Michael Plumb, Head of Economic Analysis at the Reserve Bank of Australia (RBA), said the RBA will keep using quarterly Consumer Price Index (CPI) inflation data for its forecasts. He also said the bank has been using the monthly CPI to assess underlying inflation. The RBA is still focused on the quarterly Trimmed Mean. Any shift away from it is likely still some time away. The bank wants to decide which underlying inflation measures from the monthly data it would use if quarterly CPI stopped being the main reference.

Quarterly Cpi Remains The Primary Market Catalyst

Plumb said the RBA will consult widely and clearly explain its thinking before making any changes. He also said much of the inflation rise is concentrated in certain sectors, and that price pressures should ease over the next few quarters. He added that labour market conditions are contributing to higher inflation. At the time of writing, AUD/USD was down 0.38% on the day at 0.7055. Because the RBA is clearly focused on quarterly CPI, the biggest market moves are likely to happen around those releases. The next major date for traders is the Q1 2026 CPI release in late April. Until then, markets may spend weeks positioning. Derivatives that expire before the release may trade with a different volatility pattern than those expiring after the data is published. At the same time, the RBA is watching underlying inflation each month. That can create smaller, shorter-term trading opportunities. The latest monthly CPI indicator for January 2026 showed a slight easing to 3.2% year-on-year. This supports the view that price pressures are starting to fade. It also supports short-term strategies that expect lower interest rates or a softer Australian dollar.

Trade Structure Around The Late April Cpi Event

If inflation continues to cool, the RBA’s next move is more likely a rate cut than a hike. That would likely weigh on AUD/USD, which is already near 0.7055. This backdrop can suit strategies like buying AUD put options or using bearish credit spreads to benefit from further downside or sideways trading. It also marks a clear shift from the more hawkish tone seen through much of 2025. However, the comment about labour market pressure adds risk to a purely bearish view. Australia’s unemployment rate remains low at 4.0% in the latest release. That could keep wage growth and services inflation elevated. As a result, aggressive bearish positions could be exposed if upcoming jobs data surprises to the upside. For that reason, the main approach is to structure trades around the late April CPI release. One option is to buy volatility using instruments like straddles, since implied volatility in the Australian dollar may rise sharply as the date approaches. The current quieter period may offer a chance to enter these positions at a lower cost. Create your live VT Markets account and start trading now.

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NZD/USD pulled back from near 0.6000 after the RBNZ kept rates on hold last week and stayed dovish. The bank said policy is likely to remain supportive for some time. It also noted a rate rise later in 2026 is possible, but markets are not fully pricing that in. Markets have scaled back tightening expectations. Only one hike is now expected by year-end, down from two before the decision. A September move is now priced at about a 40% chance.

Us Tariff Policy Shift

In the US, the Supreme Court ruled 6–3 on Friday to strike down the administration’s IEEPA tariffs. Trump then threatened a new 15% global tariff under Section 122 of the Trade Act, which could take effect in the coming months. Section 122 includes a 150-day legal limit, and importer refunds could exceed $160 billion. This happens as Fed speakers headline Tuesday’s US calendar, while Australia’s CPI on Wednesday could move Kiwi crosses. On Monday, NZD/USD fell 0.34%, slipped below 0.5960, and then rebounded toward 0.6000 after an earlier rally faded. The pair is still above the 50-day EMA at 0.5915 and the 200-day EMA at 0.5860. The November low near 0.5600 remains the base of the broader uptrend. The Stochastic Oscillator has turned lower and moved below its midpoint after the year-to-date high at 0.6094. Support sits at 0.5956 and 0.5900. Resistance is at 0.6000 and 0.6094, with 0.6200 above. The RBNZ’s dovish tone is weighing on the Kiwi, especially after last week’s hold. Softer data also supports the bank’s caution: New Zealand’s Q4 2025 GDP rose just 0.2%, below expectations. That weakens the case for holding the New Zealand dollar versus the US dollar.

Risks To Nzd Outlook

At the same time, renewed US trade uncertainty is a key risk for risk-sensitive currencies like the NZD. The threat of new global tariffs has pushed the VIX (a major measure of market fear) up more than 15%, to near a three-month high around 18.5. In this kind of backdrop, investors often shift into the safety of the US dollar. We are also watching for weakness in New Zealand’s major trading partners. China’s January 2026 manufacturing PMI fell back into contraction at 49.8. The Global Dairy Trade price index also dropped 2.1% at the latest auction. Together, these signals point to potential pressure on export revenues. With mixed signals, we see value in using options to position for possible downside while limiting risk in choppy trading. NZD/USD is still holding above the 50-day moving average near 0.5915, but fundamentals suggest that level could be challenged soon. Buying put options with a strike below 0.5950 could be a sensible way to trade a potential break lower. This setup also echoes the 2018–2019 trade disputes (viewed from a 2025 perspective). Back then, similar tariff uncertainty helped drive NZD/USD down more than 10% over several months. We should be ready for higher volatility in the weeks ahead. Create your live VT Markets account and start trading now.

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The RBA raised the cash rate by 25 basis points to 3.85% after inflation rose sharply and private demand strengthened. January CPI is due on Wednesday. The last reading showed headline inflation at 3.8% and the trimmed mean at 3.3%, both above the 2% to 3% target band. China’s central bank is expected to leave rates unchanged on Tuesday. US tariff policy also shifted after the Supreme Court struck down IEEPA tariffs in a 6–3 ruling. This was followed by a proposal for a 15% global tariff under Section 122 starting Tuesday.

Inflation And Policy Focus

AUD/USD fell 0.39% on Monday and did not recover 0.7100. It is still above the 50-day EMA at 0.6880 and the 200-day EMA at 0.6650. The broader uptrend from 0.6667 remains in place, with a year-to-date high at 0.7147. Stochastics have turned down from overbought levels. Price action between 0.7050 and 0.7100 looks indecisive. Support is at 0.7000. Resistance is at 0.7100 and 0.7147, with 0.7200 above and the 50-day EMA below. Key AUD drivers include RBA policy, iron ore prices, China’s economy, inflation, growth, and the trade balance. Iron ore exports total about $118 billion a year (2021 data), mostly to China. The RBA targets inflation in the 2% to 3% range. With the RBA now at 3.85%, inflation is the key focus. The January CPI release matters most. The last quarterly reading in late 2025 showed inflation at 4.1%, still well above the RBA’s 2% to 3% target. If price pressure stays high, the RBA may keep a hawkish bias, which can support the Australian dollar. The China outlook is the main offset. China is Australia’s largest trading partner, and recent data has been soft. Last month’s Caixin Manufacturing PMI was only slightly expansionary at 50.8. Weak growth could reduce demand for Australian exports and limit AUD upside.

Key Market Risks And Trade Setup

This softness is already showing up in iron ore, a major AUD driver. After trading above $140 per tonne late last year, prices have slipped back toward $125 on concerns about Chinese demand. Traders should watch commodity futures closely. Further declines would likely weigh directly on AUD/USD. Another major risk is the renewed US threat of a 15% global tariff. That would likely trigger a risk-off move, pushing investors into safe havens and away from commodity-linked currencies like the AUD. This increases downside risk and makes unhedged long positions riskier in the coming weeks. On the chart, AUD/USD is losing momentum below the 0.7100 resistance area, and near-term strength is fading. With mixed fundamentals, a range-trading approach—or a strategy that benefits from a mild pullback—may fit better. Selling call options with strikes above 0.7150 could generate premium while waiting for clearer direction from CPI data or geopolitical headlines. Create your live VT Markets account and start trading now.

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India’s February flash PMIs showed that both services and manufacturing kept expanding. This growth was driven by demand at home and abroad. Hiring rose, and businesses felt more confident. Stronger overseas demand helped services, while manufacturing improved on stronger domestic demand after GST changes. External demand for manufacturers may improve if a US trade deal cuts tariffs to 18% from 50%. Labour-intensive manufacturing could benefit the most, which may support jobs. Even with strong PMI data, USD/INR rose 0.3% to 90.98 last Friday and gained 0.4% over the week. The INR was the weakest Asian currency year-to-date. This was linked to capital outflows and strong US dollar demand from importers. Year-to-date, the INR was down 1.2% versus the US dollar. By comparison, Asian currencies excluding Japan were up an average of 0.6%. This piece was produced with the help of an AI tool and reviewed by an editor. Around this time last year, we saw a clear gap: strong Indian PMI data did not help the Rupee. Capital outflows and heavy dollar buying from importers pushed USD/INR toward 91. The Rupee was also the weakest currency in Asia, even though the economy looked strong. The story has changed since then, because the drivers of growth have started to show up in the data. Foreign portfolio investors have become net buyers of Indian equities. They brought in more than $5 billion over the last quarter, reversing the outflows seen in early 2025. This shift is backed by continued growth in manufacturing, with January’s PMI at a strong 57.5. This steady strength suggests a possible strategy: sell out-of-the-money USD/INR call options to earn premium. With spot now near 88.50, sentiment has improved for the Rupee and implied volatility has fallen. That makes it more appealing to hold positions that benefit if the currency stays steady or strengthens slowly. Still, traders should watch the steady dollar demand from commodity importers, which can set a floor under USD/INR. Brent crude holding around $85 a barrel keeps the import bill elevated, which can limit how fast the Rupee rises. This ongoing demand can stop USD/INR from falling too quickly. Because of that, traders could look at strategies such as ratio spreads, or buying short-dated USD/INR put options, to target a gradual move lower. These approaches can benefit from the expected trend while limiting the risk of sudden, importer-driven dollar buying. It is also important to monitor Reserve Bank of India activity, since it can affect short-term currency moves.

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A US Supreme Court ruling removed IEEPA-based reciprocal and fentanyl-related tariffs on China. These tariffs could be replaced with a lower 15% tariff under Section 122 of the 1974 Trade Act. Before the ruling, total US nominal tariffs on China were 30% under the second Trump administration. This included 20% reciprocal tariffs and a fentanyl-related tariff that was cut from 20% to 10%. Consumer electronics were exempt.

Tariff Reset And Trade Flow Outlook

If the US applies a 15% Section 122 tariff and keeps the consumer electronics exemption, China would face lower nominal tariffs than before. This should support a partial recovery in direct US–China trade. Chinese exports to the US fell 20% in 2025 versus 2024. Even if tariffs drop, both countries still have incentives to keep the broader trade truce in place. The truce also includes non-tariff measures tied to technology supply chains. In October, the US and China agreed to delay stricter curbs on US semiconductor exports and China’s rare earth exports by one year. Because the IEEPA-based tariffs were removed unexpectedly, we see a potential opportunity in the Chinese yuan. In 2025, the yuan weakened sharply against the dollar as the 30% tariff level hit exports. In early 2026, the currency has stabilized near 7.25. We should consider buying yuan call options, or call options on yuan-backed ETFs, targeting a move toward 7.10 as trade flows normalize.

Market Trades And Risk Positioning

This change also affects Chinese equities, which have looked undervalued for some time. The Hang Seng Tech Index, which fell heavily last year, is up 8% over the past month. January manufacturing PMI data also showed a small expansion to 50.8, suggesting the market may be forming a bottom. We believe long-dated call options on China-focused ETFs offer attractive risk-reward if the recovery continues. The 20% drop in Chinese exports to the US in 2025 was a major drag on global shipping and logistics. If tariffs fall to 15%, we expect container volumes from ports like Shanghai and Shenzhen to rebound by the second quarter. Traders could consider call options on major maritime shipping firms whose shares fell sharply last year. For US companies, this is positive for firms with meaningful sales exposure to China, including large automakers and tech companies. Their earnings were pressured last year by tariffs and weaker Chinese demand. However, January 2026 reports show a modest rise in luxury goods sales in the region. A less confrontational trade backdrop could improve consumer confidence and support these US stocks. Overall volatility should ease as a key geopolitical risk fades. The VIX spiked above 25 several times during the 2025 tariff disputes, but has since settled back into the mid-teens. We see an opportunity in selling VIX futures or writing put options on the S&P 500 to position for a calmer market in the coming weeks. Still, caution is needed. Lower tariffs do not solve the broader technology rivalry. The October agreement to delay tougher semiconductor and rare earth restrictions remains a major friction point. Negative headlines there could quickly reverse tariff-related gains, so it may be prudent to hedge long positions with puts on key semiconductor ETFs. Create your live VT Markets account and start trading now.

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USD/JPY dropped late in the North American session. Weaker U.S. equities boosted safe-haven demand for the Japanese yen and gold. The pair traded near 154.71 after hitting a daily high of 155.04. The U.S. dollar also softened after the U.S. Supreme Court ruled against IEEPA tariffs imposed by the Trump administration. The U.S. Dollar Index (DXY) fell 0.07% to 97.73.

Key Data And Policy Signals

U.S. Factory Orders for December fell 0.7% month-on-month. This reversed November’s 2.7% rise and was tied to weaker aircraft bookings. Comments from Fed Governor Christopher Waller helped slow the drop after USD/JPY slipped below 154.00. Waller said he is leaning toward further easing. However, he added that if February’s labour data is stronger than January’s, rates could stay unchanged. Upcoming U.S. releases include Conference Board Consumer Confidence and the ADP Employment Change 4-week average. Japan has no scheduled releases, but Tokyo CPI and January Industrial Production are due. On the chart, a simple moving average sits near 156.00. RSI is at 47.21. A descending trend line from 157.66 is limiting rebounds near 155.11; a break above it could open the way to 155.87. Support sits near 152.48 and 152.10. A close above the descending resistance would improve the set-up. A monthly performance table showed the Japanese yen was strongest against the British pound.

Longer Term Market Context

Earlier last year, USD/JPY briefly dipped toward 154.70. That move was driven by a short-lived flight to safety and a Supreme Court ruling that weakened the dollar. Since then, conditions have changed, and the pair has traded much higher as broader macro fundamentals have taken control. In 2025, the more hawkish tone from Fed officials, including Christopher Waller, became the dominant driver. Over the past year and into 2026, U.S. labour data has often beaten expectations. The latest January 2026 Non-Farm Payrolls report showed job growth of more than 225,000. This steady strength has reduced the chance of Fed rate cuts and has supported the dollar. In Japan, the data has not pushed the Bank of Japan to tighten policy aggressively. Traders have continued to watch Tokyo inflation. Recent figures show core CPI is still struggling to stay above the BOJ’s 2% target, at 1.8% year-over-year. This keeps the U.S.–Japan rate gap wide. For derivatives traders, volatility may be the main focus. With USD/JPY nearing multi-decade highs around 160.00, the chance of verbal or direct intervention by Japanese authorities is rising. One-month implied volatility has already increased from 8.0% to 9.5% in recent weeks. That makes long-volatility option approaches, such as straddles, more appealing if a sharp move occurs in either direction. The interest-rate differential, now above 500 basis points, still makes carry trades attractive. This trade typically means buying higher-yielding dollars and selling low-yielding yen. Traders may consider using forward contracts to lock in the positive carry. Still, tight stop-losses remain important given the higher risk of sudden policy shifts from Tokyo. Create your live VT Markets account and start trading now.

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Nvidia (NVDA) began the week at $190.00 ahead of its earnings call on Wednesday. The stock has a nearby resistance level at $193.00. For Q4 2025, Nvidia is expected to report $65.60 billion in revenue and earnings of $1.53 per share. That compares with Q3 revenue of $57 billion, a 14% increase. Nvidia has confirmed partnerships with Meta, Anthropic, and OpenAI tied to its Blackwell and Rubin GPUs. Late in 2025, the Trump administration allowed sales of H200 GPUs to “approved customers” in China. Michael Burry held a bearish position against NVDA worth about $187 million. The last clear breakout above $193.00 was in October 2025, when the stock hit an all-time high of $212.19. The 10-day and 25-day moving averages have crossed higher. At the time of writing, NVDA was still trading near $190.00. With NVDA at $190 ahead of Wednesday’s earnings, our focus is on short-term options trades. Expectations for record revenue and earnings are high, and that is raising market pressure. Many traders are positioned for a breakout above the key $193 resistance level. If we are bullish, one approach is to buy call options that expire shortly after the announcement. Strike prices at $195 or $200 could benefit from a positive earnings surprise. Nvidia has often beaten analyst estimates in recent quarters, sometimes by more than 15%. This would also line up with the recent bullish technical signal: the 10-day moving average crossing above the 25-day average. Still, talk of an “AI bubble,” plus Burry’s bearish view last year, supports the idea of a “sell the news” drop. The options market reflects this risk. Implied volatility for this week’s contracts has jumped above 90%, which signals traders expect a big move in either direction. Because of that, some of us are buying put options near the $185 strike as a hedge, or as a direct bet on weaker-than-expected results. We saw in October 2025 that a breakout above $193 helped drive the stock to a new all-time high. That rally followed partnership news and the late-2025 easing of sales limits to China. A similar move could happen again, but the risk feels higher this time. A more neutral strategy we are considering is a long straddle. This means buying both a call and a put at the same strike price, such as $190. The trade can profit if the stock makes a large move either up or down, so it is mainly a bet on volatility after earnings. It is expensive, but it avoids having to correctly predict the market’s direction.

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Vietnam stands to benefit the most in ASEAN from the US move to a flat 15% Section 122 tariff surcharge. The change cuts tariff costs for Southeast Asia and makes the region’s exports more price-competitive in the US. Vietnam’s export-led growth model and its key role in global supply chains mean this new tariff setup should support production for the US market. Vietnam is also the third-largest Asian exporter to the US. The shift also removes the higher tariff rates used under the previous IEEPA approach. This matters for Vietnam because many of its US exports are low value-added consumer goods. Key product groups include apparel, footwear, and toys. These categories previously faced steeper penalties. Removing the higher rates should strengthen Vietnam’s position versus regional and global competitors. The article was produced using an Artificial Intelligence tool and reviewed by an editor. Looking back at the US switch to a flat Section 122 tariff in 2025, the benefits for Vietnam’s export-driven economy are clear. This ongoing strength points to potential upside for the Vietnamese Dong (VND), since stronger export revenues typically raise demand for the local currency. Derivatives traders may want to look for chances to go long VND versus the US dollar in the weeks ahead. Recent data supports this view. Q4 2025 GDP growth came in at 6.72% year-on-year. January 2026 trade data also showed exports jumping 42% versus the prior year, led by shipments to the US. This suggests the tariff change is directly adding to economic momentum. This strong backdrop can also support long positions in Vietnamese equities, especially through VN-Index futures or call options. Strength has continued in sectors such as apparel, footwear, and furniture manufacturing, which benefited most from the removal of IEEPA rates. Many companies in these areas are now reporting record profits, helping lift the index. Historically, when countries gain this kind of trade advantage, their currency and equity markets can enter multi-year bull runs. While the biggest initial move may already be over, the fundamental case still looks strong. For investors with a bullish but more conservative stance, selling out-of-the-money puts on Vietnam-focused ETFs can offer a way to earn premium while keeping a positive view.

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Vietnam is set to benefit the most in ASEAN from the US move to a flat 15% Section 122 tariff surcharge. This change cuts tariff costs for Southeast Asia and makes exports to the US more price-competitive. Vietnam’s export-led growth model and its role in global supply chains mean the new tariff structure should support production for the US market. Vietnam is also the third-largest Asian exporter to the US. The change also removes the higher tariff rates used under the previous IEEPA approach. This matters for Vietnam because many of its exports to the US are low value-added consumer goods. Key product groups include apparel, footwear, and toys. These categories previously faced steeper penalties. Removing the higher rates should strengthen Vietnam’s position against regional and global competitors. The article was produced using an AI tool and reviewed by an editor. Looking back at the US shift to a flat Section 122 tariff in 2025, the benefits for Vietnam’s export-led economy are clear. This ongoing strength may support the Vietnamese Dong (VND), since stronger export revenues can increase demand for the local currency. Derivative traders may want to watch for opportunities to go long VND against the US dollar in the coming weeks. Recent data supports this view. Q4 2025 GDP growth reached 6.72% year-on-year. January 2026 trade figures also showed exports up 42% from the prior year, led by shipments to the US. This suggests the tariff change is directly adding to economic momentum. This strong backdrop can also support long positions in Vietnamese equities, including VN-Index futures or call options. Key beneficiary sectors include apparel, footwear, and furniture manufacturing, which gained the most from the removal of IEEPA rates. These companies are posting record profits, helping push the index higher. In the past, when countries have gained this kind of trade advantage, their currency and equity markets have sometimes seen multi-year bull runs. Even if the first sharp move has already happened, the fundamentals still look supportive. For a bullish but more conservative approach, selling out-of-the-money puts on Vietnam-focused ETFs may offer a way to collect premium while expressing a positive view.

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MUFG said changes in how the U.S. applies tariffs, along with a weaker U.S. dollar, suggest USD/CNY will drift lower over time. It added that China could outperform some Asian exporters because effective tariffs on Chinese exports are expected to fall. MUFG said some countries that had benefited and secured trade deals are now slightly worse off for now. It also said countries without fully finalised trade deals, such as China and Brazil, are currently better off.

Tariff Shifts Favor China

Global Trade Alert analysis cited by MUFG estimates that effective tariffs for Brazil and China could fall by about 7% to 16% over the next few months. MUFG said this would narrow the tariff gap between China and other Asian exporters. MUFG said a smaller tariff gap reduces the incentive to re-route exports to the U.S. through other Asian economies. The report noted the article was produced using an AI tool and reviewed by an editor. We expect USD/CNY to ease lower in a steady, gradual move over the coming weeks. This view is backed by a softer U.S. dollar and, even more importantly, changes in U.S. tariff policy. Together, these shifts make Chinese goods more competitive globally. New data from China’s General Administration of Customs for January 2026 supports this view. Exports to the U.S. rose 3.5% year over year, beating expectations. This is the first clear rise in six months and suggests lower effective tariffs may already be helping. For traders, this supports a firmer yuan.

Positioning And Volatility Dynamics

This marks a shift from most of 2025. During that period, traders often positioned for a weaker yuan as supply chains moved to other Asian countries to avoid higher tariffs. That re-routing trend now appears to be fading. While China is improving, Vietnam is seeing slower momentum. In January, Vietnam’s export growth to the U.S. slowed to 1.2%, down sharply from last year’s stronger pace. As China’s tariff disadvantage narrows, firms have less reason to shift production away from China. This change should keep pressure on USD/CNY. Markets also seem to expect a gradual move, not a sharp drop. One-month implied volatility in USD/CNY has fallen to 3.8%, near the lowest level in more than three months. In a low-volatility setup like this, selling out-of-the-money call options may appeal to traders looking to collect premium while positioning for downside. Create your live VT Markets account and start trading now.

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