New Zealand’s BusinessNZ PSI fell to 50.9 in January from 51.5 previously
New Zealand’s BusinessNZ Performance of Services Index (PSI) was **50.9** in January, down from **51.5** in the previous month.
A PSI reading **above 50** means the services sector is **expanding**. A reading **below 50** means it is **contracting**.
The latest PSI shows the New Zealand economy is still growing, but growth has clearly slowed since December. The drop to **50.9** suggests last year’s high interest rates are starting to reduce business activity. This is a key sign that the momentum seen in **2025** is fading.
This data makes the Reserve Bank of New Zealand less likely to raise rates at its next meeting. Inflation has been easing to **3.5%**, and unemployment rose to **4.1%** at the end of last year. Together, these trends weaken the case for more hikes. We should consider **buying NZD put options** or **shorting NZD/USD futures** to position for a weaker New Zealand dollar.
Interest rate markets will likely respond by removing any remaining chance of a rate hike this year. As traders adjust, **short-term government bond yields** could fall. This supports positions in **interest rate swaps** that benefit if the central bank holds rates steady, or cuts later in the year.
For the local stock market, slower growth is a negative for earnings, especially in consumer-facing service industries. Based on how markets reacted to slowing conditions in 2025, we expect some weakness in the **NZX 50**. Traders could consider **buying put options** on the index, or on selected service-sector stocks, as a hedge against a downturn.
We should also watch the New Zealand dollar versus the Australian dollar. Australia’s latest inflation print was slightly higher than expected at **3.7%**, which suggests its central bank may stay hawkish for longer. This policy gap supports a weaker **NZD/AUD**, making it an attractive pair to short.
Risk appetite returned as S&P 500 premarket selling halted on Friday ahead of the CPI release
The S&P 500 stabilised after Friday’s premarket sell-off and did not drop further ahead of the CPI release. Investors focused on rising oil and fuel prices, which raised fears of a higher CPI reading and a more hawkish Federal Reserve.
After the CPI was released and came in as expected, markets moved higher. The S&P 500 and Nasdaq rose and then extended their gains. This eased near-term inflation worries.
Cyclical shares and rate-sensitive stocks moved the most. Gold regained much of the prior day’s drop, while silver recovered less.
The US dollar was mostly unchanged, suggesting little change in its near-term trend.
Markets are turning nervous again after the January 2026 CPI report came in at 3.3%, slightly above our 3.1% forecast. This brings back memories of the inflation scare in fall 2025, which triggered a sharp but brief pullback. With the Fed not expected to cut rates until at least the summer, this report increases the odds policymakers will stay on hold.
Because of this uncertainty, volatility looks likely in the coming weeks. The VIX has already moved up from lows near 14. We think traders should consider buying protective puts on SPY. If you expect limited upside, another approach is selling out-of-the-money call spreads. These trades can benefit from either a pullback or a sideways market driven by renewed rate fears.
Rate-sensitive sectors are showing the most weakness, especially technology and high-growth stocks. These names helped push the S&P 500 to recent highs near 5,900. We are also seeing more bearish positioning in QQQ options. A short-term tactical trade could be buying puts on specific, overextended tech stocks that are most exposed to higher borrowing costs.
On this news, the US dollar index has strengthened above 105, which is weighing on commodities. This is a very different reaction from similar events in 2025. That shift may create an opportunity in futures options—for example, buying puts on gold as it struggles to hold support. This directly reflects the market’s growing view that interest rates may stay higher for longer.
New Zealand’s electronic card retail sales rose 0.4% year on year, recovering from -1%
New Zealand’s electronic card retail sales rose 0.4% year on year in January. This comes after a -1% year-on-year fall in the prior period.
The new number marks a shift from negative to positive annual growth. It points to a small improvement in electronic card retail spending versus a year ago.
The move back to 0.4% year-on-year growth is a clear change from the negative trend seen at the end of 2025. It suggests consumer pressure may be starting to ease. This could help set a bottom in the recent slowdown. For traders, it also weakens the view that a near-term rate cut is a sure thing.
In light of this, it may be time to rethink bets on an early rate cut from the Reserve Bank of New Zealand. Swap markets may now lower the odds of a cut in the first half of the year. That creates a chance to trade against earlier, more bearish expectations. The RBNZ will likely want more evidence before hinting at any policy shift, especially since inflation in Q4 2025 was 3.8%, still well above target.
A change in rate expectations could support the New Zealand dollar. If the RBNZ holds rates steady while other central banks, like the U.S. Federal Reserve, move toward cuts later this year, New Zealand’s yield advantage supports NZD. One idea is to buy NZD/USD call options, looking for upside as this policy gap becomes clearer to the market.
Even a small pickup in consumer spending is also supportive for local equities. It suggests earnings for consumer-facing firms may hold up better than expected. Traders could consider NZX 50 index futures, as a steadier consumer backdrop helps the case for a broader market recovery after a tough 2025.
New Zealand’s monthly electronic card retail sales fell to -1.1% from -0.1% previously
New Zealand’s electronic card retail sales fell 1.1% month on month in January. This followed a 0.1% month-on-month fall in the prior month.
The January result (-1.1%) is a clear sign that consumer demand is weakening. It is much softer than expected and suggests the New Zealand economy is cooling faster than we thought. We should prepare for a more dovish Reserve Bank of New Zealand (RBNZ).
This also tests the RBNZ’s firm stance through much of 2025, when it held the Official Cash Rate at 5.50% to fight inflation that stayed above 3%. Inflation in Q4 2025 was still sticky, but this spending data is the first strong evidence that high rates are starting to bite. Markets may now bring forward expectations for RBNZ rate cuts later this year.
We should consider entering interest rate swaps to receive fixed rates. This would position for lower rates ahead. Recent labor data supports this view: unemployment rose to 4.2%, pointing to a softer job market. Weak spending plus a cooling labor market makes further hikes less likely and rate cuts more likely over time.
For FX traders, this outlook is negative for the New Zealand dollar. We can consider buying NZD/USD put options to position for a move lower from around 0.6200. This gives downside exposure while limiting risk to the option premium.
We have seen similar setups before, such as in the late 2010s. In those episodes, weaker retail data came before a dovish RBNZ shift and a fall in the Kiwi dollar. This surprise data may also lift implied volatility. That could make long-volatility trades, such as NZD straddles, attractive in the coming weeks.
MUFG’s Michael Wan says the interim US–India deal helps India externally and may limit the rupee’s rise above 90
More information has come out about an interim US–India trade deal, including tariff cuts and exemptions. The report says this should support India’s external position.
The report adds that USD/INR could briefly drop below 90 in the coming months. It also says any Rupee rebound is likely to be limited.
The report forecasts USD/INR at 89.50 in Q1 2026. It then expects the pair to rise again to 93.00 by December 2026.
It links the later rise in USD/INR to continued FDI repatriation. It also points to strong import demand and a wider current account deficit.
The report notes there could be political pushback in India over agricultural concessions. It also says the article was created with help from an AI tool and reviewed by an editor.
We view the recent US–India trade deal as a short-term positive for the Rupee. The tariff cuts should help push USD/INR down toward our 89.50 target by the end of March. Early data from January 2026 supports this view: exports rose 4.5%, the strongest start to a year since the post-pandemic rebound in 2023.
For the next few weeks, we think buying USD/INR put options is a good way to benefit from this expected dip. A strike near 90.00 with an April 2026 expiry would position for a move toward our target. After the uncertainty of 2025, implied volatility has fallen to a 12-month low of 4.8%, which makes this a relatively cheap way to position for Rupee strength.
We do not expect this Rupee strength to last, and we think traders should plan for a reversal later in the year. Our forecast has USD/INR rising back to 93.00 by the end of 2026. A key reason is likely FDI repatriation. Central bank surveys from last year suggest more than $15 billion could flow out as early investments mature.
Because of this, we see any dip toward 89.50 as a chance to build long USD/INR exposure for the second half of the year. One approach is to buy call options with strikes near 91.00 or 92.00 and expiries late in 2026. This fits with the wider current account deficit seen in Q4 2025, which reached 2.8% of GDP and looks likely to keep widening.
Commerzbank analysts say Singapore’s 2026 Budget boosts supply-side support, SME expansion, and equity market funding initiatives
Singapore’s 2026 Budget outlines measures that focus on supply-side support, SME internationalisation, and capital market development. It includes new funding for the Equity Market Development Programme and the Anchor Fund.
In FX markets, USD/SGD was little changed at 1.2630. The pair is close to a 10-year low of 1.2580.
The Singapore dollar has outperformed most Asian peers this year. Year-to-date, SGD is up 1.8% against the US dollar.
Within Asia, SGD is the second-best performing currency behind MYR (+4.0%), with THB up +1.9%. The Straits Times Index has reached record highs.
The article was produced using an Artificial Intelligence tool and reviewed by an editor.
The 2026 Budget offers solid fundamental support for the Singapore dollar. It focuses on policies that improve competitiveness and attract capital. This supports the current trend of SGD strength, which has already made it one of Asia’s top performers this year. Overall, the rally appears well supported.
With USD/SGD testing a key decade-low area near 1.2580, traders may want to prepare for a possible break lower. Options data shows rising demand for USD puts. This suggests the market expects more SGD strength in the near term. Strategies that benefit from a move toward the 1.24 level could do well.
This setup is similar to mid-2025, when government efforts to attract tech investment were followed by a sharp drop in USD/SGD. The Monetary Authority of Singapore has often acted early, and a pro-growth budget may give it room to keep a strong-currency stance. Traders who were short SGD in 2025 may be hesitant to bet against this move again.
Beyond FX, record highs in the Straits Times Index point to broader confidence. The index was supported by S$1.5 billion in foreign inflows last month alone. The budget’s targeted funding for capital market development could add to this momentum. Selling out-of-the-money put options on the index may be one way to collect premium while aligning with the positive sentiment.
SGD implied volatility has been trending lower and recently hit a six-month low. Lower volatility, together with a favourable interest rate differential versus the US dollar, can make SGD attractive for carry trades. Traders may continue borrowing in USD to buy SGD to capture both the rate spread and potential FX gains.
MUFG analysts say easing and reflation steer the yuan as CPI dips after holiday effects and PPI improves
MUFG said China’s slower CPI growth in January was heavily affected by Chinese New Year base effects. Food and services were the main drags on headline inflation. MUFG said the underlying reflation trend is still slow and gradual.
The note said PPI deflation eased as global metals prices improved and demand linked to the tech sector strengthened. It added that “anti-involution” measures are unlikely to speed up reflation.
It said the PBOC has signalled an easing bias for 2026 and described policy as “moderately loose”. China’s GDP growth slowed to 4.5% year on year in Q4.
It said more easing may be needed in H1 2026 to support growth and boost credit demand. It also said markets will watch the PBOC meeting on 20 February for possible easing steps aimed at structural slowdowns.
The note said this policy stance could keep USD/CNY on a mild downward path in 2026. It also said the yuan may stay near the lower end of its trading range.
We see January inflation, which rose only 0.1% year over year, as being largely distorted by holiday base effects. This supports our view that reflation in China will be slow and gradual. Even with government support, underlying demand remains weak.
This slow momentum—shown by the 4.5% GDP growth rate in Q4 2025—supports the People’s Bank of China’s clear easing bias this year. This is very different from the United States, where inflation has stayed firmer than expected. That has pushed back hopes for Federal Reserve rate cuts. This policy gap is a key reason the dollar has been stronger against the yuan.
With the PBOC meeting on February 20, we think traders should be ready for more easing. A cut to the key policy rate is now a realistic possibility. One way to express this view is to buy short-dated USD call options against the yuan. This can benefit from a rise in USD/CNY while keeping risk defined. It also fits our expectation of a mild yuan depreciation.
In the forward market, it may make sense to lock in a higher exchange rate. The steady message of “moderately loose” policy—reinforced after the reserve requirement ratio cut in late 2025—points to a managed depreciation as the most likely outcome. We expect USD/CNY to test 7.35 in the coming quarter, up from about 7.28 now.
Standard Chartered’s Tommy Wu raises Hong Kong’s 2026 GDP growth forecast to 3.2%, citing momentum and sentiment
Standard Chartered raised its Hong Kong GDP growth forecast for 2026 to 3.2%, up from 2.5%. It cited strong momentum in Q4, higher financial activity, and improved consumer sentiment.
The bank expects more financial-sector activity, including IPO fundraising and wider use of the Renminbi internationally. It also expects consumer sentiment to keep improving during the current stock market rally.
It forecasts a modest rebound in the housing market. However, the outlook is still cautious because of structural changes and global risks.
HIBOR is expected to stay lower in the first half of the year, then rise gradually again by Q4. The article says it was produced using an AI tool and reviewed by an editor.
We see the upgraded 3.2% GDP growth forecast as a strong positive signal for equities. The Hang Seng Index has already risen more than 15% since November 2025, which supports this momentum. Over the next few weeks, buying call options on the index looks like a direct way to gain from the expected continued strength.
The stock market rally also seems to be lifting consumer confidence. January retail sales rose 4.8%, which supports a modest housing rebound. Housing prices just posted their first monthly gain after a weak 2025. This makes call options on property and retail-focused stocks worth considering.
Expectations for lower HIBOR in the first half of the year also create an opportunity in interest-rate markets. The 3-month HIBOR has already dropped from its 2025 highs above 5.5%, which supports this view. Traders may consider positions that benefit from falling short-term rates, such as going long HIBOR futures.
We are also watching for a pickup in financial activity, especially IPOs, after a quiet 2025. With a stronger pipeline of new listings expected in Q2, volatility could rise. That could make selling put options on financial-sector ETFs attractive, allowing traders to collect premium while taking a bullish-to-neutral view.
UOB economists say Malaysia’s 2025 growth hit 5.2% as fourth-quarter GDP rose 6.3% year on year
Malaysia’s GDP grew 6.3% year on year in 4Q25, the fastest pace since 4Q22. For 2025, full-year growth was 5.2%. Real GDP growth is projected at 4.5% in 2026. The Ministry of Finance estimates 2025 growth at 4.0%–4.5%.
Domestic demand is expected to support growth in 2026, helped by government measures and national master plan initiatives. Other drivers include the rollout of approved investments, stronger tourism from Visit Malaysia Year 2026, and increased activity linked to AI.
Malaysia’s current account surplus rose to MYR31.8bn (1.6% of GDP) in 2025, up from MYR27.7bn (1.4%) in 2024. The surplus is projected at MYR38.0bn (1.8% of GDP) in 2026, compared with the Ministry of Finance estimate of MYR23.2bn (1.1%).
External risks have increased due to renewed geopolitical tensions and new US tariff announcements in mid-January. These measures included:
– A 25% tariff tied to countries doing business with Iran (12 Jan)
– A 25% levy on certain advanced computing chips (14 Jan)
A one-year pause in US–China tariff escalation is in place until Nov 2026. Related US Supreme Court proceedings were also delayed.
We expect a mixed outlook for Malaysian markets in the coming weeks, even after last year’s strong data. Headline GDP growth is likely to slow to 4.5% this year from 5.2% in 2025. Still, strong domestic demand should provide a meaningful cushion. This could lead to a split between the broader FBMKLCI index and domestically focused sectors.
The main risk is external. President Trump’s new tariffs on advanced chips and on countries trading with Iran were announced last month. This uncertainty has already weighed on the Bursa Malaysia Technology Index, which fell 3% in early February as markets priced in the new risks. We think protective put options on the FBMKLCI, or on technology-focused ETFs, are a sensible hedge against further negative surprises from US trade policy.
The local story remains supportive. Government spending and firm consumer activity are helping, and January 2026 retail sales rose 5.8%. For derivatives traders, this backdrop may support selling put options on fundamentally strong banks or consumer staples names to collect premium, based on their relative stability. This approach leans on domestic strength that is less exposed to global trade shocks.
The Ringgit outlook is more complicated. The projected rise in the current account surplus to 1.8% of GDP is supportive. However, risk-off sentiment could still pressure the currency, as shown by the VIX rising above 20 last month. USD/MYR has been volatile but mostly range-bound around 4.70 since January. That setup can suit options strategies such as straddles for traders expecting a breakout but uncertain about the direction.
Visit Malaysia Year 2026 is a clear positive. Tourism-related stocks have already gained in early February. Call options on airlines and major hotel operators may offer a focused way to express this theme. This can also provide a long exposure to balance hedges on more vulnerable export-oriented sectors.
This setup echoes 2018–2019, when US–China trade tensions drove sharp swings in Malaysian equities despite a stable local economy. Traders who hedged export exposure while staying long domestic themes tended to outperform. We expect a similar pattern in the next few months, rewarding investors who can manage a strong local economy alongside volatile external risks.
After softer US inflation data, silver rebounded from $74 and rose 2.5% to $77.20, but was down for the week
Silver (XAG/USD) rose on Friday after rebounding from near $74. It gained more than 2.50% and traded around $77.20 per troy ounce. The move followed a softer-than-expected US inflation report, but silver is still set to end the week lower.
Silver is down 0.85% for the week after opening near $80.00. US stocks fell on Thursday, and that decline pulled silver lower because silver has recently moved in line with equities.
