Chicago Fed President Austan Goolsbee said interest rates could fall further. But he said the Fed needs more progress on services inflation before making the next move. He added that the latest CPI report had some encouraging signs, but also raised concerns. He said services inflation is still high and above the 2% target. Because of that, he wants more data before moving up the timing of rate cuts. He also said he is not sure how restrictive current Fed policy is, and that it would have been better to wait in December. Goolsbee said he hopes the worst effects of tariffs are now behind us. He pointed to strong job growth in January and said the labor market has been steady, with only mild cooling. He said the U.S. consumer is the strongest part of the economy. If the job market stays stable and inflation keeps easing, consumers should be able to hold up. He added that if inflation reaches 2%, there could be several more rate cuts. Inflation is the increase in prices for a basket of goods and services. It is measured month over month and year over year. Core inflation excludes food and fuel. Central banks focus on core inflation and often target about 2%. Markets suggest interest rates can move lower. But the Fed still needs clear progress on inflation before making big moves. The January inflation report showed core prices rising at a 3.2% annual rate. That is better than before, but still well above the 2% target. Core services inflation is still high at 4.2%, so the outlook for rate cuts is still unclear. In 2025, we saw a similar setup. Markets expected several rate cuts in the second half of the year, but sticky services inflation got in the way. The economy stayed stronger than expected, so it did not cool enough for the Fed to cut aggressively. That history suggests traders should be careful about expecting early cuts this year. For equity traders, this setup favors trades that benefit from volatility. One example is buying straddles or strangles on major indices ahead of the next inflation release. The strong January jobs report, with 225,000 jobs added, suggests the economy is stable. But that also means the Fed does not need to rush to cut rates. This push and pull—solid growth but stubborn inflation—can drive sharp market swings in the weeks ahead. In interest rate markets, this backdrop argues for cuts happening later than current pricing suggests. Traders could use options on Treasury futures to position for yields staying higher for longer. A steady job market supports consumer spending, which can keep services inflation elevated. This environment can also support the U.S. dollar. Higher relative interest rates tend to attract foreign capital. Derivatives traders could look at call options on dollar-tracking ETFs or currency futures that benefit from dollar strength, especially against currencies where central banks may ease sooner. A strong consumer also helps support the dollar by supporting overall U.S. growth. For commodities, this outlook is not as supportive for gold. Higher interest rates raise the cost of holding assets that do not pay yield, like gold. That can put pressure on gold prices. Traders could consider put options on gold or short gold futures, expecting gold to struggle until the market sees a clear signal that rate cuts are close.

here to set up a live account on VT Markets now

The US Dollar fell over the week, even though January Nonfarm Payrolls showed 130K new jobs and the Unemployment Rate dipped to 4.3% from 4.4%. The DXY traded near 96.80, down from 97.15 after a softer January CPI. US December PCE is due on Friday. EUR/USD traded near 1.1880 after the Eurozone flash Q4 GDP print came in at 1.4% year-on-year, above the 1.3% forecast. AUD/USD hovered near 0.7080, close to a three-year high. Australia’s Business Confidence and Wage Price Index are due Wednesday, followed by jobs data and the flash S&P Global Composite PMI on Thursday. USD/CAD traded near 1.3600 ahead of Canadian December Retail Sales on Friday. USD/JPY traded near 152.80, with Japan’s National CPI due Thursday. GBP/USD sat near 1.3650, with UK PPI and RPI on Wednesday and UK Retail Sales on Friday. Gold traded near $5,038 after recouping most of Thursday’s losses, but it remained below January’s $5,598 peak. Scheduled speakers run from 14–20 February, including Lagarde on 14, 15, and 20 February, multiple Fed speakers, and RBNZ’s Breman on 19 February. Key data include Japanese flash Q4 GDP (15 February), RBA minutes and Canadian January CPI (17 February), the RBNZ rate decision and FOMC minutes (18 February), and Australia employment and unemployment (19 February). Other releases include UK Retail Sales, German and Eurozone PMIs, US December core PCE, and February US S&P Global PMIs (20 February). Looking back to this time in 2025, the US Dollar was under heavy pressure around 96.80. Softer inflation data led markets to expect the Federal Reserve to cut rates soon. That view drove positioning for months and reinforced the idea of a weaker dollar. Today the picture is different. The US Dollar Index has been more resilient and has recently traded above 104.50. The rate cuts expected in 2025 did not happen as quickly as many thought. Core inflation stayed sticky through year-end and remained above the Fed’s 2% target. Traders should be cautious about being short USD. Options markets also show lower implied volatility for DXY than the spike seen in the middle of last year. The Eurozone surprised to the upside in late 2024, but more recent Q4 2025 data points to slowing momentum, with GDP growth revised down to just 0.1%. That leaves the European Central Bank in a tough spot and increases the odds it cuts rates before the Fed. This policy gap could keep pressure on EUR/USD. Traders may look at bearish setups or consider buying puts ahead of upcoming ECB speeches. The Reserve Bank of Australia sounded hawkish last year, but that tone has eased. Australia’s latest quarterly CPI for Q4 2025 was 4.1%, down from above 5% earlier in the year, and the RBA is now clearly on hold. That removes a key support for AUD/USD and makes the pair more sensitive to shifts in global risk sentiment. Sterling is still driven by domestic inflation. While inflation has come down from its peak, it remains the highest among G7 nations as of January 2026. That keeps pressure on the Bank of England to hold rates high, even as growth stalls. The result is often choppy GBP/USD price action, where range-trading can work better than chasing breakouts. The gold rally seen in early 2025 has cooled. High US interest rates raised the opportunity cost of holding non-yielding bullion. Even with last year’s elevated prices, gold has not been able to break those highs and has instead settled into a new range as markets accept a “higher-for-longer” rate path. Real yields remain a key driver, and a sustained drop in real yields could bring buyers back to gold. In the weeks ahead, the main theme is central-bank divergence. That is a clear change from last year, when most markets were focused on inflation in a similar way. One approach is to trade pairs that reflect this split, such as being long USD versus currencies with more dovish central banks, like the EUR or CAD. Volatility could jump around major data, especially the US PCE report, so using options to define risk may be sensible.

here to set up a live account on VT Markets now

Standard Chartered raised its Taiwan 2026 GDP growth forecast to 8.0%, up from 3.8%. This follows Q4-2025 GDP growth of 12.7% year on year and full-year 2025 growth of 8.7%. Q4-2025 quarter-on-quarter growth was 5.4%, and the bank expects some “statistical payback” in Q1-2026. The outlook is tied to global semiconductor demand and stronger exports of ICT goods and electronic components. Exports rose 70% year on year in January, helped by shipments ahead of the Lunar New Year holidays in February, after 49.4% growth in Q4-2025.

Semiconductor Led Outlook

A recent US trade deal is expected to make it easier for exporters. The US makes up 30% of Taiwan’s exports. The bank expects bumpy growth and a wider gap in household incomes. It also expects the central bank (CBC) to keep targeted credit controls to limit property-related borrowing. With the 2026 GDP growth forecast now at 8.0%, our main view is bullish on Taiwanese equities. The TAIEX index has already moved above 25,000 this past week, supported by tech export data from late 2025. Buying call options on the index or on major technology ETFs is a direct way to gain exposure to this strength. The 70% year-on-year jump in January exports also supports the New Taiwan Dollar. The currency has strengthened to a 15-month high, trading below 29.5 per US dollar. Derivative traders may consider long positions in TWD futures, as ongoing demand for Taiwanese goods could push the currency higher.

Positioning For Currency Strength

This growth is heavily driven by the AI and semiconductor upcycle, as shown by ICT shipment data. A more focused approach is to look at options on major firms such as TSMC, whose shares are up more than 20% since the start of the year. Bull call spreads can target further gains in this sector while helping control premium costs. However, the warning of “statistical payback” matters after the very strong growth seen in late 2025. Fast, steep runs often bring higher volatility and can lead to a sharp, short-lived correction. Hedging long positions with short-dated put options can help protect against a sudden pullback in the coming weeks. The central bank’s use of selective credit controls, instead of near-term interest rate hikes, suggests it wants to cool the property market without hurting exports. This may mean financial and real estate stocks lag the broader market. For that reason, we should stay underweight in derivative positions linked to these domestic-focused sectors. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Gold rose nearly 2% on Friday and climbed back above $5,000 after a softer US inflation report. It had slipped to around $4,950 before buyers stepped in and pushed prices higher. US CPI for January came in at 2.4% year on year. That was below the 2.5% estimate and down from 2.7% in December. Core CPI was 2.5% year on year, matching forecasts and down from 2.6%.

Gold Reclaims Key Level

Other US data this week was strong. Nonfarm Payrolls showed more than 130K jobs added in January, and the Unemployment Rate fell to 4.3%. Money markets now price a 55% chance of a June rate cut, with a 25 basis point move. Recent CPI readings were 3.0% in September, 2.7% in November and December, and 2.4% in January. US Treasury yields fell. The 10-year yield dropped almost 3.5 basis points on the day and 14 bps on the week, to 4.06%. The US Dollar Index was on track for a 0.85% weekly decline and traded at 96.84, down 0.07% on the day. Next week brings Durable Goods Orders, housing data, Fed comments, FOMC Minutes, Initial Jobless Claims, a second GDP estimate for Q4 2025, and core PCE. Key technical levels include resistance at $5,100 and $5,200, and support at $4,971, $4,900, $4,800, and $4,618.

Derivatives Strategy And Positioning

With gold back above the key $5,000 level, we view this as a clear move driven by softer inflation. The rally is supported by renewed bets that the Federal Reserve may cut rates by June. We should position for further gains as long as this story remains in place. Derivative traders may consider buying call options with strike prices near the $5,100 resistance level. Implied volatility has likely risen after the sharp move, but strong momentum suggests there may still be room to the upside. During the late-2023 gold rally, when talk of a Fed pivot first picked up, we saw similar bursts of strong and persistent buying. At the same time, the solid jobs report and still-firm core inflation could give the Fed a reason to wait. To hedge against a pullback, traders could buy put options with strike prices below the 20-day moving average, near $4,950, to help protect gains. This can act as a buffer if upcoming data shifts sentiment. The main focus in the coming weeks is the Fed’s preferred inflation measure: core PCE. This report could confirm the disinflation signal from CPI, or it could challenge it, which may lead to large price swings. Traders should plan for higher volatility around this release, including strategies that can benefit from a big move in either direction. We are also watching the US 10-year yield, now at 4.06%. Historically, a steady decline in real yields supports non-yielding assets like gold. If yields keep falling and the US Dollar Index stays below 97.00, it would strengthen the bullish case for gold derivatives. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Singapore’s FY26 budget increases development spending. It focuses on building national AI capabilities, supporting business funding, attracting high-quality capital, and providing targeted cost-of-living help. The government expects higher spending to be funded by stronger corporate tax revenue and rising net investment returns, while keeping public finances sustainable. The government has raised its 2026 growth forecast, pointing to strong momentum in late 2025. The outlook is also supported by continued activity and spending in advanced manufacturing, semiconductors, and AI-related work. Plans include creating a National AI Council. Prime Minister Lawrence Wong will chair it. The goal is to encourage wider use of AI technology, lift long-term potential growth, and help offset demographic pressures. The article says it was produced with the help of an AI tool and reviewed by an editor. The FY26 budget’s focus on growth and AI is a clear positive signal for Singapore-linked assets. The added government spending, together with strong late-2025 momentum, supports the upgraded outlook. The Straits Times Index (STI) has already reacted well, rising almost 4% since the start of January 2026. We view this as a reason to expect the Singapore dollar to strengthen in the near term. Singapore’s strong fiscal position and focus on high-growth sectors make its currency appealing versus currencies tied to weaker or less certain outlooks. This week, USD/SGD fell to 1.3250 and broke the 1.33 support level that held through much of Q4 2025. This suggests further downside may follow. For equity derivatives, the budget puts more attention on technology and advanced manufacturing. These sectors are a large part of Singapore’s economy and should benefit directly from new funding and AI initiatives. We should consider buying call options on the STI, or on specific ETFs that track these higher-growth areas, to benefit from expected earnings growth. In the past, clear and supportive fiscal policy has often been followed by lower market volatility. After the recovery budgets of 2021–2022, implied volatility on STI options trended down as policy direction became clearer. This pattern suggests volatility-selling strategies may become attractive, though we still need to watch for external shocks.

here to set up a live account on VT Markets now

Malaysia’s economy grew by 5.2% in 2025, up from 5.1% in 2024. Growth was helped by strong domestic confidence, AI-related investment, and supportive policy. This happened even as trade uncertainty increased due to US-led tariffs. Standard Chartered expects GDP growth to slow to 4.5% in 2026. This is close to the government’s forecast range of 4.0–4.5%. The slowdown is partly due to earlier front-loaded activity fading and tariff effects showing up later. The report highlights upside risks for 2026. These include ongoing AI-driven demand and strong local sentiment. It also points to better-than-expected growth in Q4. The report says the strong Q4 result may raise questions about whether Bank Negara Malaysia might reverse its pre-emptive rate cut from July 2025. However, it adds that mild inflation and external uncertainty could lead BNM to keep rates unchanged in the near term, while it reviews growth over the next 1–2 quarters. Because last year’s growth was strong, we think the Ringgit is well supported. GDP rose a solid 5.2% in 2025, led by a jump in AI-related investment and healthy domestic spending. This strength supports a positive near-term view for the currency. Recent data supports this view. Malaysia drew more than MYR 45 billion in new data center and AI-related foreign direct investment in the second half of 2025. Retail sales also rose 6.5% year-on-year in Q4, showing demand remained firm. Even with the strong end to 2025, we do not expect BNM to raise rates soon. It will likely avoid reversing the July 2025 cut right away. Instead, the central bank will probably wait to review the data over the next couple of quarters. Inflation supports this cautious stance. January 2026 inflation was a moderate 2.1%. This is similar to 2018–2019, when BNM kept rates steady for a long time after a cut to confirm the recovery was stable. Ongoing uncertainty from US-led tariffs also argues for patience. For derivative traders, this setup supports selling USD/MYR volatility. With strong fundamentals but a central bank that is likely on hold, the Ringgit may rise slowly rather than surge. One way to express this view is to sell out-of-the-money USD/MYR call options to earn premium in a steadier market. In rates, a “BNM on hold” view should keep the front end of the yield curve stable. This suggests markets may be overstating the chance of a near-term hike. Positioning in short-term interest rate swaps for a steady policy rate could therefore make sense.

here to set up a live account on VT Markets now

Baker Hughes said the US oil rig count fell to 409, down from 412. That is a drop of three rigs from the previous report.

Us Oil Rig Count Slips

The number of active oil rigs in the US has slipped to 409. It is a small move, but it matters. Fewer rigs can mean slower growth in US oil output. It also fits the “capital discipline” trend producers followed through most of 2025. This drop comes as new government data showed a bigger-than-expected fall in crude inventories. Stockpiles fell by almost 3 million barrels last week. The market is already tight. With fewer rigs running, less new supply is likely to arrive over the next three to six months. Together, these signals support oil prices. In 2025, producers often chose to return cash to investors instead of ramping up drilling, even when prices were strong. The latest rig count suggests that approach is continuing into 2026. With global demand forecasts still firm—especially in developing economies—slower US supply growth could have a real impact. For traders, this points to a bullish medium-term view. One way to position for higher prices is through call options or bull call spreads on WTI futures, especially for contracts that expire in late spring. These tools can capture upside while helping limit risk. Still, global events could change the picture fast. A surprise production increase from OPEC+ or clear signs of weaker global growth could pressure prices. Keep a close watch on news from Vienna and key economic data from China.

Key Risks To Watch

Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

India’s CPI inflation, using the rebased 2024 series, rose to 2.8% year-on-year. Food prices were the main driver. At 2.8%, inflation was within the Reserve Bank of India’s 2% to 6% target band. This supported keeping interest rates unchanged at the RBI’s April policy meeting.

Inflation Backdrop And Policy Implications

The article says it was created with help from an artificial intelligence tool and then reviewed by an editor. In early 2025, inflation in India was calm. CPI came in at a mild 2.8% year-on-year. This was comfortably inside the RBI’s target band, so the central bank had room to keep rates steady. With policy more predictable, rate markets also saw less volatility. In February 2026, the picture is very different. Price pressures are rising. The January 2026 CPI report showed inflation picking up to 5.1%, driven by higher global energy prices and still-high domestic food inflation. That puts inflation much closer to the RBI’s 6% upper limit and shifts attention toward possible tightening. This trend is also backed by strong growth. Latest data shows GDP growth for Q3 of FY 2025–26 was 7.8%. Solid growth can lift demand, which can add to inflation pressure. That strengthens the case for the RBI to consider rate hikes to cool the economy. The RBI’s tone has also become more cautious, with more emphasis on bringing inflation back toward the 4% midpoint.

Trading Considerations For Rates And Volatility

For derivative traders, last year’s “stable rates” approach may no longer work. It may now make more sense to position for a more hawkish RBI, using tools such as Overnight Index Swaps (OIS). Paying fixed on one-year OIS is a direct way to express a view that the RBI will raise rates within the next 12 months. Uncertainty about when hikes happen—and how large they are—can also push volatility higher. That can create opportunities in options on 10-year government bond futures. Buying straddles or strangles can benefit from a big move in bond prices, whether bonds fall on a hike or rally if the RBI unexpectedly holds rates. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

US Treasury Secretary Scott Bessent said he does not want the US to decouple from China. Instead, he wants to reduce risk in the relationship. He also said there is a good chance US GDP growth in 2025 will be 3%. Bessent said the bond market is “so tame” because the government is “sorting the fiscal house”. He also said inflation could move back close to the Federal Reserve’s 2% target by the middle of this year. If inflation moves toward the Fed’s 2% target by summer, traders should expect a change in monetary policy. The January 2026 CPI report showed inflation easing to 2.4%. This supports the view that rate cuts could be coming and helps explain the strong activity in interest rate derivatives. We think trades that can benefit from future rate cuts, such as buying SOFR futures, look more attractive. The bond market is calm, and that creates an opportunity if the fiscal outlook is truly improving. The 10-year Treasury yield has stayed in a tight range near 3.6%. That is very different from the big swings in 2023 and 2024. This may make call options on long-duration bond ETFs more appealing, especially if the market starts to price in rate cuts in the second half of the year. With 2025 GDP growth coming in strong at 3.1%, the risk of a near-term recession looks much lower. That backdrop can make selling out-of-the-money put options on major indexes like the S&P 500 an attractive way to collect premium. Demand for downside protection also appears to be falling as growth stays firm. Steady growth and cooling inflation could keep volatility low. The VIX is trading near 14. That suggests investors feel relatively calm, at levels not seen since before the early-2020s inflation surge. Traders may want strategies that do well when volatility stays low or falls further, such as selling VIX call spreads. The push to de-risk from China, rather than decouple, is still creating clear winners and losers. That argues for selective sector trades instead of broad market bets. Options can be used to gain exposure to US-focused semiconductor and industrial ETFs, which may benefit from reshoring policies.

here to set up a live account on VT Markets now

The Dow Jones Industrial Average rose about 220 points on Friday to near 49,665 after opening at 49,366. This followed a 669-point drop on Thursday. The S&P 500 was slightly higher, and the Nasdaq Composite was mixed. All three indexes were still on pace for weekly losses, and the S&P 500 was on track for its worst week since November. US CPI rose 0.2% month over month in January, below the 0.3% forecast. It rose 2.4% year over year versus 2.5%, down from 2.7% in December. Core CPI rose 0.3% month over month and 2.5% year over year. CME FedWatch put the odds of a June rate cut at about 83%, up from below 50% earlier in the week. Money markets priced about 63 basis points of Federal Reserve cuts for 2026. That equals about a 50% chance of a third cut by December. A leadership change is expected in May, with Kevin Warsh seen as likely to replace Jerome Powell. Applied Materials jumped about 12% after posting adjusted EPS of $2.38 on $7.01 billion in revenue, beating estimates of $2.20 and $6.87 billion. It also forecast more than 20% growth in semiconductor equipment this year. Rivian rose more than 20% and guided 2026 deliveries of 62K to 67K, up from 47K to 59K in 2025. Roku gained about 10% and guided 2026 revenue of $5.5 billion versus $5.34 billion. Pinterest fell more than 20% after guiding Q1 revenue of $951 million to $971 million versus $981 million expected. DraftKings dropped about 17% after guiding 2026 revenue of $6.5 billion to $6.9 billion versus $7.31 billion expected. The Dow’s 50-day EMA is 48,852 and its 200-day EMA is 46,472. Stochastics are at 73.67/76.23. Resistance is 50,509 and support is 49,092. With January inflation coming in at a mild 2.4%, we believe the Federal Reserve has a clear path to start cutting rates. The jump in June-cut odds to 83% is a strong signal to prepare for easier policy. We should consider buying call options on broad market indexes, such as the SPDR S&P 500 ETF (SPY). We can target expirations in the third quarter to benefit from a likely easing cycle. This setup looks similar to the pivot in late 2023, which helped drive a strong rally into 2024. When the CME FedWatch tool shifts this sharply, it often makes sense to reduce defensive positions. The expected Fed leadership change in May adds uncertainty. Still, soft inflation data may push the new Chair to follow the market’s expected path toward rate cuts. The market is split, and we should trade that gap. We should add to bullish semiconductor positions using call options on names like Applied Materials, which benefit directly from AI infrastructure spending. Data from last year showed global semiconductor sales rose by more than 13% after a slump in 2024, and this trend appears to be strengthening into 2026. At the same time, we see pressure on consumer-focused digital platforms, as shown by weak guidance from Pinterest and DraftKings. This creates a chance to buy put options on ad-driven and discretionary-spending companies. Even if the Fed cuts rates, ad budgets may not rebound right away, which supports these bearish trades. Recent swings have been large, with the Dow moving nearly 700 points in one day. We expect implied volatility to fall as the Fed outlook becomes clearer. We can try to benefit from that by selling VIX call spreads or buying VIX put options. A lower “fear gauge” would fit with less uncertainty about interest rates. Using the technical levels above, we can set up trades with clear risk limits. Selling cash-secured puts near the Dow’s support area around 49,000 could help us collect premium while staying bullish to neutral. If the index fails to hold that level, we should treat it as a signal to recheck and possibly reduce our bullish exposure.

here to set up a live account on VT Markets now