Russia’s central bank reserves rose to $806.1 billion from $797.5 billion
Russia’s central bank reserves rose to $806.1 billion from $797.5 billion. That is an $8.6 billion increase.
The rise in reserves suggests Russia is holding up better than many expected. Despite sanctions, the balance of payments appears strongly positive, mainly because of commodity exports. These larger reserves give the state more capacity to support the currency and manage economic stress.
TD Securities’ strategy team expects UK retail sales to cool in January and PMIs to ease somewhat
TD Securities’ Global Strategy Team expects UK retail sales growth to slow to 0.1% month-on-month in January. That would be below the market forecast of 0.2% and down from 0.4% previously. The team still expects consumer spending to hold up, but it sees a softer underlying trend.
It says December’s retail figures were boosted by jewellery purchases. It does not expect that strength to continue in January.
Uk Data Momentum Moderation
The team also expects UK Purchasing Managers’ Index (PMI) readings to ease in both manufacturing and services. Even so, it forecasts PMIs of 51.5 for manufacturing and 53.5 for services, in line with market expectations. It links the earlier lift in sentiment and new orders to lower uncertainty after the budget. It expects that boost to fade about three months after the event. For 2026, the team expects growth to come in bursts, but overall activity to remain cautious. There are also signs the UK consumer is turning more cautious, which fits with slower expected retail sales growth. This lines up with recent Office for National Statistics data showing January inflation stayed unexpectedly firm at 2.8%. That makes Bank of England rate cuts harder to justify. If inflation remains sticky, households’ spending power is likely to stay under pressure in the near term.Derivative And Fx Strategy Implications
A softer PMI print, even if it stays above 50, supports the idea that momentum is cooling. The jump in business confidence seen in late 2025 after clarity around the autumn budget now looks like it is settling back to normal. That suggests markets may have priced in a stronger recovery than what is actually happening. For derivatives traders, this setup favors selling volatility, since a sharp upside growth surprise looks less likely. FTSE 100 implied volatility is still a bit higher than its 2023–2024 averages. Strategies such as selling covered calls on UK equities or selling short strangles on the index may look attractive. These trades tend to do well when markets move slowly or trade in a range, rather than breaking out strongly. In FX, this cautious UK outlook may limit how far the pound can rise. If the Bank of England stays on hold, range-based option strategies in GBP/USD, such as iron condors, could work well in the weeks ahead. Any sterling rallies may be better treated as chances to sell into strength, rather than the start of a lasting uptrend. Create your live VT Markets account and start trading now.USD/CHF rebounds near 0.7750 on hawkish Fed messaging as the Swiss franc slips despite data
The Swiss Franc weakened against the US Dollar on Thursday as the Dollar strengthened. USD/CHF traded near 0.7750 after hitting an intraday low around 0.7694.
Swiss trade data showed exports rose to CHF 22,229 million in January from CHF 19,866 million. Imports fell to CHF 18,411 million from CHF 18,932 million. This lifted the trade surplus to CHF 3,818 million from CHF 934 million.
Swiss Output Trends
Industrial production fell 0.7% year on year in the fourth quarter. This followed a 2% increase in the previous reading. The US Dollar also gained after the Federal Reserve released its meeting minutes on Wednesday. The minutes pointed to a cautious approach. They suggested rates may stay unchanged for a while as officials review incoming data. However, the Fed left room for further rate hikes if inflation remains above target. The minutes also said rate cuts could come later this year if price pressures ease as expected. They added that most participants see signs the labour market is starting to stabilise. Markets are pricing in about two US rate cuts in the second half of the year. The US Dollar Index (DXY) traded near 97.82, its highest level since February 6.Key Upcoming US Data
Thursday’s US releases include weekly Initial Jobless Claims and the Philadelphia Fed Manufacturing Survey. Focus then shifts to Friday’s Core PCE Price Index and the advance estimate of fourth-quarter US GDP. Looking back to early 2025, the US Dollar stayed strong because the Fed remained cautious. USD/CHF was trading around 0.7750 as officials debated keeping rates higher for longer. That caution proved well-founded, as the Fed delivered only one quarter-point rate cut late in 2025. This differs sharply from the Swiss National Bank. With weak industrial data, the SNB cut its policy rate twice in 2025, bringing it to 1.00%. This widening policy gap increased the interest rate advantage for the Dollar. As a result, USD/CHF has risen strongly over the past year and now trades near 0.8900. US inflation is still higher than expected. The latest January 2026 CPI reading was 2.8%. Swiss inflation is much lower at 1.2%, giving the SNB little reason to tighten policy. This backdrop continues to support long USD/CHF positions through futures contracts, aiming to benefit from both possible price gains and positive carry. Uncertainty over the timing of additional Fed cuts in 2026 has pushed FX volatility higher. Traders may want to use options to manage this risk. Buying USD/CHF call options can provide upside exposure while setting a clear maximum loss. Create your live VT Markets account and start trading now.Bob Savage says rising oil prices now track the dollar less, amid net selling flows
BNY says the long-running positive link between oil prices and the US dollar is weakening. This is happening even as Brent trades above $70 and WTI tests $68, after a strong oil rally since December.
Data from iFlow show mixed US dollar flows, including net dollar selling during the period. The report notes that for most of the past five years, higher oil prices often came with a stronger dollar.
Oil Dollar Correlation Weakens
The report says the US is the world’s largest oil producer and exports some oil, but still consumes more than it produces. In the past, this relationship helped explain other unusual market moves, such as the dollar rising while equities fell. It also points to geopolitical risk linked to Iran and the Strait of Hormuz. The report says the strait is a chokepoint for more than 25% of the world’s oil supply, and that recent dollar flows do not appear to be driven by oil. It adds that if WTI moves above $68 per barrel, it could raise inflation worries and affect fixed income markets. However, it suggests the oil–dollar relationship is shifting. We should accept that the traditional link between oil prices and the U.S. dollar is no longer dependable. The 90-day correlation between WTI crude futures and the Dollar Index (DXY) has dropped to 0.15, down from around 0.6 for much of 2024. In other words, we can’t simply buy the dollar as an easy way to express a bullish view on oil.Geopolitics Drives Oil Not Dollar
This shift is being driven mainly by geopolitics, not just by US production strength. With WTI now pushing above $85 a barrel, much of the rally reflects a risk premium tied to recent naval tensions near the Strait of Hormuz. These security risks are lifting crude prices without lifting the dollar. Higher oil is still adding to inflation. The January 2026 CPI report showed inflation stuck at 3.4% year over year, with energy costs a major driver. But with the Dollar Index hovering around 104, the currency is not gaining from these inflation pressures the way it often did in the past. That makes inflation hedging harder than it used to be. For derivatives strategies in the coming weeks, this means separating our energy and currency trades. We can consider call options on oil ETFs such as USO to capture more upside in crude, while using separate, targeted FX options to express a view on the dollar. Betting on a dollar rally just because oil spikes is now a low-probability trade. This split started to show up in the second half of 2025. During that time, a strong oil rally did not lead to meaningful dollar gains, even as markets priced in a hawkish Fed. That history suggests the current move is not a one-off—it is becoming the new pattern. Create your live VT Markets account and start trading now.Spain’s three-year bond auction yield falls to 2.273% from 2.341%
Spain’s 3-year bond auction yield fell to 2.273%, down from 2.341% at the previous auction.
This means Spain can now borrow for 3 years at a lower interest rate than before.
Implications For Investor Demand
The lower 3-year yield points to strong investor demand for Spanish government bonds and improved confidence in Spain’s credit risk. For derivative traders, falling yields often go hand in hand with lower credit default swap (CDS) pricing. That could make selling CDS a potential way to benefit from the market’s view of reduced risk. This auction also supports the idea that the European Central Bank (ECB) may be closer to cutting rates than markets previously expected. When government borrowing costs fall, it can signal easier financial conditions and a shift toward looser policy. One way to express this view is through interest rate swaps positioned to profit if the Euribor benchmark rate declines over the next few quarters. Recent inflation data supports this narrative. Eurostat’s January 2026 report showed inflation easing to 1.9%, slightly below the ECB’s target. That gives the ECB more flexibility to consider rate cuts to support growth. In this setting, short-term European interest rate futures may also benefit if rates move lower. In 2025, the ECB stayed hawkish through the summer due to wage pressure. The current decline in bond yields suggests a shift away from that cautious tone. With stability improving, selling put options on ETFs that track European government bonds could be a way to collect premium, assuming bond prices hold up or rise.Potential Euro Dollar Impact
Rate-cut expectations in Europe could weaken the euro against the US dollar. This week, the Federal Reserve appears to be holding rates steady, which could widen the interest-rate gap between the US and the euro area. To hedge against a potential EUR/USD decline, traders may consider buying put options on the EUR/USD pair. Create your live VT Markets account and start trading now.Eurozone construction output (working-day adjusted) fell to -0.9% year on year, from -0.8%
Eurozone construction output, adjusted for working days, fell by 0.9% year on year in December. This was slightly worse than the previous reading, which showed a 0.8% decline.
The latest figures show Eurozone construction output fell 0.9% year on year in December 2025, marking a small increase in the pace of decline from the prior month. This points to ongoing weakness in a key part of the economy as we move into 2026. It also suggests that the high interest rates of the past two years are still weighing on activity.
Construction Data And Macro Signals
This slowdown fits with other recent indicators. For example, the January 2026 S&P Global Construction PMI came in at 41.3, which signals a sharp contraction. At the same time, headline inflation has eased to 2.1%, giving the European Central Bank more room to consider cutting rates. Overall, this backdrop suggests continued pressure on Eurozone growth in the first quarter. Given this outlook, short positions in European equity indices such as the EURO STOXX 50 may perform well. For more focused exposure, traders could consider buying put options on major construction and materials firms like Heidelberg Materials or Saint-Gobain. In 2025, these stocks tended to lag during periods of negative economic surprises. The weak data also supports the case for the ECB to cut interest rates sooner than previously expected, potentially in the second quarter. Traders may want to consider going long German Bund futures, which often rise when markets expect easier monetary policy. This view is also reflected in the EURIBOR futures market, which has shifted toward pricing an earlier rate cut. As a result, the outlook for the euro looks bearish, especially against currencies like the US dollar, where economic data has been stronger. Taking short positions in EUR/USD, either through futures or by buying put options, may be a sensible approach. A wider interest rate gap between a more dovish ECB and a potentially more hawkish Federal Reserve supports this trade.Implications For Rates And Eur
Create your live VT Markets account and start trading now.Eurozone construction output rose 0.9% in December, recovering from a 1.1% fall in November
Eurozone construction output rose 0.9% month on month in December. This followed a 1.1% month on month fall in the previous month.
This update shows construction returned to growth in December. The figures are seasonally adjusted and reported month on month.
Market Pricing And Timeliness
The December 2025 construction output rebound to 0.9% is now fully priced into the market. This was positive news, but it is old news. Newer and more mixed economic signals have taken over. As a result, trading based only on this data point is no longer timely. The main story now is the push and pull between sticky inflation and weaker growth. January 2026 flash inflation for the Eurozone came in a bit hot at 2.4%. In response, the European Central Bank signaled that rate cuts may not come soon. This has reduced the optimism seen at the end of 2025. Forward-looking data is also less clear. The flash manufacturing PMI for February fell to 47.8, which points to contraction. That weakness clashes with the older strength in construction and makes the wider outlook harder to read. With signals moving in different directions, markets may stay choppy in the weeks ahead. For traders, this setup may favor volatility strategies instead of betting on a clear trend. One approach is to buy straddles or strangles on major European indices like the Euro STOXX 50. These positions can profit from a large move up or down. Implied volatility, tracked by the VSTOXX index, has already risen from 14 to 17 over the last two weeks, and it could still move higher.Hedging For Cyclical Downside
With manufacturing PMIs weakening, buying put options on industrial sector ETFs may be a sensible hedge against a deeper slowdown. This can limit downside risk while we wait for clearer first-quarter 2026 data on the Eurozone economy. The construction strength from last year is unlikely to support related stocks if overall sentiment turns negative. Create your live VT Markets account and start trading now.ING’s Warren Patterson and Ewa Manthey say Brent rises amid Iran tensions and Gulf supply risks
Oil prices rose as markets watched the risk of US military action against Iran and a possible disruption to Persian Gulf supply. ICE Brent gained 4.35% and settled above $70 a barrel, with strength continuing in early trading.
Iran exports about 1.5m barrels a day of crude oil. Total oil flows through the Strait of Hormuz are around 20m barrels a day, including refined products. If shipping tightens through the Strait, it could disrupt both crude and product movements.
Brent Curve Signals Tight Supply
The ICE Brent forward curve remains in backwardation through 2026 and 2027, and extends into early 2028. This pricing structure suggests a tighter market than many forecasts imply. A balance-sheet view shows a surplus in the first half of the year, which would normally pressure near-term prices. But sanctions on parts of supply, along with reduced buying of sanctioned barrels (such as Russian oil) by Indian refiners, may be tightening physical supply more than headline balances show. Oil prices are rising as concern grows about possible US action against Iran, keeping the market on high alert. ICE Brent is now testing $75 a barrel, a level last seen in late 2025. Reports of the US 5th Fleet positioning near the region are also adding to trader anxiety. This military build-up makes a quick diplomatic de-escalation look less likely. The biggest risk for oil markets is disruption to the Strait of Hormuz, a chokepoint where roughly 21 million barrels of oil move each day. Any conflict could threaten that flow and Iran’s own crude exports, currently around 1.5 million barrels per day. As a result, headlines about military activity in the Persian Gulf are likely to drive short-term price swings.Geopolitical Risk Concentrates In Hormuz
The Brent forward curve supports the view of a tight market, staying in backwardation through the end of 2027. This means buyers are paying more for oil delivered now than for oil delivered later—often a sign that near-term supply is strained. While front-month prices are reacting to geopolitical news, the backwardation further out suggests the tightness may be more persistent. Our balance sheets may show a surplus, but this can be misleading because they do not fully reflect the impact of sanctions. In late 2025, for example, we saw major buyers such as Indian refiners become more hesitant to buy Russian crude due to sanctions and payment hurdles. That reduces the volume of oil that is truly available to the market, making physical supply tighter than the paper numbers suggest. Create your live VT Markets account and start trading now.Spain’s five-year bond auction yield rose to 2.577% from 2.512% in the previous auction (market update)
Spain’s 5-year government bond auction yield rose to 2.577%, up from 2.512% at the previous auction.
That is an increase of 0.065 percentage points, or 6.5 basis points.
Implications For Eurozone Rate Expectations
Higher borrowing costs in Spain suggest markets are pricing in more interest rate risk across the Eurozone. This does not appear to be a one-off move. Flash Eurozone CPI for January 2026 rose to 2.7%, which may push expectations toward a more hawkish European Central Bank. Derivatives traders should be ready for higher volatility in fixed-income markets. In the coming weeks, we see potential in trades that benefit from falling bond prices (rising yields). One way to express this view is to short German Bund futures or buy put options on them, since Bunds are the key regional benchmark. This is similar to trades that worked well during the sharp bond sell-off in the second half of 2025. Rising yields can also weigh on equity valuations, especially for heavily indebted companies. Protective put options on Spain’s IBEX 35 index may be sensible, as the cost of servicing Spanish corporate debt is already 12% higher than a year ago. This pressure could also spread to broader benchmarks such as the EURO STOXX 50. For FX traders, the signal is mixed, but we lean bullish on the euro. If yields are rising mainly because markets expect ECB rate hikes (rather than concerns about sovereign credit risk), the euro should be supported. EUR/USD call options could be a practical way to target a move toward 1.14, a key resistance level that was tested last quarter. We also need to watch credit spreads, especially the gap between Spanish and German 10-year yields. This spread has widened by 8 basis points this month to 92 bps, pointing to higher risk aversion.Relative Value And Spread Risk
A relative value trade—long German bond futures and short Spanish bond futures—could profit if this stress keeps building. Create your live VT Markets account and start trading now.Spain’s 10-year Obligaciones auction yield falls to 3.167% from 3.223%
Spain held an auction of 10-year *obligaciones*. The yield came in at 3.167%.
The previous auction yield was 3.223%. This is a drop of 0.056 percentage points.
