Mexico’s fourth-quarter current account came in at $7,702M, below forecasts of $11,520M
Mexico’s current account balance rose to $7,702 million quarter-on-quarter in Q4. This was below the expected $11,520 million.
The reported balance missed the forecast by $3,818 million. The figure is in US dollars and covers the Q4 period.
The fourth-quarter current account surplus for 2025 came in at $7.7 billion, below our expectation of more than $11.5 billion. This means less foreign currency flowed into Mexico than planned, which is a negative for the peso. This miss could also weaken market sentiment toward the MXN in the coming weeks.
Based on this, we are considering strategies that may benefit from a weaker peso, such as buying USD/MXN call options. The peso has been strong, trading near 17.50 per dollar recently, helped by Mexico’s higher interest rates versus the U.S. This weaker report could be the trigger that lifts the exchange rate toward 18.00.
This report also makes the outlook harder for Banxico ahead of its March meeting. Inflation in January 2026 was still high at 4.5%, but this weaker signal for external demand and growth could push Banxico toward a more dovish message. We will watch interest rate swaps for any shift in pricing of rate cuts later this year.
The weakness likely reflects a softer trade balance, possibly tied to the slowdown in U.S. manufacturing seen in January’s data. Remittances were still strong—above $63 billion for all of 2025—but they were not enough to reach the higher surplus forecast. This may point to early stress in the export-led growth story.
This surprise adds uncertainty around the peso’s next move. For investors without a clear directional view, buying volatility through options such as straddles may be sensible. This approach can profit from a large MXN move in either direction as the market absorbs the news.
Mexico’s accumulated current account-to-GDP ratio rose to 1.6% in Q4, up from 0.49%
Mexico’s accumulated current account balance rose to 1.6% of GDP in the fourth quarter, up from 0.49% in the prior period.
That is an increase of 1.11 percentage points. These figures measure the accumulated current account balance as a share of GDP.
We view this improvement in Mexico’s external accounts as a bullish signal for the Mexican peso. The end-2025 data suggests the country is in a stronger financial position, which could attract more capital. This supports derivative strategies that position for peso strength versus the dollar in the near term.
This positive фундаментals backdrop adds to the high interest-rate differential that has supported the peso. In 2025, this support strengthened as Banxico kept its policy rate at 11.25%. With USD/MXN already testing lows near 17.05 this month, the current account news could provide the push to break below that key psychological level. As a result, we should consider short USD/MXN futures or buying peso call options.
A stronger current account also changes the outlook for monetary policy by giving the central bank more room to maneuver. Inflation is still a risk, but greater external stability could allow Banxico to deliver an initial rate cut sooner than markets expect. We should look at positioning in TIIE futures for a more dovish shift by the second quarter.
With less uncertainty, we expect implied peso volatility to fall. Last year, implied volatility for 3-month USD/MXN options averaged above 14%, but it could now trend lower. That setup can favor option-selling strategies, such as covered calls or short strangles.
This is not a one-off result. It also shows that nearshoring is delivering real gains. Foreign direct investment in Mexico reached a record of more than $40 billion in 2025, and the current account data suggests this is translating into stronger exports and a healthier balance of payments. This structural shift supports a long-term appreciation view for Mexican assets.
As geopolitical and economic risks persist, silver gains traction as buyers support dips and the RSI stays above 50
Silver rose on Wednesday after falling the day before, as buyers returned amid continued geopolitical and economic risks. XAG/USD traded near $90.25, up about 3.38%. A stronger US Dollar, however, limited the upside.
The metal is up almost 24% over the past five sessions and is trading near its highest level in almost three weeks. This comes after a pullback from the late-January record high of $121.66.
Technical Trend Remains Intact
On the daily chart, price has moved back above the rising 50-day Simple Moving Average and is still above the 100-day SMA, both in the low-to-mid $80s. This keeps the broader uptrend in place. The Relative Strength Index is back above 50, which points to improving momentum without signaling overbought conditions. The MACD is moving toward zero as its histogram shrinks, suggesting bearish pressure is easing. Average True Range has dropped from recent highs, showing lower volatility. This can lead to steadier moves instead of sharp swings. Support is near the 38.2% Fibonacci level at $86.08, based on the $121.66 high and $64.08 low. Below that, the 23.6% level comes in at $77.67.Key Levels To Watch
Resistance is near the 50% Fibonacci level at $92.87. Above that, the next level is the 61.8% retracement at $99.67. Silver is gaining traction after the sharp pullback from the record highs near $121 in late January. A 24% jump in just five days shows dip-buyers are active, which could help form a new price floor. This rebound suggests we should revisit bullish strategies. The main headwind is the strong US Dollar. It is being supported by the Federal Reserve’s “higher for longer” rate stance. Recent data is adding to that strength. For example, the January jobs report showed 295,000 new jobs versus 180,000 expected. This dollar strength will likely limit any runaway upside in silver for now. It is also important to note the solid fundamental demand for silver, especially from green energy. In the final quarter of 2025, global solar panel installations rose 15% year over year. This industrial demand helps support prices even when markets are volatile. With momentum improving and the RSI turning positive, $92.87 is the key level. A clear break above it could signal an opportunity to buy long call options or sell bull put spreads, with a more open path toward $99.67. On the downside, risk is centered on the $86.08 support level. A sustained move below it would suggest the bullish move is fading. That makes it an important level for stop-losses or for buying protective puts to hedge long exposure. This setup is similar to patterns seen in 2025, when strong rallies driven by inflation fears often ran into resistance as central bank policy shifted. However, the current drop in volatility suggests this rebound could be steadier than the sharp swings seen last year. Create your live VT Markets account and start trading now.HSBC says GBP/USD looks overvalued as BoE cut expectations grow, keeping sterling under pressure after February’s close vote
HSBC Global Research says GBP/USD looks expensive when compared with interest rate differences. Markets are also starting to expect a more dovish Bank of England. Sterling has been under pressure since the BoE’s 5–4 vote in February to keep policy unchanged.
UK labour market data is due a few hours before the BoE meeting on 19 March. Bloomberg data dated 24 February shows markets pricing about an 80% probability of a 25 bp rate cut.
BoE Outlook And Sterling Valuation
Traders are also watching the BoE’s guidance on how far it could cut rates through the rest of 2026. The article says it was made with help from an AI tool and reviewed by an editor. The piece is credited to the FXStreet Insights Team. It is described as a group of journalists who select market observations from different analysts. It says the content includes notes from commercial sources, plus added input from internal and external analysts. We think the British Pound looks overvalued against the US Dollar as the gap between UK and US rate expectations grows. The Bank of England’s narrow 5–4 vote to hold rates earlier this month has kept sterling under heavy pressure. It suggests the BoE is close to loosening policy. Recent data supports this view and makes a cut look more likely. UK inflation has cooled a lot from the high levels seen in 2025. The latest reading is 2.3%, much closer to the Bank’s target. At the same time, fourth-quarter GDP from last year points to an economy that has stalled. This gives the BoE a clear reason to support growth. The US looks different. The economy is still holding up, with core inflation near 2.8% and the latest jobs report coming in stronger than expected. That makes it more likely the Federal Reserve will keep rates steady for longer than the BoE. This policy gap is a key negative for GBP/USD.Trading Implications For Options Markets
For derivative traders, this suggests positioning for a weaker pound. One approach could be to buy GBP/USD put options that expire after the 19 March meeting, to benefit if the pair falls. Since the market already prices an 80% chance of a cut, the bigger driver may be the BoE’s forward guidance. The main issue may not be the cut itself, but what the BoE signals for the rest of 2026. If it suggests a run of cuts over the year, sterling could fall much more. Holding bearish positions through the announcement could capture a larger move than the first market reaction. Create your live VT Markets account and start trading now.After softer Eurozone inflation and German fourth-quarter GDP data, investors push the euro lower against the pound
EUR/GBP traded near 0.8716 on Wednesday. It fell for a fourth straight day after new Eurozone inflation data and Germany’s Q4 GDP report.
Eurostat’s final estimates showed the Harmonised Index of Consumer Prices (HICP) rose 1.7% year-on-year in January. That was down from 2.0% in December and the lowest level in 16 months. It was also the first final reading below the ECB’s 2% target since May 2025. On the month, HICP fell 0.6%.
Eurozone Inflation And ECB Outlook
Core HICP fell 1.1% in January, after a 0.3% rise in December. Year-on-year, core inflation eased to 2.2% from 2.3%. Markets still largely expect the ECB to keep rates unchanged through 2026. ECB President Christine Lagarde said on Monday: “I very strongly believe that we are in that good place.” Germany’s economy grew 0.3% quarter-on-quarter in Q4, matching forecasts and the prior reading. Annual GDP growth was 0.4%, also in line with expectations.BoE Cut Expectations And Trade Implications
In the UK, focus shifted to the Bank of England. Markets see a possible rate cut in March. Governor Andrew Bailey told Parliament’s Treasury Committee that a cut is a “genuinely open question,” and that decisions will depend on inflation and wage data. With Eurozone inflation down to 1.7% in January, well below the ECB’s target, we see little reason for the central bank to change its steady approach. This supports President Lagarde’s view that policy is in a “good place,” and it reinforces expectations that rates will stay unchanged for some time. Steady German GDP growth also reduces any near-term pressure on the ECB to act. The bigger shift is in the UK. Expectations for a Bank of England cut are rising, possibly as soon as March. Governor Bailey’s comments have left the door open, and market pricing has adjusted. Overnight Index Swaps now point to more than a 60% chance of a 25 basis point cut next month. This creates a clear setup: the Euro has a stable policy base, while the Pound faces near-term easing risk. That gap could push EUR/GBP higher in the coming weeks. The current move below 0.8720, driven by the soft inflation print, may therefore offer a strategic entry point. We should consider options, such as buying EUR/GBP call spreads, to position for a rebound while limiting downside risk. A similar policy split appeared in late 2024, when early speculation about central bank pivots created strong trends for traders who positioned early. The key releases to watch now are the next UK inflation and wage reports. If last month’s UK core inflation of 3.9% continues to cool, expectations for a March cut should strengthen and could lift the pair. Meanwhile, early-February PMI data showed Eurozone services remain steady, while manufacturing is still contracting. This supports the disinflation trend. It also backs our view that the ECB will stay on hold even after the BoE begins cutting. This policy gap is the main theme we should trade. Create your live VT Markets account and start trading now.MUFG’s Derek Halpenny says yen weakness returns after Takaichi nominates reflationist academics Asada and Sato to the BoJ board
Japan’s government nominated Toichiro Asada and Ayano Sato to the Bank of Japan (BoJ) policy board. They will replace Asahi Noguchi at the end of March and Junko Nakagawa at the end of June.
MUFG reported fresh yen underperformance after the nominations. Asada is often described as reflationist and has co-authored research with former Deputy Governor Wakatabe.
Market Pricing And Policy Implications
Markets are pricing about 15 bps of BoJ tightening for April. MUFG said traders will watch an upcoming speech by Deputy Governor Himino for signs that this April pricing is justified. MUFG added that if Himino does not support the April hike story, the yen could weaken further against USD/JPY and other G10 currencies. The article says it was produced with an AI tool and reviewed by an editor. The yen is underperforming after the government nominated the stimulus-leaning academics Toichiro Asada and Ayano Sato to the BoJ policy board. Asada is known for supporting easier policy, which can tilt expectations toward a weaker yen. This also raises doubts about the market’s relatively aggressive tightening expectations. Derivatives markets are pricing roughly 15 basis points of tightening at the April meeting. But recent data makes that look less likely. January core inflation was 1.8%, below the BoJ’s target. At the same time, Q4 2025 GDP fell by 0.2%. With softer inflation and weaker growth, the new dovish-leaning members have little reason to push for a quick rate hike.Key Risk For Yen Traders
The BoJ has been cautious before. After its historic but careful exit from negative rates in 2024, policy normalization in 2025 was also slower than the market expected. That track record suggests the BoJ is more likely to disappoint hawkish expectations than validate them. The main near-term event is Deputy Governor Himino’s speech. If he is not clearly hawkish and does not back an April hike, markets may reprice quickly and sell the yen further. Options positioning—such as buying USD/JPY calls—could be one way to express this downside risk in the yen. USD/JPY is near 152.50 and uncertainty is rising. One-month implied volatility has moved up to 9.5% ahead of the speech, suggesting traders expect a larger move. If Himino does not signal a hike, USD/JPY could push higher as rate expectations are revised down. Create your live VT Markets account and start trading now.TD Securities strategists expect another RBA hike after January CPI beats headline and trimmed mean forecasts
Australia’s January CPI held at 3.8% year on year. That was above the 3.7% consensus and unchanged from the prior 3.8%. Trimmed mean inflation rose to 3.4% year on year, beating the 3.3% consensus and up from 3.3% previously.
On a seasonally adjusted month-on-month basis, headline CPI rose 0.5%. That was faster than the 0.2% increases seen in each of the prior two months.
Inflation Drivers In January
Housing costs drove most of the monthly rise. Electricity prices increased after Commonwealth and state rebates ended. New dwelling prices and rents also rose faster in January. Recreation and transport prices fell, which partly offset increases in other categories. Overall, the data still show inflation pressure. That keeps the case for another Reserve Bank of Australia rate rise alive, with May mentioned as a possible month. We saw a similar pattern early last year. The January 2025 CPI printed a hot 3.8%. Price pressures, led by housing and electricity, signaled the RBA would likely need to tighten policy. The RBA followed through with a hike in May 2025, taking the cash rate to 4.60%. By February 2026, the outlook is less clear. The January 2026 monthly CPI shows inflation picking up again to 3.2%. That is lower than last year, but it is still above the RBA target band. It also interrupts the disinflation trend seen in late 2025. As a result, another hike remains possible, even if it is not the base case. At the same time, the economy is cooling, which complicates the RBA’s decision. Unemployment has edged up to 4.2%. Retail sales have been flat. These are signs that earlier rate hikes are weighing on demand. The RBA now has to balance controlling inflation with protecting growth.Implications For Rates And Markets
For derivatives traders, this backdrop argues for a stretch of steady rates, followed by cuts later on. Overnight index swaps are pricing a long RBA pause, with a mild lean toward easing only from late 2026. If incoming data weaken, markets may bring forward the timing of those expected cuts. Sticky inflation plus slower growth often leads to higher volatility. One approach is to consider options strategies such as straddles on 3-year bond futures ahead of the next RBA meeting. These positions can benefit from a large move in either direction, which is plausible given the mixed signals. In FX, the Australian dollar is likely to stay pulled between supportive yield differentials and concerns about domestic growth. That setup suggests range-bound AUD/USD trading in the weeks ahead. Options strategies that sell premium far from spot may help capture this lack of a clear trend. Create your live VT Markets account and start trading now.Christopher Graham at Standard Chartered says Parliament halted ratification while awaiting clarification on newly announced US tariffs
The European Parliament has paused ratifying the EU–US trade deal while it asks for clearer details on new US tariffs. The pause follows uncertainty created by a US Supreme Court ruling on 20 February and fresh US tariff announcements.
The 20 February ruling struck down tariffs imposed under the IEEPA. This has raised new questions in Europe about whether the current deal still stands and what tariffs could come next. EU officials are especially concerned about the timing and risk of additional tariffs under Section 232 and Section 301.
Tariff Uncertainty And Legal Clarity
President Trump announced a new 10% tariff on all trade partners under Section 122. He also said the rate could rise to 15% soon. The White House has said it will still honour legally binding agreements, but EU policymakers say it is not clear how that would work in practice. The European Parliament’s trade committee is waiting for more details. This includes information on a proposed cut to tariffs on US industrial goods imports. European officials are also watching for changes to steel tariffs and any sector-specific exemptions. EU Trade Commissioner Maros Sefcovic said the deal could be ratified in March if the situation becomes clearer. The article says it was created using an AI tool and then reviewed by an editor. The pause adds major uncertainty to markets in the coming weeks. Because the issue is about transatlantic trade, it can affect assets linked to EU–US commerce. The VSTOXX, a key gauge of European market fear, has already jumped 15% this week in response.Market Hedging And Volatility Strategies
For currency traders, this points to renewed downside risk for the euro against the US dollar. Until there is clearer guidance—possibly not until late March—the balance of risk favours a weaker EUR. One-month implied volatility on EUR/USD options has already moved above 8%, showing that traders expect bigger price swings. It may also make sense to hedge exposure to European industrial and automotive stocks, which face the most risk. One approach is buying put options on indices such as Germany’s DAX. This can help protect against a drop if trade talks worsen. A similar pattern appeared during the original Section 232 tariff escalation in 2025, when these sectors lagged the broader market by 3–5%. Political uncertainty at this level can also support long-volatility strategies in the weeks ahead. The timing is unclear, but markets often react sharply once a final outcome—positive or negative—arrives. A long straddle on a major European index could benefit from a large move in either direction once a decision is announced. Create your live VT Markets account and start trading now.ING analysts report LME copper topping $13,000/t as Chinese buyers return, lifting Yangshan premiums to their highest levels
Copper prices on the LME climbed back above $13,000 per tonne on Tuesday as Chinese buyers returned after the Lunar New Year. Their return boosted import demand. The Yangshan copper premium rose to $53/t, a two-month high, up from about $33/t before the holiday.
Demand is improving, but inventories are still high. SHFE stocks remain elevated after the usual seasonal build. LME inventories have also kept rising, so the global market is still well supplied.
Market Structure Signals
LME time spreads are in deep contango, which suggests plenty of nearby supply. For spreads to tighten, the market would likely need clear stock declines in both China and LME warehouses. There are early signs of demand recovery, but high stock levels could limit near-term tightening. The focus is on whether the import arbitrage stays open and helps pull down LME stocks, alongside faster-than-usual declines in SHFE inventories. LME COTR data shows funds cut their net long in copper by 3,393 lots to 33,882 lots, the lowest since October 2023. Money managers also reduced their net long in aluminium by 4,486 lots to 92,972 lots, while zinc net long fell by 844 lots to 44,587 lots. At this time in 2025, the market was dealing with high inventories and speculative selling, even as Chinese demand was only starting to pick up after the holidays. Today, that picture has flipped. LME copper stocks have dropped by more than 60% over the past year to multi-year lows near 75,000 tonnes. That tightening has supported prices, which are now holding above $14,500/t.Positioning And Strategy
The deep contango seen in early 2025 has shifted to a persistent backwardation. The cash-to-three-month spread is now around an $80/t premium. This points to strong demand for immediate physical metal. The Yangshan premium, now near $110/t, supports that view as China’s clean energy buildout accelerates. Together, these signals suggest demand has moved well ahead of readily available supply. The caution seen in early 2025—when funds were cutting net longs—has been replaced by stronger conviction. Money manager net longs in copper are now near 85,000 lots. This reflects a crowded bullish view that expects further supply deficits. Heavy positioning can still be a risk, because it can lead to sharp pullbacks if negative news hits. With a tight physical market and stretched speculative positioning, outright long futures may carry a higher risk of a sudden correction. Traders may prefer call spreads to target more upside with defined risk, while reducing exposure to volatility in a crowded trade. There may also be opportunities in relative value trades, such as long copper versus aluminium, to benefit from copper’s stronger fundamentals while hedging against a broader macro downturn. Create your live VT Markets account and start trading now.A firmer US dollar lifts USD/CHF to 0.7746 after rebounding from 0.7719 on Fed policy shifts
USD/CHF rose on Wednesday as the US Dollar strengthened, which weighed on the Swiss Franc. The pair traded near 0.7746 after bouncing from an intraday low of 0.7719.
Traders scaled back expectations for near-term Federal Reserve rate cuts because inflation concerns remain. Chicago Fed President Austan Goolsbee said he is cautious about cutting rates too soon without clear evidence that inflation is moving back toward the 2% target.
