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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South Korea’s Producer Price Index (PPI) rose 1.9% year on year in January. This was the same as the previous reading of 1.9%. The data shows producer price growth stayed at 1.9% compared with the prior month’s rate. The release updates price changes faced by producers in January.

Policy Rate Outlook

South Korea’s January PPI holding at 1.9% year over year points to limited inflation pressure for now. This supports our view that the Bank of Korea will likely keep its policy rate at 3.5% at its next meeting. The bank held this level for most of last year, 2025. With inflation steady, the risk of a surprise rate hike that could shake markets looks lower. A steady rate outlook can leave the won (KRW) at a disadvantage versus higher-yield currencies like the U.S. dollar. With the rate gap still favouring the dollar, USD/KRW could drift higher and potentially re-test the 1,350 level seen late last year. Traders could consider buying USD/KRW call options to position for possible won weakness. For equities, stable input costs support the manufacturer-heavy KOSPI 200 index. Softer cost pressure can help profit margins, especially as semiconductor exports to the U.S. recently rose 12% year on year. This backdrop supports a bullish view on Korean stocks, making long KOSPI 200 futures or call options worth considering. With no surprise in this inflation print, implied volatility in options markets may ease. Compared with the sharp swings seen in 2023, today’s calmer conditions may favour volatility-selling strategies. Short strangles on the KOSPI 200 could be a way to collect premium, assuming no major outside shocks in the next few weeks. Risks remain, especially from China, which buys nearly a fifth of South Korea’s exports. Recent data showed China’s industrial output was weaker than expected. If China slows further, sentiment toward Korean exporters could deteriorate quickly. This is the biggest near-term risk in an otherwise stable outlook.

Key Risk Watch

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South Korea’s Consumer Sentiment Index rose to 112.1 in February, up from 110.8 in the prior reading. The move higher in consumer sentiment is a positive sign for the domestic economy. It suggests households feel more confident and may spend more in the weeks ahead. That could support stronger corporate earnings, especially in consumer-facing sectors.

Implications For Equity Positioning

This renewed confidence could act as a tailwind for the KOSPI 200. We may want to consider buying call options on the index or on major consumer discretionary names such as Hyundai Motor and Samsung Electronics, focusing on March and April expiries. The data also supports the recovery story, following January retail sales that rose a modest but encouraging 1.2% year over year. Stronger consumer demand could also support the Korean won, since it may keep inflation from cooling too quickly. The Bank of Korea held its policy rate at 3.5% last month, and this type of data may give it a reason to delay any rate cuts. As a result, we are watching currency derivatives that benefit from a stronger won versus the US dollar, such as short USD/KRW futures. Interest rates also matter here. After the sharp tightening cycle in 2022, strong consumer data has sometimes been followed by more hawkish central bank messaging to contain inflation. Because of that, we see a case for hedging with short positions in Korean Treasury Bond futures, based on the view that markets may reduce the odds of rate cuts this year. This February sentiment reading stands out given the uncertainty in late 2025, when global trade slowed. Today’s improved mood, along with a recent government report showing semiconductor exports up 7% in January, points to a firmer and more self-sustaining recovery. This may mean markets are underestimating Korea’s economic strength in the first half of the year.

Key Risks And Monitoring

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South Korea’s Producer Price Index (PPI) rose 0.6% month on month in January. This was up from a 0.4% month-on-month increase in the prior month.

Producer Costs Accelerating

The January data shows that producer costs in South Korea are rising faster. The monthly PPI increased to 0.6%, which suggests inflation pressures are building earlier in the supply chain. These higher costs may be passed on to consumers in the months ahead. This rise also makes it harder for the Bank of Korea (BOK) to cut its benchmark interest rate. Instead, it supports a more hawkish approach until inflation is clearly under control. The BOK kept rates steady through 2025 to manage price pressures, and this report gives another reason to stay cautious. Other recent data points in the same direction. The latest consumer inflation reading was 2.9%, still above the BOK’s 2% target. With the policy rate held at 3.50% just last week, a stronger PPI print is likely to reinforce the BOK’s stance. That makes a rate cut before the second half of the year look less likely. For Korean won traders, this can be supportive for the currency. A hawkish central bank often strengthens its currency, so strategies that benefit from a lower USD/KRW rate may be worth considering. This could include buying KRW call options or using futures to position for a stronger won. For equities, this is a negative factor for the KOSPI 200. Higher rates for longer can weigh on earnings and investor sentiment. Buying put options on the index could be used as a hedge, or as a way to position for a potential pullback in March.

Market Implications For Rates

This PPI reading also matters for rate markets and interest rate derivatives. Traders may reduce expectations for an early rate cut, which could push bond yields higher. As a result, Korean Treasury Bond (KTB) futures prices may come under downward pressure. Create your live VT Markets account and start trading now.

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The US Dollar recovered most of its intraday losses on Monday and traded mostly flat. Markets had first reacted to a Supreme Court decision that struck down President Donald Trump’s tariffs, and then to his weekend move to add more levies. The Dollar Index held near 97.70. Trump also announced a 15% tariff on global trade. EUR/USD traded near 1.1790 and slipped after earlier gains. GBP/USD held near 1.3490 after giving back most of its earlier rise. AUD/USD traded near 0.7060, down more than 0.40%. USD/JPY traded near 154.60 after a softer Japan January National CPI raised bets that the Bank of Japan could hike rates.

Market Reaction And Dollar Moves

Gold rebounded as risk aversion increased. It hit a three-week high above $5,200 and traded at $5,211, up more than 2%. Central banks bought 1,136 tonnes of gold worth about $70 billion in 2022, the largest annual purchase on record. Upcoming data includes Australian January CPI (25 February) and Tokyo February CPI (26 February). Data due on 27 February includes Swiss Q4 GDP, Germany’s February flash CPI and HICP, Canadian Q4 GDP, and the US Producer Price Index. Looking back at the market shock from this time in 2025, it is clear that the main drivers of volatility have changed. The Supreme Court’s tariff ruling, followed by a new 15% global levy, was a political shock that shook markets. Today, markets focus less on surprise policy headlines and more on inflation trends and how central banks respond. Last year’s jump in gold above $5,200 was an extreme flight to safety. The same basic idea still applies. Central banks remain major buyers. The World Gold Council said they added a near-record 1,037 tonnes to reserves in 2023. With ongoing geopolitical tension, using options to build long gold exposure can still be a useful hedge against sudden global shocks. Last year, the US Dollar Index dipped to 97.70 and then rebounded as trade uncertainty rose. Now the backdrop is different. The DXY is stronger and has recently hovered near 105 as the Federal Reserve stays cautious on rate cuts amid stubborn inflation. That makes derivative strategies around key releases, like the Producer Price Index (PPI), more relevant than reacting to political surprises.

Shifting Drivers Of Volatility

Last year, USD/JPY near 154.60 was driven by expectations of a Bank of Japan rate hike. Since then, the BoJ made its historic policy shift in 2024, but the rate gap with the US is still very large. That gap now exceeds 500 basis points. This suggests futures trades focused on the interest-rate differential are more structural than the short-lived risk-off moves seen in 2025. Unlike last year, when the Australian Dollar was moved mainly by broad tariff headlines, it now reacts more to specific economic releases. Australia’s monthly CPI indicator for January 2026 came in at 3.5%, slightly above expectations. This supports the view that scheduled data is now a bigger driver for FX pairs. Traders may prefer short-term options to position for volatility around these set release dates. Create your live VT Markets account and start trading now.

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Gold rose for a fourth straight day on Monday and climbed back above $5,200 late in North American trading. XAU/USD was up nearly 2%. Prices touched a four-week high of $5,219 as the US Dollar weakened. The US Supreme Court ruled against tariffs imposed under the International Emergency Economic Powers Act (IEEPA). After the ruling, Donald Trump announced 10% global tariffs, then raised them to 15% under Section 122. These Section 122 tariffs expire 150 days after they take effect.

Geopolitical Risk And Safe Haven Flows

Middle East tensions also lifted demand. Reports said Washington is weighing a targeted strike on Iran, followed by a broader attack aimed at removing the Supreme Leader by force. Talks are due to resume in Geneva on Thursday. On Monday, the US embassy in Beirut told non-essential staff and family members to leave. US data showed Q4 2025 growth of 1.4% quarter-on-quarter. Core PCE inflation rose 3% in December. Swap markets are pricing about 55 basis points of rate cuts. The Dollar index fell 0.15% to 97.64, and the 10-year US yield dropped six basis points to 4.025%. Key resistance levels cited are $5,250, $5,451, $5,500, and $5,600, with support at $5,025 and $4,702. Central banks bought 1,136 tonnes of gold in 2022, worth about $70 billion. Gold’s move above $5,200 is being driven by heavy geopolitical and trade uncertainty. New global tariffs and rising tension with Iran are fueling a classic safe-haven bid. This backdrop points to continued upside potential and elevated volatility in the weeks ahead.

Options Positioning And Market Signals

This move is not only short-term speculation. It also reflects steady institutional demand. Central banks have kept buying aggressively, adding more than 1,000 tonnes a year in recent years. That kind of demand helps put a floor under prices. Soft US data from late 2025, along with an ISM Manufacturing PMI still in contraction at 47.1, leaves the Federal Reserve in a tough spot. Even with December inflation at 3%, the Fed may face pressure to cut rates to support slowing growth. Rate cuts would likely weaken the dollar and support higher gold prices. For derivatives traders, this setup favors call options to gain upside exposure with defined risk. With major event risk ahead—Geneva talks and President Trump’s State of the Union address—volatility is likely to stay high. Call spreads may be a lower-cost way to position for a move toward $5,400–$5,500. Options positioning is already leaning bullish. Open interest in April contracts at the $5,400 and $5,500 strikes has risen by more than 30% over the past week. This suggests many traders are positioning for a retest of all-time highs. Similar conditions have appeared before, especially in the late 1970s: high inflation, geopolitical conflict, and a weaker dollar. In that period, gold rose sharply in a relatively short time. Today’s setup echoes parts of that history, which may mean the rally still has room to run. It also makes sense to hedge against any sudden easing in tensions. A positive outcome in the Geneva talks could trigger a sharp (though likely temporary) drop in gold. Traders who are long may want to watch $5,100 as a key support level and consider put options for protection. Create your live VT Markets account and start trading now.

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GBP/JPY slipped 0.22% on Monday and stayed in the 208.00–209.25 range. At the time of writing, it was trading around 208.57 after topping out at 209.23. Traders are watching support near 207.75. Price is consolidating near the lower edge of an ascending channel. A rising support trendline and the 100-day SMA near 207.60 have limited losses so far, while a bearish flag pattern is forming.

Bearish Momentum Building

The RSI is below neutral and still falling. This points to building selling pressure. If the pair breaks below 208.00, the next support sits near 207.50. Below that, traders will watch 205.32 and the 200-day SMA at 202.60. On the upside, resistance is seen around 209.50 and 210.00. Additional resistance comes in near the 20- and 50-day SMAs at 210.73/210.98, with 213.82 as a higher target. A bearish flag is forming on the GBP/JPY chart. This suggests the current sideways move could be a pause before another leg lower. For derivative traders, that may mean considering downside hedges or selective short exposure. The pair is currently trading near 208.57 in a tight range.

Key Levels To Watch

The technical setup is reinforced by economic surprises from early February 2026. UK inflation cooled unexpectedly to 2.5%, increasing expectations that the Bank of England may pause rate hikes. Meanwhile, Bank of Japan officials have sounded more confident about policy normalization, which has supported the yen. These diverging central-bank signals strengthen the bearish view. The 208.00 level is key. A clear break below it could trigger follow-through selling toward 207.50. That makes put options with strikes at or below 207.75 a potential approach for the coming weeks. A decisive move under this zone would put 205.32 in focus. It’s also worth recalling the sharp selloff in the second half of 2025. When risk sentiment deteriorated, the pair dropped more than 10 figures in a single quarter. That history suggests that a break of support near 207.60 could turn into a fast move. It also supports waiting for a confirmed breakdown before committing to a large position. If buyers push above 209.50, the bearish flag would be invalidated. That could force shorts to cover and trigger a squeeze. In that case, call option traders may look toward the 210.00 to 210.75 area. A sustained move above 211.00 would be needed to confirm a new bullish trend. Create your live VT Markets account and start trading now.

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Malaysia’s exports rose 19.6% year on year in January. This beat the Bloomberg consensus of 14.6% and improved from 10.2% in December. It was the strongest result since September 2022. Growth came mainly from high-value manufactured goods, including electronics and optical equipment. Authorities expect export growth to slow in the coming months, but to stay positive in 2026. The Malaysia External Trade Development Corporation linked the strong results to exporters’ resilience and competitiveness. Political tensions have increased inside the governing coalition. The Democratic Action Party, the largest party in the ruling bloc, is considering moving its cabinet ministers to the backbenches. This comes as support for Prime Minister Anwar Ibrahim has weakened and reforms have progressed slowly. In foreign exchange markets, USD/MYR fell 0.2% to 3.90 last Friday and declined 0.1% over the week. Year to date, the Malaysian ringgit is up 4.0% against the US dollar. Foreign portfolio flows have turned positive on a net basis. Net foreign portfolio inflows totalled USD355mn this year, compared with a USD885mn outflow over the same period last year. We are seeing a strong start to 2026. January export growth of 19.6% was the best since late 2022. This strength is supported by the global technology upswing that began in 2025, which is still lifting demand for Malaysian electronics. The ringgit has gained 4% against the dollar this year, helped by USD355 million in net foreign inflows. However, political uncertainty in the governing coalition is rising. Any sign of instability could quickly reverse the portfolio inflows seen so far. The market volatility around the 2018 general election shows how quickly foreign capital can leave on political headlines. Over the next few weeks, this mix of strong data and higher political risk suggests that buying volatility may be sensible. With economic data strong, it may be risky to outright short the ringgit. But ignoring political risk also looks unwise. Options could help hedge long-MYR exposure or position for a sharp move in USD/MYR, possibly above 4.00. Bank Negara Malaysia’s steady stance on the Overnight Policy Rate helps for now. It has held the rate at 3.00% since mid-2023. The 10-year Malaysian Government Securities yield, near 3.85%, also looks attractive versus the US 10-year Treasury. This yield gap can support some foreign investment, but it may not be enough to stop outflows if political risks rise further.

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