Singapore’s Manufacturing Purchasing Managers’ Index (PMI) came in at 50.6 in February. This was up from 50.3 in the previous reading. A PMI above 50 points to growth, while a reading below 50 points to contraction. The February figure therefore indicates a small improvement in overall manufacturing conditions.

Implications For Growth And Positioning

The rise in Singapore’s manufacturing PMI to 50.6 indicates that economic expansion is not just continuing, but accelerating. This is the second month of growth, and the faster pace suggests growing confidence in the sector. We should therefore be positioning for continued positive momentum in Singapore-linked assets over the next few weeks. This strength appears to be supported by a recovery in the crucial electronics sector. January’s non-oil domestic export figures showed a 4.2% year-on-year rise in electronics shipments, reversing the broad weakness we saw throughout much of 2025. This provides a solid foundation for the PMI reading and makes bullish derivative plays more credible. Given this data, we see potential upside in the Straits Times Index (STI). Traders should consider buying call options on STI-tracking ETFs or entering long positions in index futures. The current implied volatility may not yet fully reflect this strengthening outlook, offering a favorable entry point. A healthier economy also supports a strong Singapore Dollar, as it gives the Monetary Authority of Singapore room to maintain its policy stance. We are exploring strategies that would benefit from currency appreciation, like buying SGD call options against the US dollar. Historically, the SGD strengthens when the global electronics cycle, a major driver for Singapore, enters an upswing.

Contrast With Last Year Backdrop

This is a significant change from the environment we faced in the third quarter of 2025. At that time, global demand was uncertain and the PMI was struggling to stay above the 50-point neutral mark. The current data signals that it is time to shift away from the cautious, defensive postures we held then. Create your live VT Markets account and start trading now.

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Brazil’s S&P Global Manufacturing Purchasing Managers’ Index (PMI) rose to 47.3 in February, up from 47 in the previous month. A PMI reading below 50 indicates a contraction in manufacturing activity, while a reading above 50 indicates expansion.

Manufacturing Contraction Shows Signs Of Stabilizing

The rise in Brazil’s manufacturing PMI to 47.3 is a welcome sign, even though it still shows a contraction. It suggests the decline in the manufacturing sector is losing steam, which is the first step towards a potential recovery. For us, this isn’t a signal to go all-in, but it does justify shifting away from a purely bearish stance. We remember how the aggressive interest rate hikes by the Banco Central do Brasil throughout 2025 were necessary to curb inflation. Those policies likely contributed to this manufacturing slowdown we’ve been experiencing. However, with the Selic rate now cut to 11.25% in January, this PMI data could be the first evidence that monetary easing is starting to work its way through the economy. In the coming weeks, we should consider cautiously bullish positions on the iBovespa index futures. A strategy like buying May call spreads on the EWZ ETF makes sense, as it captures potential upside while defining our risk. This approach is prudent given that the index is still trying to recover from its 8% drop in the final quarter of 2025. This data also has implications for the Brazilian Real, which has been under pressure. A bottoming in the economy could lend support to the currency, potentially halting its slide against the dollar. Selling out-of-the-money puts on the BRL/USD pair for April could be a way to collect premium while betting that the currency won’t weaken significantly from here. We should expect implied volatility on Brazilian assets to slowly decrease if this trend of better-than-feared data continues. The market may begin to price out the worst-case recessionary scenarios.

Key Watch Items For The Next Move

Keep a close eye on iron ore prices, which have stabilized near $115 per ton, as any renewed weakness there could easily overpower this domestic optimism. Create your live VT Markets account and start trading now.

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US index futures opened the new week and month with a downside gap across the Dow (YM), S&P 500 (ES) and Nasdaq (NQ/MNQ), with trading described as a fragile attempt to repair broken intraday structure. The framing puts the next move on whether price accepts or rejects key levels into the New York session. Dow futures were at 48,195, down 1.63%, below TPO POC 48,630 and VPOC/CP 48,426, with VAH/VAL 48,710/48,420. The decision area was 48,211–48,160, with LG 48,344–48,293 above and LR 48,078 below; other mapped levels were UG 48,616–48,543 and UR 48,923.

Key Levels And Decision Bands

S&P 500 futures were at 6,812, down about 1%, below CP 6,866, TPO POC 6,837 and VPOC 6,825, with VAH/VAL 6,852/6,800. The decision band was 6,788–6,803, with LG 6,842–6,827, LR 6,764, UR 6,979, UG 6,893–6,909, and 6,683 if LR fails. Nasdaq futures were at 24,665, down 1.42%, holding above CP 24,579 but below TPO POC 24,800 and VPOC 24,770, with VAH/VAL 24,875/24,625. Key levels were LG 24,625–24,653, UG 24,727–24,699, UR 24,774, LR 24,384, 24,142 if LR fails, and 25,051 if UR holds. We are starting the week on the back foot, with a significant gap down driven by renewed Middle East tensions over the weekend. This geopolitical shock sent Brent crude prices surging over 8% to above $95 a barrel, pushing the VIX up to 22, its highest level this year. This environment demands a defensive posture until the market shows it can absorb this new risk. Our focus is on the S&P 500, which is showing the most structural weakness by trading below its key support at 6,827. A failure to quickly reclaim this level makes a test of the lower range at 6,764 highly probable. Traders should consider buying puts or selling call spreads to hedge long portfolios if the 6,788 demand band gives way.

Strategy For A Defensive Tape

In contrast, the Nasdaq is showing relative strength by holding its central pivot around 24,579. However, we see this as a fragile repair attempt rather than a sign of outright strength until it can reclaim the 24,770 volume point of control. This divergence between the Nasdaq and S&P is a classic warning sign we saw during the choppy markets of 2025. This weekend’s events are hitting a market already weakened by stubborn inflation data from last month. The February CPI report showed inflation re-accelerating to 3.5%, keeping the 10-year Treasury yield stuck above 4.5% and limiting the Federal Reserve’s ability to signal any rate cuts. This backdrop means any rally will likely be sold into until we see a clear de-escalation. For the coming weeks, our strategy will be to trade from level to level with a defensive bias. We are watching for acceptance or rejection at the key pivots, particularly the S&P’s 6,764 and the Nasdaq’s 24,579. A break of these levels would signal a deeper correction, while a strong defense could offer a short-term buying opportunity in a high-volatility environment. Create your live VT Markets account and start trading now.

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Dollar strength after the Iran attack is linked to higher energy prices and changing expectations for US interest rates. Three channels are cited: US energy independence, the energy dependence of Europe and Asia, and the impact of higher oil and gas costs on importers’ external accounts. Europe’s TTF natural gas opened 25% higher, after Brent crude opened 10/12% higher. Prolonged higher prices can worsen terms of trade for currencies such as the euro and yen, which can support the dollar.

Energy Prices And Dollar Support

Fed Fund futures contracts fell 3–4 ticks in Asia on the view that the Federal Reserve may not be able to cut rates twice this year. This comes after the January FOMC signalled less patience with inflation and indicated that rate cuts may depend on clearer disinflation and labour market changes. Higher energy prices could also reverse recent emerging market trends, including stronger EM currencies, local easing cycles, and bond and equity rallies. A reversal in flows would tend to favour the dollar. DXY has traded above resistance at 98.00. A move back to 100 this month is described as possible if there is no early de-escalation in the Middle East. Looking back at the Mideast tensions in 2025, we saw a clear playbook for how an energy shock combined with a hawkish Federal Reserve creates sustained dollar strength. The core logic from that period remains highly relevant for positioning in the coming weeks. These dynamics of US energy independence versus foreign dependence are not short-term trends.

Positioning For A Retest Of Highs

The surge in Brent crude, which jumped over 15% to nearly $105 a barrel in late 2025, severely damaged the trade balances of Europe and Japan. As a net energy exporter, with the U.S. Energy Information Administration confirming record LNG exports that year, we saw the dollar benefit directly. This fundamental advantage for the U.S. economy continues to be a central theme for the currency markets today. This energy shock fed directly into inflation, which remained stubbornly above the Fed’s target, ending 2025 at a 3.4% annual rate according to the Bureau of Labor Statistics. Consequently, the Federal Reserve held rates steady through its last meetings, completely repricing market expectations for cuts. The market is now pricing in a prolonged pause, which provides a strong floor for the dollar. This environment suggests positioning for continued dollar dominance in the near term through derivatives. We should consider buying call options on the Dollar Index (DXY) or dollar-tracking ETFs to capture further upside. Alternatively, strategies that short the euro or yen, such as buying puts on EUR/USD, could perform well as their economies grapple with higher energy costs. We should also be mindful of the continued pressure on emerging markets, which was a key outcome of the dollar’s rise last year. Recent data from early 2026 confirms that capital outflows from these regions are persisting. This makes buying puts on broad emerging market ETFs a relevant hedge or speculative position against further dollar strength. The DXY did in fact break through resistance at 98 and ultimately tested the 100-101 range late last year, validating the initial analysis. Given that the underlying energy and interest rate dynamics have not fully resolved, we believe that using options to bet on a retest of these highs remains a sound strategy for the coming weeks. The conditions that favor a weaker dollar are still not present. Create your live VT Markets account and start trading now.

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A US-led military operation against Iran has driven risk-off trading, with the US Dollar rising broadly while global equities fell. Gold rose by over 4%, and Brent crude climbed as much as 13%. Most major sovereign bond yields increased as higher oil prices lifted inflation expectations, outweighing safe-haven demand for bonds. President Donald Trump said on Sunday that the US military could continue its assault on Iran for “four to five weeks” if needed.

Conflict Duration And Market Direction

Market direction may depend on how long the conflict lasts and whether it weakens or removes Iran’s regime. Beyond geopolitics, the next move in the Dollar and risk assets is expected to depend on US economic releases, including this week’s US jobs data. The February ISM manufacturing index is due at 3:00pm London time (10:00am New York). The headline reading is forecast at 51.5, down from 52.6 in January, with focus on the Prices Paid and Employment sub-indexes. The piece notes it was created with the help of an AI tool and reviewed by an editor. It also describes FXStreet Insights Team content as selected market observations with added internal and external analysis. Markets are now in a classic risk-off mode, bracing for geopolitical fallout. We remember the US-led military operation against Iran in early 2025, which provides a clear playbook for the current tensions. The Dollar is rising broadly, while global equities are selling off, mirroring the pattern we saw last year.

Volatility And Defensive Positioning

Volatility is the main trade, and we are seeing the CBOE Volatility Index (VIX) push above 30, a level not sustained since last year’s conflict. This suggests buying puts on the SPDR S&P 500 ETF (SPY) for downside protection or straddles to play sharp moves in either direction. The heightened uncertainty makes holding short-volatility positions extremely risky for the next few weeks. This environment strongly favors the US Dollar, much like it did throughout 2025. The U.S. Dollar Index (DXY) is testing the 106.00 level, and derivative traders should consider call options on the dollar or buying puts on currencies like the Euro or Australian Dollar. These positions benefit directly from safe-haven flows into the United States. We are also seeing a significant reaction in commodities, with April delivery Brent crude futures soaring past $98 a barrel due to fears of supply disruptions in the Strait of Hormuz. Gold has also surged, breaking above $2,350 per ounce as investors seek a hedge against both conflict and inflation. Long positions in oil and gold futures or call options are logical responses to the ongoing crisis. Beyond the immediate geopolitical headlines, the broader direction will depend on this week’s US jobs data. We will be paying close attention to Friday’s Non-Farm Payrolls report, with whispers of a number below the 185,000 consensus possibly complicating the Fed’s inflation fight. A strong jobs number, however, would likely add even more fuel to the dollar’s rally. We must also be prepared for a rapid reversal if tensions de-escalate, just as risk assets rebounded quickly when last year’s campaign ended. This means it is prudent to look at cheap, out-of-the-money call options on major equity indices. These can serve as a low-cost way to position for a sudden snap-back in market sentiment. Create your live VT Markets account and start trading now.

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The US ISM Manufacturing PMI for February is due at 15:00 GMT. The index is forecast at 51.8, down from 52.6 in January, with 50.0 marking the line between expansion and contraction. In January, the PMI rose above 50.0 for the first time after 10 straight months below that level. Other ISM measures in focus include the Employment Index, Prices Paid, and New Orders Index.

Key Inflation Signal

The ISM Manufacturing Prices Paid index is forecast at 59.5, up from 59.0. This measure tracks changes in input costs such as labour and raw materials. If the PMI is weaker than forecast, markets may price in more Federal Reserve rate cuts; stronger data may reduce those expectations. EUR/USD was 0.75% lower near 1.1730 and below the 20-day exponential moving average near 1.1800. The 14-day RSI moved towards 40.00 after failing to regain 60.00, with added downside momentum if it drops below 40.00. Support levels are cited at 1.1645, then the mid-1.1500 area and 1.1489, while resistance is at 1.1800, then 1.1880 and 1.2030. The ISM PMI is a monthly survey-based gauge of US factory activity, with readings above 50 indicating expansion and below 50 indicating decline. It is treated as a leading indicator, with Prices Paid and Employment also monitored for inflation and labour conditions.

Market Positioning Ahead Of The Release

With the February ISM Manufacturing PMI data due for release today, we are watching closely to see if the manufacturing sector shows signs of life. The January reading came in at a disappointing 49.1, and the market consensus for today is a slight improvement to 49.5, still in contraction territory. A number below this forecast would signal deepening economic weakness. We remember a similar situation in early 2025, when manufacturing activity briefly expanded for the first time after a 10-month slump through most of 2024. That recovery was not sustained, teaching us that a single month of positive data is not a confirmed trend. This past fragility informs our cautious approach to today’s numbers. The sub-components of the report are just as important as the headline number, especially the Prices Paid Index. Given that the latest CPI data showed core inflation remains sticky at 2.8%, a high Prices Paid figure would create a headache for the Federal Reserve. It would suggest inflationary pressures are persisting even as the broader manufacturing economy struggles. A weak headline PMI, especially a fall below 49.0, will likely increase market expectations for a Fed interest rate cut by the summer. Currently, futures markets are pricing in about a 50% chance of a cut by June, so a poor reading could push those odds much higher. On the other hand, a surprise jump above 50 would reduce those odds and strengthen the US dollar. Derivative traders should consider that implied volatility is relatively low ahead of this release. This makes buying options attractive, as a significant surprise in either direction could cause a sharp market move. A long straddle on a major currency pair like EUR/USD could be a viable strategy to profit from a volatility spike, regardless of the direction. For those with a directional view on EUR/USD, currently trading around 1.0850, a much weaker-than-expected PMI could be the catalyst to push the pair above resistance at 1.0950. A surprisingly strong number could send it down to test support near 1.0750 in the coming weeks. Using call or put options can define risk for traders wanting to position for these specific outcomes. Create your live VT Markets account and start trading now.

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Brent crude oil has so far moved only a little in response to the Middle East war and the de facto closure of the Strait of Hormuz. It rose to just over $80 in Asian trading before easing. If the war lasts only a few weeks, the German and eurozone economies are expected to see limited effects. If it continues for several months, eurozone inflation is expected to rise by at least 1 percentage point and growth to be a few tenths of a percentage point lower. In a longer conflict, the Strait of Hormuz may stay impassable for an extended period. In that case, Brent could move towards $100 per barrel and stay near that level for a time. A move to $100 would be about a 40% rise from mid-February levels, before war speculation increased. The article was produced with the help of an AI tool and checked by an editor. We saw Brent crude react moderately at first to the Middle East conflict in late 2025, with prices briefly touching $80 before easing. That initial calm was deceptive, as the conflict has dragged on, and we are now seeing Brent hold firm around $92 a barrel as of today, March 2, 2026. This shows the market has fully priced in a prolonged disruption rather than a short war. The key factor remains the Strait of Hormuz, which has become practically impassable, disrupting a significant portion of global supply. Historically, this chokepoint handles over 20% of the world’s daily petroleum liquids consumption, and its closure has sent importers scrambling for alternative sources. This sustained supply shock is the main reason prices are nearly 40% higher than they were this time last year. The economic consequences predicted for a longer war are now evident in the latest data. The Eurozone flash CPI for February 2026 came in at 3.5%, well above consensus and reversing the previous cooling trend, largely due to surging energy costs. This confirms that the conflict is now inflicting the painful economic drag on European growth that we had feared. For derivative traders, this means upside risks will dominate the coming weeks, and we should be positioned accordingly. Implied volatility on Brent call options has remained elevated, with the Cboe Crude Oil Volatility Index (OVX) sitting near 48, reflecting market anxiety about another potential price spike. This suggests that buying protection against, or speculating on, higher prices is a prudent strategy. We should look to options structures that benefit from a move toward the $100 per barrel mark, which now seems increasingly plausible. Buying May 2026 call spreads could offer a cost-effective way to gain exposure to this upside potential. All eyes will be on the next OPEC+ meeting in three weeks for any signal on production policy, as a failure to add barrels to the market would likely trigger the next move up.

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TD Securities reported early market moves linked to the Iran conflict, with broad but measured US Dollar buying. Gold was up about $150, 10-year US Treasury yields were about 2bps higher, and Brent reached $82 per barrel before falling to around $78. The firm said the Dollar could gain support from safe-haven flows, with the Swiss franc noted as the only currency outperforming it at the time. It also pointed to the Norwegian krone and Canadian dollar as likely to do better than the euro and Australian dollar, and said USD/CAD could rise at the start. TD Securities said gold could rise by as much as $200 per ounce on the open, with silver also expected to rally. It added that TIPS breakevens could widen and the Treasury curve could bull steepen, with 10-year yields expected to fall as markets price in more Federal Reserve easing. Next week’s focus includes the US non-farm payrolls report on Friday, with forecasts for unemployment to stay at 4.3% and payrolls to rise by 90,000 for February. Other releases include Retail Sales and the ISM surveys for manufacturing and services. The story was corrected to remove an outdated quote about a 10–15 day deadline linked to Trump and Iran. It was produced using an AI tool and reviewed by an editor. Given the renewed tensions in the Strait of Hormuz, we are seeing markets react with a flight to safety. Initial moves show broad but measured buying of the US Dollar, which should continue as it benefits from its safe-haven status. This dynamic is a repeat of what we observed during similar flare-ups back in 2025. The immediate reaction will be driven by expectations of more Federal Reserve easing, as geopolitical risk clouds the economic outlook. In fact, overnight swaps are now pricing in a 55% chance of a rate cut by the May meeting, a sharp increase from just 30% last week. The 10-year Treasury yield has already dropped 12 basis points to 3.85% on these fears. In the currency markets, the Swiss Franc is the only major currency outperforming the dollar. We expect commodity currencies like the Canadian dollar to hold up better than the Euro or the Australian Dollar, particularly as speculative long positions in the Euro were near 18-month highs, making it vulnerable to a sell-off. For derivative traders, this suggests considering options that favor USD strength against the EUR and AUD. Gold has surged over $50 to $2,350 per ounce, acting as the primary geopolitical hedge. We saw a similar playbook during the onset of the Eastern European conflict in 2022, when gold rallied significantly in a short period. Brent crude oil also spiked to $91 a barrel, and while it has settled, the risk of a sustained supply shock is now being priced into energy derivatives. This week, the market’s focus will be split between these geopolitical developments and Friday’s crucial Non-Farm Payrolls report. Current consensus expects a gain of around 160,000 jobs for February, with unemployment holding at 3.6%. A weak report would intensify calls for Fed rate cuts and could further boost safe-haven assets.

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NZD/USD stayed near 0.5950 in European trading on Monday, down 0.75%, after losses linked to the war between the US and Iran. The pair remained under pressure as demand for safe-haven assets rose on worries about wider Middle East tensions. The US Dollar Index (DXY) was up 0.7% at about 98.40. Iran’s security chief Ali Larijani rejected any intention of negotiations with the US, adding to risk pricing in safe-haven markets.

Middle East Conflict Drives Risk Aversion

Over the weekend, the US and Israel carried out airstrikes on Tehran and reported killing Supreme Leader Ayatollah Ali Khamenei. Iran responded with missiles and drones aimed at Israeli territory and several US military bases in the Middle East. Markets are also tracking US data, with February Nonfarm Payrolls due on Friday. On Monday, traders are watching the US ISM Manufacturing PMI for February at 15:00 GMT, expected at 52.3 versus 52.6 in January. In New Zealand, expectations for tighter Reserve Bank of New Zealand policy have eased. Governor Anna Breman said in February that the economy could keep growing without creating inflation pressure. A correction dated March 2 at 12:19 GMT clarified that the war referenced is between the US and Iran, not the US and Israel.

From Geopolitical Shock To Fundamentals

Looking back at the events of early 2025, we saw the market driven by a flight to safety due to the US-Iran conflict, which pushed the US Dollar Index (DXY) towards 98.40. Today, the situation is different; the DXY is trading much higher near 104.50, but this strength is rooted in economic fundamentals rather than geopolitical fear. The focus now is on the Federal Reserve’s policy in response to persistent, though moderating, inflation. The NZD/USD, which fell to around 0.5950 during the conflict last year, is currently holding stronger near 0.6180. This resilience comes despite the strong dollar, partly because the Reserve Bank of New Zealand has signaled rate cuts are further off than previously expected due to stubborn domestic inflation. This contrasts with their dovish tone in February 2025, when they were less concerned about price pressures. With the key US Nonfarm Payrolls report due this Friday, implied volatility is increasing. We just saw the US ISM Manufacturing PMI for February come in at 50.1, barely in expansion territory but beating expectations of a contraction. Traders should consider using options to manage risk around Friday’s jobs number, which is forecast to show a solid 190,000 jobs were added last month. A payrolls number significantly above forecast could propel the DXY higher and push NZD/USD down, making long-dated puts on the pair an attractive hedge. Historically, strong US jobs data during periods of global uncertainty, like the post-pandemic recovery in 2022, often led to sharp dollar rallies. Conversely, a weak report could challenge the dollar’s strength, making short-term call options on NZD/USD a viable speculative play. Create your live VT Markets account and start trading now.

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Global markets opened the week in a risk-off move after US and Israeli strikes on Iran. Iran retaliated with attacks on US assets across the Gulf after Ayatollah Ali Khamenei and up to 40 senior Iranian officials were reported killed. Hezbollah said it struck Israeli missile defence sites, and NBC News reported 3 US service members killed in action. BBC News reported ongoing Iranian strikes early Monday, with explosions in Bahrain and Dubai, smoke near the US embassy in Kuwait, and 9 deaths in Beit Shemesh from a missile strike.

Safe Haven Bid Accelerates

Gold rose on safe-haven demand to its highest level since late January near $5,400, up more than 2% on the day. US stock index futures fell 1.2% to 1.6% in the European session. The US Dollar strengthened, with the USD Index up more than 0.5%. The Swiss Franc rose, and the Swiss National Bank said it could intervene to limit excessive CHF gains. Earlier reports said President Donald Trump announced “major combat operations” after Israeli strikes on Tehran, and Tasnim reported US bombing in Tehran. Israel declared a state of emergency, and its military said missiles were launched from Iran, triggering sirens and further retaliatory strikes. Given the sharp escalation in geopolitical risk, we must anticipate a significant and sustained spike in market volatility. The CBOE Volatility Index (VIX), which we saw jump to over 35 during the onset of the Ukraine conflict in 2022, will likely surge much higher given the direct involvement of the US and the death of a head of state. Derivative traders should consider buying VIX call options or establishing long straddles on major indices like the S&P 500 to capitalize on this explosive increase in uncertainty. For equity markets, the clear and immediate strategy is to position for further downside. With US index futures already showing significant losses, we should buy put options on the SPX and NDX to hedge existing long exposure or to speculate on a deeper correction. The initial 13% drop in the S&P 500 in the first two months of 2022 provides a recent historical blueprint for how markets react to major wars, and the current situation is arguably more severe.

Energy Shock And Portfolio Positioning

The most direct impact will be on energy prices, and we must position accordingly. Retaliatory strikes across the Gulf directly threaten the Strait of Hormuz, a chokepoint through which about 20% of the world’s daily oil supply travels. Any disruption here will lead to a historic supply shock, so buying call options on WTI and Brent crude oil futures is a primary trade to capture this upside risk. Gold is acting as the ultimate safe haven, and we should expect this rally to have strong legs. The move towards $5,400 reflects a flight to safety that will likely intensify as the full economic implications of the conflict become clear. We can increase our exposure by buying call options on gold futures or using leveraged gold miner ETFs, as this asset is insulated from the counterparty risk affecting the banking system. In the currency markets, we should continue to favor the US Dollar due to its unparalleled liquidity in a crisis. While the Swiss Franc and Japanese Yen are also benefiting, the SNB has already signaled its discomfort with a rapidly appreciating Franc, which introduces intervention risk we saw them enact in the past decade. The most straightforward pairs trade would be to short commodity currencies like the Australian Dollar against the US Dollar, as demand for industrial materials will wane amid fears of a global recession. Create your live VT Markets account and start trading now.

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