Malaysia’s headline inflation held at 1.6% year on year in January, unchanged from December. This matched the Bloomberg consensus and came in slightly below UOB’s 1.7% forecast. UOB said 4Q25 GDP growth was solid and inflation pressures remain contained. As a result, it expects Bank Negara Malaysia to keep monetary policy unchanged in the near term.

OPR Outlook Remains Steady

UOB continues to expect the Overnight Policy Rate (OPR) to stay at 2.75% through 2026, supported by stable inflation. The article notes it was created with help from an artificial intelligence tool and reviewed by an editor. With inflation still contained at 1.6% in January and the economy growing by a solid 3.0% in 4Q25, there appears to be little pressure on Bank Negara to act. This stability points to lower implied volatility for Malaysian assets. For derivative traders, this suggests sharp, surprise moves in interest rates are less likely in the near term. We also expect the OPR to remain steady at 2.75%, where it has been since mid-2025. The 3-month KLIBOR forward curve supports this view, pricing in almost no change for the rest of the year. This may make selling interest-rate volatility—or positioning for a range-bound outcome—a potentially attractive approach.

FX Divergence And Hedging Considerations

Stable domestic policy contrasts with a more hawkish US Federal Reserve, which could widen differences in interest rates. That means a steady OPR may not lead to a stronger ringgit if global rates rise. It may be worth considering hedges against potential MYR weakness, such as buying USD/MYR forward contracts. For equity derivatives, a low and stable rate environment generally supports corporate earnings. It also removes a major risk for the stock market, which can keep option premiums on the FBMKLCI relatively low. This could be a chance to build long exposure using call options with limited upfront risk. Create your live VT Markets account and start trading now.

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The Bangko Sentral ng Pilipinas (BSP) cut its policy rate by 25 basis points to 4.25%. It cited a weaker-than-expected recovery, lower confidence, and delays in government spending due to graft-related uncertainty. BSP lowered its official growth forecasts to 4.6% for 2026 and 5.9% for 2027, down from 5.4% and 6.3%. It also raised its 2026 inflation forecast to 3.6% from 3.2%, while keeping 2027 inflation near 3%.

Cautious Easing Bias

BSP offered cautious guidance and signaled it could cut rates again if growth stays weak. DBS expects one more 25bp rate cut. To support the easier stance, BSP lowered reserve requirement rates this month on several bank-issued instruments. This is meant to add liquidity to the local banking system. The decision to cut the policy rate to 4.25% confirms a dovish turn by the BSP. For derivatives traders, lower rates reduce the yield advantage of holding Philippine Pesos. That makes the Peso less attractive. As a result, it may make sense to position for PHP weakness against the US dollar in the coming weeks. Q4 2025 GDP growth was 4.1%, which confirms that the recovery remains soft and supports the rate cut. This weak backdrop, combined with looser policy, has pushed USD/PHP toward 57.00. We expect the move to continue, with a chance to revisit levels last seen in late 2025.

Trading Implications Ahead

The BSP is putting growth ahead of inflation. It cut rates even while lifting its 2026 inflation forecast to 3.6%. This is negative for the currency because it suggests the central bank is willing to tolerate higher inflation while growth is weak. It also signals acceptance of a weaker Peso to help stimulate the economy. BSP also said more easing is possible. That points to at least one more 25bp cut in Q2. Traders may want to consider positions that benefit from lower short-term rates. Examples include receiving fixed on PHP interest rate swaps or going long government bond futures. For equity derivatives, the picture is less clear. Lower rates can support stocks, but the cut in the 2026 growth forecast to 4.6% and ongoing uncertainty around public spending could weigh on earnings. We expect higher volatility in the Philippine Stock Exchange Index. Put options may be a practical hedge against downside risk. This setup looks similar to the aggressive easing cycle in 2020, when the BSP cut rates sharply to support the economy during the pandemic. Global conditions are different now, but the local approach—supporting growth even if it pressures the currency—looks familiar. We therefore expect the Peso to underperform many regional peers. Create your live VT Markets account and start trading now.

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AUD/USD rose for a second day, up 0.36%, as the US dollar weakened. This came as US growth slowed and inflation moved closer to 3%. The pair traded at 0.7086 and was on track for a weekly gain of more than 0.19%. The pair kept moving higher after breaking above the 20-day simple moving average at 0.7034. It then pushed past 0.7050 and moved toward 0.7100.

Momentum And Key Resistance Levels

Momentum remained positive. The RSI climbed after bottoming near 59.34. If the RSI moves above 65.00, price could test resistance and the year-to-date high at 0.7147. If AUD/USD falls below 0.7000, support is at the 6 February low of 0.6897. The next support level is the 50-day SMA at 0.6832. Around this time last year, in February 2025, AUD/USD showed a clear bullish bias as it moved above 0.7080. The rally was driven by a weaker greenback, and traders targeted the yearly high at 0.7147. That strength did not last, however. The pair failed to hold the gains and later reversed that month. The situation today, in February 2026, is very different. AUD/USD is trading near 0.6650. The US inflation story has shifted from a major risk to a more controlled issue. The latest CPI data shows core inflation at just 2.5%. This is a sharp contrast to early 2025, when inflation was a larger concern and helped weaken the dollar for a period. Last year, markets reacted to signs that US growth was slowing while inflation stayed high. Today, US GDP growth has stabilized at a moderate 1.5% annual pace, and the Federal Reserve’s policy direction is clearer. This has reduced the uncertainty seen in early 2025 and lowered overall currency volatility.

Derivative Strategies In A Range Bound Market

For derivative traders, lower implied volatility may make option-selling strategies more attractive than they were a year ago. With less chance of a major breakout, traders may look to collect premium by writing covered calls against existing long positions or selling cash-secured puts near key support levels. We believe the calmer market makes being a net seller of volatility more appealing. With conditions more stable, we see more potential in range-bound strategies than in the directional trades that were popular in early 2025. Options can help define a likely trading range. For example, structures such as short iron condors may benefit if the pair continues to move between clear support and resistance levels. We are watching a possible range between 0.6500 and 0.6800 over the coming weeks. Create your live VT Markets account and start trading now.

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Gold rose more than 1% on Friday. XAU/USD traded near $5,065 after briefly dipping to $4,981. The move followed softer US growth and inflation data. The US Dollar Index (DXY) fell 0.11% to around 97.70. The US Supreme Court ruled against Trump’s tariffs imposed under an emergencies law, and US equities turned positive. Trump said Sections 232 and 301 tariffs will stay in place, and he plans a 10% global tariff under Section 122.

Stagflation Signals Support Gold

US GDP growth for Q4 was revised down from 4.4% to 1.4% YoY, partly linked to the 43-day government shutdown. Core PCE inflation was reported above 3%. Another estimate said December’s increase eased from 4.4% to 1.4% YoY. University of Michigan sentiment slipped from 57.3 to 56.6, with households pointing to higher prices. One-year inflation expectations dropped from 4% to 3.4%, while five-year expectations held at 3.3%. The US 10-year yield rose 1 basis point to 4.081%. Markets still price in two 25-basis-point Fed cuts this year, but there is scepticism about any cut before June 2026. Next week’s focus includes ADP Employment Change (4-week average), Initial Jobless Claims, and January PPI. Gold levels to watch include $5,100, $5,200, $5,451, $5,598, $4,841, and the 50-day SMA at $4,681.

Options Positioning And Key Risk Levels

Markets are flashing stagflation signals. US growth has slowed sharply to 1.4% while core inflation remains above 3%. This mix tends to support gold and helps explain the push above the key $5,000 level. The weaker US dollar, with DXY near 97.70, is adding to gold’s strength. Recent data supports the slower-growth view. Initial jobless claims rose to 245,000, the highest in three months. At the same time, inflation is still elevated. January CPI came in at 3.5% year over year, echoing the message from the PCE data that inflation pressures have not fully eased. That backdrop can make non-yielding gold more appealing as a store of value. Geopolitical risks are also lifting safe-haven demand. A proposed 10% global tariff and the possibility of military action against Iran add uncertainty, which often helps keep a floor under gold prices in the near term. This setup is similar to the 2022–2023 inflation shock. Gold held up even as central banks raised rates, then rallied as recession fears grew. A comparable pattern may be developing now, with markets still expecting rate cuts later this year despite sticky inflation. For derivatives traders, this points to a bullish bias. Long call options can offer defined risk while keeping exposure to further upside. Strike prices above the next resistance around $5,100 could make sense, with potential targets near $5,200 or $5,450 over the coming weeks. Still, the US 10-year yield is holding above 4.08%. If yields keep rising, they could weigh on gold. Protective put options can help hedge against a sharp pullback. Uncertainty around the timing of rate cuts also argues for staying prepared for volatility. With uncertainty high, implied volatility in gold options may be elevated. For traders comfortable owning gold at lower levels, selling out-of-the-money puts is one way to collect premium. For example, strikes below nearby support—such as the February 17 low at $4,841—may offer room for the market to absorb stagflation concerns while keeping risk defined. Next week, attention will be on ADP employment and January PPI. Weaker growth or persistent inflation in those reports could be the next catalyst for a retest of recent highs. A strong jobs print, however, could cool expectations and trigger a short-term pullback. Create your live VT Markets account and start trading now.

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Bank Indonesia kept its 2026 growth forecast at 4.9%–5.7% and left its inflation target at 1.5%–3.5%. It sees inflation risks as tilted to the upside. If the economy runs hotter and the output gap narrows, the rupiah could weaken. Demand at recent bond auctions has softened. The 18 February auction posted a 10‑year bid‑to‑cover ratio of 1.71x, the lowest since March 2025 and below the 2024–2025 average. The 5‑year tenor saw a bid‑to‑cover ratio of 1.47x, the lowest since May 2024.

Rising Yields And Rupiah Pressure

A model assessment says 10‑year government bonds look overvalued versus macro fundamentals. Technical signals also point to higher yields. This combination adds pressure on the rupiah and makes Bank Indonesia’s policy decisions harder as it considers gradual easing. SRBI outstanding has increased on a net basis since November 2025. SRBI yields are up by about 11–14bp since September last year. Non‑resident inflows into SRBI have picked up slightly since December, and have partly offset foreign outflows from equities and government bonds. Bank Indonesia is keeping its 2026 growth forecast at 4.9% to 5.7%, but inflation is the bigger focus. In January 2026, headline inflation rose to 3.6%, moving just above the top of the 1.5%–3.5% target range. If the economy overheats, price pressure could increase further and become a clear headwind for the rupiah. The government bond market is already under strain, which creates a clear trading signal. At the 18 February auction, the 10‑year bid‑to‑cover ratio fell to 1.71x. That is a weak result and extends the softer demand seen in late 2025. With 10‑year yields around 6.8%, yields could rise as prices fall.

Trading Implications For Rates And FX

Since models suggest 10‑year bonds are overvalued, derivatives traders may want strategies that benefit from higher Indonesian yields. This can include interest rate swaps or options, positioned for a move toward 7.0% in the coming weeks. In our view, current bond prices do not fully reflect higher inflation risk and weaker foreign demand. These local pressures may also weigh on the rupiah, which can make short rupiah positions more appealing. With USD/IDR near 16,100, continued bond outflows could push the pair toward the 16,350 resistance level last tested in October 2025. Buying USD/IDR call options can be a way to express this view while limiting downside risk. Bank Indonesia’s SRBI has drawn modest foreign inflows since December, helped by higher yields. This has given the rupiah a small buffer against outflows from government bonds and equities. Still, the SRBI inflows are not large enough to change the broader bearish tone. Create your live VT Markets account and start trading now.

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The US Dollar stayed strong on Friday, and the DXY gained nearly 1% for the week. Core PCE inflation rose to 3% year over year in December. At the same time, the flash Q4 GDP print came in at 1.4% versus 3% expected. The DXY is holding near 97.80. Next US releases include December Factory Orders, the ADP Employment Change (4-week average), the December Housing Price Index, and February Consumer Confidence. Initial Jobless Claims and the Chicago PMI are also due.

Us Data Crosscurrents

EUR/USD traded near 1.1780 after the US Supreme Court ruled against President Donald Trump’s tariffs, which pushed the USD lower. Upcoming euro data includes the German IFO, Italian January CPI, Germany’s GDP and the GfK survey, Eurozone sentiment readings, and German labour data, plus Spain’s flash HICP. GBP/USD was near 1.3490 after a weekly drop tied to UK jobs and inflation data. That data increased expectations of a BoE rate cut next month. AUD/USD was near 0.7080, with Australia’s Private Capital Expenditure due Thursday. USD/JPY was near 155.10 after giving back some gains. Japan will release January Large Retailer Sales, Retail Trade, and Retail Trade S.A. USD/CAD was near 1.3690 after Canada’s December Retail Sales fell 0.4% MoM versus 0.5% expected, following November’s 1.2% rise. The Current Account is due Thursday. Gold traded at $5,077 after recovering most of its weekly losses. Scheduled speakers run from February 23 to 27 and include Lagarde, Waller, Goolsbee, Bostic, Collins, Cook, Barkin, Bullock, Bowman, Pill, and Kocher, plus Donald Trump. Other releases include NZD Retail Sales (Feb 22), Australian CPI (Feb 25), Tokyo CPI (Feb 26), and on Feb 27: Swiss Q4 GDP, Germany’s flash CPI and HICP, Canada’s Q4 GDP, and the US PPI.

Key Catalysts Next Week

US data is sending mixed signals, and that can create opportunity. Core PCE inflation at 3% points to a more hawkish Federal Reserve. But the sharp drop in Q4 GDP to 1.4% points to a clear slowdown. This push and pull has left the US Dollar Index stuck near 97.80. A volatility breakout is possible, so options straddles may be worth considering. The gap between Europe and the UK is widening. EUR/USD is holding near 1.1780, helped by the Supreme Court tariff ruling. In contrast, GBP/USD looks weak near 1.3490 as traders price in a Bank of England rate cut. UK growth also stalled in the final quarter of 2025, with GDP up only 0.1%. That makes a March BoE cut more likely and supports long EUR/GBP positions. Gold at $5,077, along with a stronger yen that pulled USD/JPY down to 155.10, suggests rising fear in markets. That fits with worries about slowing US growth, which is pushing investors toward safer assets. Given how high gold is, call spreads on gold futures can help limit risk while keeping upside exposure. Commodity currencies face an important week. The Aussie has held up near 0.7080, but CPI and Capital Expenditure data will be a key test. The Canadian dollar also looks stuck near 1.3690, and Canada’s Q4 GDP release this Friday is its biggest catalyst in months. Next week also brings a heavy schedule of central bank speakers from the Fed, ECB, and BoE. Since the Fed raised rates by only 25 basis points in December 2025, any hints of a pause or reversal from Fed speakers could reprice markets quickly. Implied volatility may rise, and buying VIX futures could help hedge against sudden policy shifts. Create your live VT Markets account and start trading now.

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US CFTC data shows that gold net positions for non-commercial traders slipped from 160K to 159.9K. That is a 0.1K drop in the latest report.

Gold Positioning Signals Market Pause

The latest data shows net long positions held by large speculators in gold futures are basically flat, edging down to 159,900 contracts. This suggests major traders are unsure about the next move. They are not adding new bullish bets, but they are not selling existing ones either. It looks like the market is pausing, likely while waiting for a key economic release. This makes sense given recent U.S. data. January’s Consumer Price Index, released last week, showed inflation at 3.2% year over year. That was slightly above the 3.1% forecast and keeps inflation on the Federal Reserve’s radar. Many traders may wait for clearer guidance from Fed officials before placing bigger bets on gold in the weeks ahead. A strong labor market is also a headwind for gold. The January jobs report showed 215,000 new jobs, while unemployment stayed low at 3.6%. This strength gives the Fed room to keep policy steady, which can limit gold’s upside for now. As a result, gold remains sensitive to moves in the U.S. Dollar Index, which has been trading in a narrow range. We saw a similar setup in Q3 2025. Speculative positioning was quiet, then gold jumped after unexpected geopolitical tensions. The market is calm again, but derivatives traders may want to consider strategies that benefit if volatility rises. Flat positioning can mean the market is building energy for a larger move once a clear catalyst appears.

Possible Volatility Ahead

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US CFTC data shows oil NC net positions rose to 141.3K. The previous figure was 117.8K. We are seeing a sharp rise in bullish bets on crude oil from large speculators. Net-long positions climbed to 141,300 contracts. This suggests that money managers expect higher prices in the coming weeks. It is also the strongest confidence from this group since Q4 2025.

Spec Positioning Signals Stronger Bullish Conviction

This move also fits with the fundamentals. OPEC+ still looks committed to keeping production cuts in place through Q2. Recent EIA data supports the bullish case as well: U.S. crude inventories fell by more than 5 million barrels over the past two weeks, a bigger draw than analysts expected. With supply tightening, traders have more reason to stay long. From a derivatives angle, bullish setups may now offer better odds. One approach is to buy near-the-money call options for April and May expiries to benefit from a potential rally into the U.S. summer driving season. After the choppy action in late 2025, the market is starting to show a clearer direction. In the past, fast increases in speculative net-long positions have often come before a 5–10% move over the next month. A similar build-up in spring 2024 was followed by a steady rally in WTI crude. Traders should be ready for stronger upside swings and higher volatility.

Risk Considerations For The Weeks Ahead

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Australia’s CFTC data shows Australian dollar non-commercial net positions at 45.9K, up from 33.2K in the previous reading. This suggests speculators are becoming more confident in the Australian dollar. Net bullish positions rose sharply from 33.2K to 45.9K, pointing to stronger expectations for further upside. It’s a clear shift in sentiment worth watching in the weeks ahead.

Drivers Behind The Bullish Shift

This move likely follows the Reserve Bank of Australia keeping its cash rate unchanged at 4.5% earlier this month, reinforcing its focus on bringing inflation under control. At the same time, markets are increasingly pricing in the possibility that the US Federal Reserve could cut rates later this year, which can make the AUD relatively more attractive. A wider interest rate gap is a major reason behind the more bullish positioning. Strength in key commodity markets is also supporting the Aussie dollar. Iron ore prices have stayed firm, holding above $120 per tonne, helped by steady demand from China’s recovering economy. This is a meaningful improvement in stability compared with the sharp swings seen in 2025. For traders, this stronger bullish consensus may support strategies that benefit from a rising AUD/USD. Buying call options or using bull call spreads are two ways to gain upside exposure with defined risk. The quick rise in net speculative length also suggests momentum could be building for another move higher. Still, keep a close eye on Australia’s inflation data due next week. A weaker-than-expected result could reduce the case for a hawkish RBA and cool some of this optimism.

Key Risks And What To Watch

It’s also important to remember how quickly global risk sentiment can change, as seen at times in 2025. When risk appetite drops, flows can reverse fast in currencies like the AUD. That’s why tracking upcoming data and broader market sentiment matters before leaning too heavily into this trend. Create your live VT Markets account and start trading now.

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CFTC data shows eurozone EUR non-commercial net positions fell to €174.5K. The previous reading was €180.3K. The latest CFTC data shows speculative net long positions in the euro fell for a second week in a row. This means large traders are cutting back on bullish bets. It is a warning sign we should take seriously. This change in positioning matches recent data. Eurozone Manufacturing PMI unexpectedly fell to 48.2, below the 49.5 forecast, which signals contraction. At the same time, US inflation came in a bit hotter than expected. That supports the view that the Federal Reserve may stay hawkish longer than the European Central Bank. This gap in policy outlook often leads to a weaker euro versus the dollar. Given this backdrop, we should consider buying downside protection on the euro. Buying EUR/USD put options with expiries in the next four to six weeks could help us benefit if the euro weakens further. Implied volatility has risen slightly, but it is still well below the late-2025 highs, so options remain relatively affordable. If you want a less directional trade, another option is to sell out-of-the-money call spreads on the euro. This lets us collect premium while betting the euro’s upside is limited in the near term. It’s a practical way to express a neutral-to-bearish view without needing a large drop. We should also remember how quickly sentiment flipped in the second half of 2025 when positioning became too crowded. While €174.5K net long is not extreme by historical standards, the direction is clear: bullish conviction is fading. It will be important to watch upcoming economic data closely.

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