low inflation and a 0% policy rate put the SNB in a tough spot. After the data, expectations for a dovish SNB stance were broadly unchanged. USD/CHF could also come under pressure if the US Dollar weakens after softer US inflation data. US CPI rose 2.4% year on year in January, down from 2.7% in December and below the 2.5% forecast. US CPI rose 0.2% month on month, down from 0.3% and below the 0.3% expectation. CME FedWatch shows close to a 90% chance of no change in March, up from about 83% a week earlier. Markets are pricing a 25-basis-point cut in June at around 50.5%.Options And Forward Positioning
In early 2025, signs pointed to a more dovish Swiss National Bank as inflation hovered near zero. That pattern has mostly continued. The latest January 2026 CPI data from the Swiss Federal Statistical Office shows inflation at a muted 0.5% year over year. This reduces pressure on the SNB to tighten policy and helps keep the franc a low-yielding currency. The SNB’s steady and predictable approach, a trend we followed through 2025, has also kept implied volatility in CHF pairs relatively low. In this kind of market, buying USD/CHF call options can be a capital-efficient way to position for further upside. With option premiums still relatively cheap, the risk-to-reward profile can be attractive if the pair moves higher in the coming weeks. On the US side, the outlook has become more complicated than expected in early 2025. The Federal Reserve delivered two rate cuts in the second half of last year, but January 2026 US CPI came in hotter than expected at 2.8%. This “sticky” inflation has pushed traders to scale back expectations for more cuts, which supports the dollar. This policy gap—between a dovish SNB and a more cautious Fed—supports a continued uptrend in USD/CHF. The pair has climbed from around 0.7700 last year to about 0.8100 today. Traders may consider defined-risk strategies such as a bull call spread. For example, buying a 0.8150 call and selling a 0.8300 call for the April expiry could be a lower-cost way to target a gradual rise. Create your live VT Markets account and start trading now.EUR stays near 1.1865 against the USD as holiday-thinned trading precedes a week full of data releases
EUR/USD traded near 1.1865 on Monday and was mostly unchanged. The move came after weak Eurozone industrial production data and thin trading volumes.
Eurozone industrial production fell 1.4% in December, versus a 1.5% drop expected. November was revised down to 0.3% growth from 0.7%.
On a yearly basis, output rose 1.2%. That was below the 1.3% forecast and down from 2.5% in November. EUR/USD stayed stuck in its recent range.
Trading was quiet because many Asian markets, including Japan, were closed for the Lunar New Year. US markets were also shut for President’s Day.
Later, markets were set to hear from Federal Reserve Vice Chair for Supervision Michelle Bowman and ECB Governor Joachim Nagel. These speeches came before a busier week of data.
On the 4-hour chart, EUR/USD held above a rising trendline near 1.1855, with extra support at 1.1833. MACD sat just below zero, and RSI was just under 50.
A break below 1.1833 would put 1.1775 in focus. Resistance was seen at 1.1890, then 1.1925.
Looking back to this time last year, in February 2025, EUR/USD was steady near 1.1865 even as Eurozone factory output looked weak. Trading was also very quiet, helped by holidays in the US and Asia. That low-volatility setup is very different from today’s market.
The Eurozone’s underlying weakness seen in the December 2024 data has continued. The latest December 2025 figures show industrial production fell 0.7% month-on-month, according to Eurostat. This ongoing softness helps explain why EUR/USD is now struggling to hold above 1.09, far below the levels discussed a year ago.
In early 2025, attention was on softer US CPI data, which gave the Fed room to consider rate cuts. By February 2026, the picture has reversed. US inflation remains sticky, running at 2.9% year-on-year last month, which has kept the Fed on hold. At the same time, the ECB is sounding more open to cuts. This policy gap continues to pressure the euro.
For derivatives traders, this calls for a different playbook than last year’s range trading. With major inflation and jobs data due from both economies in the coming weeks, EUR/USD straddles may offer a way to benefit from a volatility jump, regardless of direction. Implied volatility is near 8.2%, well above the sub-6% levels seen in the quiet February 2025 period, suggesting traders expect larger moves.
The technical backdrop has also weakened a lot over the past year. The 1.1833 support level watched in February 2025 is now far above the market and would likely act as major resistance. Today’s key level is around 1.0850, and a clean break below it could lead to more selling.
