Commerzbank’s Volkmar Baur says China’s record Q4 2025 surplus adds to evidence the yuan is tightly managed
China’s Q4 2025 balance of payments data shows a current account surplus of USD 242 billion, or 4.9% of GDP. This was a record for the quarter.
Foreign direct investment into China rose to USD 38.8 billion in Q4 2025. This was the highest level since early 2022.
With Fed cut expectations fading and geopolitical strains persisting, silver trades near $76.50, down 0.70%
Silver (XAG/USD) traded near $76.50 at the time of writing, down 0.70% on the day. It began the week on a weaker note after failing to build on a recent rebound. Profit-taking followed a fresh look at US monetary policy after new data.
US inflation slowed in January, according to the Consumer Price Index (CPI). Headline CPI rose 0.2% month-on-month, down from 0.3% previously. The annual rate eased to 2.4% from 2.7%.
Fed Policy And Market Expectations
Markets are also tracking US labour market strength and the Federal Reserve’s view. The Fed has not signaled a near-term rate cut. The CME FedWatch tool suggests no change at the March and April meetings, keeping rates in the 3.50%–3.75% range. A modest rebound in the US Dollar has pressured dollar-priced metals, since a stronger Dollar makes them more expensive for overseas buyers. Still, the Dollar’s upside may be limited by expectations of policy easing later in the year. Geopolitical risks remain under the spotlight, including tensions between Washington and Tehran. Reports say the US military is preparing for the possibility of extended operations against Iran if the situation escalates. Looking back to this time in 2025, silver was trading cautiously around $76.50. Markets were focused on the Fed’s reluctance to cut rates, even as inflation cooled to 2.4%. That backdrop meant traders had reason to be careful with long positions and to favor strategies suited to range-bound or weaker prices.Shift In The 2026 Outlook
That cautious view proved accurate. The Fed kept rates unchanged through the summer of 2025, pointing to a strong labour market that added more than 220,000 jobs per month through the second quarter. Higher real yields and a firm US Dollar stayed in place, which limited meaningful rallies in silver for months. Derivative traders benefited most from selling call options on rallies or using bearish put spreads. Conditions have changed as we move into the first quarter of 2026. The strength seen in early 2025 has faded. Recent reports show Q4 2025 GDP growth slowed to 1.3%. The CME FedWatch Tool now shows more than an 85% chance of a rate cut in March 2026, a sharp shift from the hawkish pause a year earlier. Geopolitical risks from 2025 have also persisted, helping support demand for safe-haven assets. At the same time, industrial demand has picked up. Industry reports estimate photovoltaic demand for silver rose about 15% in 2025. This added support, together with a more dovish Fed, suggests traders may want to consider bullish strategies, such as buying call options or using bull call spreads, to position for potential upside. Create your live VT Markets account and start trading now.With US markets shut, sterling dips in light liquidity; GBP/USD falls to 1.3635 ahead of UK CPI
The Pound Sterling slipped against the US Dollar during the North American session, as trading was quiet. US markets were closed for President’s Day, which reduced liquidity.
At the time of writing, GBP/USD was at 1.3635, down 0.12%, as traders looked ahead to UK CPI.
Quiet Trading Ahead Of UK Inflation Data
GBP/USD is again seeing quiet trading ahead of this week’s important UK inflation data. The pair is currently near 1.2750. This is similar to the thin trading we saw around this time in 2025, when GBP/USD hovered near 1.3635 before a major data release. Traders are waiting for a clear trigger. Markets expect January CPI to come in at 2.9%, slightly lower than the prior month. If CPI is higher than expected, it would weaken the view that the Bank of England can cut rates further, which could support the pound. If inflation drops sharply, it could increase expectations for rate cuts and weigh on the currency. This uncertainty has pushed up one-week implied volatility in GBP/USD options to 8.5%. A similar setup played out in late 2024, when a surprise inflation reading triggered a 150-pip move in GBP/USD within hours. As a result, traders are pricing in a higher chance of a sharp move in either direction.Options Positioning For Volatility
In response, we are using options strategies that aim to benefit from higher volatility, rather than betting on a single direction. Long straddles and strangles are popular choices because they can profit from a large move, whether CPI surprises higher or lower. This approach helps manage risk while preparing for the market reaction to the inflation data. Create your live VT Markets account and start trading now.After dovish MPC cues, UK markets price a BoE cut next month as Bailey and Mann await data
UK rate markets are now pricing in another Bank of England rate cut, potentially as soon as next month. This follows a more dovish update from the Monetary Policy Committee (MPC) earlier this month.
Governor Andrew Bailey and MPC member Catherine Mann have suggested they could vote for rate cuts, depending on how upcoming economic data evolve.
Market Focus Turns To March Cut
Data due next week include the latest UK labour market figures, the CPI report, and retail sales. Traders will use these releases to judge whether wage growth and inflation are still slowing. The article says it was produced with help from an artificial intelligence tool and reviewed by an editor. With markets now pricing a possible Bank of England rate cut in March, our short-term bias is clear. Recent comments from Governor Bailey and Catherine Mann signal that the MPC may be shifting away from fighting inflation and toward easing policy. That creates an opportunity for trades that benefit from lower UK interest rates. Recent data back up this view. The January 2026 inflation report showed headline CPI falling to 2.1%, only slightly above the Bank’s target and well below the levels seen through most of 2025. Wage growth is still high at 4.5%, but it continues to cool from last year’s peak.Trade Ideas For Rates And Sterling
For currency traders, this outlook points to a weaker British Pound, especially against the US dollar. We should consider buying GBP/USD put options to benefit if the pair falls. A rate cut would likely make the pound less attractive to hold. This approach also limits risk if the next data prints come in stronger than expected and the Bank delays any cut. In interest rate markets, the trade is to position for lower yields. One way to do this is by buying futures tied to the SONIA rate, which reflect expectations for the Bank of England’s policy rate. These contracts tend to rise in value if the Bank cuts rates as expected. It is worth looking back at 2025, when inflation stayed above 4% for the first half of the year. That period highlights how meaningful this shift could be. The Bank’s aggressive hiking cycle appears to have cooled the economy, which suggests the next easing cycle may involve more than a single cut. Create your live VT Markets account and start trading now.Reuters poll shows economists expect the Bank of England to cut rates by 25 basis points to 3.50% in March
A Reuters poll conducted on 10–16 February found that most economists expect the Bank of England to cut interest rates by 25 basis points at its March meeting. The poll surveyed 63 economists. Of these, 41 expect the Bank Rate to fall to 3.50% on 19 March.
Another 19 economists expect the first cut in April, in line with the Monetary Policy Review. One economist expects a cut in June. One is unsure between April and June. One expects the Bank Rate to remain at 3.75%.
Year End Rate Forecasts
For the rest of the year, economists were split on when a second cut might arrive—either in the second quarter or later. The median forecast is for the Bank Rate to end the year at 3.25%. In its February Monetary Policy Report, the Bank expects inflation to reach 2.1%. It also expects CPI to move closer to its 2% target in April or May. This is mainly due to one-off effects from regulated prices and the November budget. The Bank of England sets UK monetary policy with a 2% inflation target. It mainly does this by changing base lending rates. It can also use quantitative easing, which tends to weaken sterling, or quantitative tightening, which tends to support sterling. As expectations for a rate cut strengthen, markets are pricing it in more heavily. Overnight index swaps currently imply an 85% chance of a 25-basis-point cut to 3.50% at the 19 March meeting. This view is supported by the majority of economists, who expect the Bank to act soon.Implications For Traders
Recent data supports this more dovish outlook. January CPI came in at 2.4%, continuing the disinflation trend seen throughout 2025. At the same time, Q4 2025 GDP growth was flat at 0.0%. Together, these figures give policymakers both room and reason to start easing policy. For traders, this suggests the British pound may face more downside pressure. After the sharp rate hikes used to curb post-pandemic inflation, a shift toward cuts would likely make GBP less attractive than currencies where central banks may keep rates higher for longer. We are positioning for further weakness in pairs such as GBP/USD. Because a March cut is already largely priced in, near-term opportunities in interest-rate derivatives may be limited. Focus may shift to what happens after March, where pricing a faster or slower pace of later cuts could offer better value. Options that would benefit from a surprise hold in March can also serve as a low-cost hedge against the consensus. Pound volatility is expected to rise as the mid-March meeting approaches. Traders may look at options on GBP crosses to take advantage of a likely post-announcement move. The key is to watch upcoming labour and inflation data closely, as any unexpected strength could quickly reduce expectations for rate cuts. Create your live VT Markets account and start trading now.With US markets closed, light trading drags GBP/USD lower in North America as investors await UK CPI
The pound slipped in light trading on Monday as US markets were closed for President’s Day. GBP/USD traded at 1.3635, down 0.12% during the North American session.
Markets were mixed after last week’s US inflation report showed prices cooling. This raised expectations of more Federal Reserve rate cuts. With few major releases due in the US or UK, attention turns to UK labour market data on Tuesday and CPI on Wednesday.
Uk Inflation Outlook
UK CPI in January is forecast to fall -0.5% month-on-month and rise 3% year-on-year, both lower than December. If inflation eases again, markets may price in more Bank of England rate cuts. A Reuters poll found that over 60% of economists (41 of 63) expected the BoE to cut rates by 25 basis points to 3.50% at the 19 March meeting. The survey ran from 10–16 February. UK political tensions also eased after Labour backed Prime Minister Keir Starmer, following debate over appointing Peter Mandelson as ambassador to the US. In the US, key events include Fed speeches, durable goods orders, housing data, and the FOMC meeting minutes. On the technical side, GBP/USD was near 1.3633. Support is seen around 1.3518 and 1.3506, along with a rising trend line from 1.3035. A year ago, in mid-February 2025, markets were positioned for a BoE rate cut. Investors expected January 2025 inflation to drop to 3%, and more than 60% of economists in polls predicted a cut at the March meeting. GBP/USD held firmly above 1.3600 on this view. But the data proved those expectations wrong. January 2025 inflation came in higher at 3.2%. The BoE then held rates at 3.75% in March 2025, and the pound fell. This shows how one inflation report can quickly change both central bank policy and market direction.Current Market Setup
Today, the picture is very different. UK inflation for January 2026 came in at 2.1%, much closer to the BoE’s 2% target. Since then, the central bank has cut rates to 2.75%. GDP for Q4 2025 also showed weak growth of just 0.1%, adding pressure for more policy support. With inflation largely under control and growth still weak, we think the BoE may cut rates again in the coming months. This would likely weigh on sterling, with GBP/USD now trading near 1.2950. Derivatives traders may want to consider strategies that benefit if the pair falls. One approach is to buy GBP/USD put options with a strike near 1.2800 and an expiry in late March. This can profit from a move lower while limiting risk to the premium paid. The trade also reflects a widening gap between a more dovish BoE and a more patient Federal Reserve. Traders should also watch implied volatility, which often rises ahead of a BoE rate decision. If volatility looks expensive, a bear put spread may be a lower-cost way to take the same view. This involves buying a higher-strike put and selling a lower-strike put to reduce the total premium. Create your live VT Markets account and start trading now.EUR/JPY rises toward 181.76 as weak Japan GDP weighs on the yen, while bears test the 100-day SMA
The Euro rose against the Japanese Yen on Monday after Japan posted weak GDP figures. EUR/JPY traded near 181.76, up almost 0.20% on the day.
Japan’s GDP grew 0.1% quarter-on-quarter in Q4, below the 0.4% forecast, after -0.7% in the prior quarter. Annualised GDP rose 0.2% versus a 1.6% forecast, improving from -2.6% previously. The GDP deflator eased to 3.4% YoY from 3.5%.
Bank Of Japan Policy Expectations
Focus then shifted to Bank of Japan policy expectations. Slower growth makes near-term tightening less likely. This added pressure to the Yen. In technical trading, GBP/JPY fell below the 50-day SMA and the 186.50–182.50 range that had held since mid-December. The 50-day SMA is still above the 100-day and 200-day SMAs, and it continues to rise. Support is near the 100-day SMA at 180.83, then 178.00, and the 200-day SMA near 175.35. Resistance is at the 50-day SMA at 183.66, then 186.00–187.00, with 190.00 above. MACD is below zero with a negative histogram, and the MACD line is under the Signal line. RSI is near 40, below its midline and not yet oversold.Key Levels And Options Positioning
We remember the weak Japanese GDP report in early 2025. It reinforced the Bank of Japan’s cautious stance for the year. That weakness helped keep the rate gap with other central banks wide. It also supported the carry trade, which has continued to weigh on the Yen. As of February 16, 2026, EUR/JPY is around 192.50. The European Central Bank’s main rate is 3.5%, while the Bank of Japan has only lifted its rate to 0.1%. This leaves a large yield advantage for the Euro. This rate difference remains the main driver and makes it costly to bet against the pair. Over the coming weeks, selling out-of-the-money EUR/JPY puts may be a workable strategy for some traders. It allows traders to collect premium while holding a bullish-to-neutral view. The trade profits if EUR/JPY stays above the strike price or continues to trend higher. Risks remain, since the pair is near historic highs. A sustained break below the 190.00 psychological level could signal a momentum shift, so it is a key area to watch. Any unexpectedly hawkish comments from the Bank of Japan could also trigger a fast reversal and hurt these positions. Because the trend has been strong, volatility may stay elevated, which can lift options premiums. Traders who want defined risk could use put credit spreads to limit downside and reduce capital needs. This means selling a higher-strike put and buying a lower-strike put to cap potential losses. Create your live VT Markets account and start trading now.Dev Ashish at Societe Generale says cheap post-2022–24 valuations could drive equity inflows into Brazil in 2026
Brazil has continued to see strong equity portfolio inflows in 2026, extending the trend from 2025. These inflows are linked to valuations that still look attractive after the compression seen in 2022–24.
Brazil is one of the top destinations for equity portfolio flows in 2026. Year-to-date inflows total USD 5.9bn, above the USD 4.6bn recorded in 2025 and ahead of most major emerging markets.
Drivers Of Equity Inflows
Flows are being supported by expectations of central bank easing, resilient earnings, improving emerging market sentiment, and institutional stability. Together, these factors have helped keep demand for Brazilian equities strong. Risks tied to the election cycle remain a key factor for 2026. Fiscal and policy uncertainty could determine whether the current pace of inflows can continue. The strong capital inflow into Brazilian equities, which has carried over from 2025, is a clear short-term bullish signal. With USD 5.9bn flowing in so far this year, the momentum may create opportunities to buy call options on the Ibovespa index or related ETFs to capture further upside. Current sentiment looks strong enough to support higher prices in the near term. This view is supported by the central bank’s recent 50 basis point cut to the Selic rate, taking it to 8.75% earlier this month and pointing to more easing ahead. Corporate earnings for Q4 2025, reported last month, also beat analyst expectations by an average of 4%, reinforcing the case for resilient fundamentals. In this backdrop, strategies such as selling cash-secured puts on fundamentally strong Brazilian companies may appeal to investors looking to earn option premium.Election Volatility And Risk Management
Volatility may rise as the October general election approaches, adding fiscal and policy uncertainty. A similar pattern appeared ahead of the 2022 election, when implied volatility rose in the prior six months and the Ibovespa Volatility Index (VIXB) climbed by more than 30%. This makes longer-dated options—extending beyond the second quarter—more relevant. In this environment, buying protective put options on broad market indices can be a sensible hedge against a potential market reversal later in the year. Collar strategies may also help: selling an out-of-the-money call can help fund the purchase of a protective put, allowing continued upside participation while clearly limiting downside risk. Create your live VT Markets account and start trading now.Colombia’s year-on-year GDP growth was 2.3% in Q4, below the 3.1% forecast
Colombia’s gross domestic product rose 2.3% year on year in the fourth quarter.
This was below the 3.1% increase expected.
Because Colombia’s economy is growing much more slowly than expected, the Colombian peso may weaken against the US dollar. The 2.3% result is a clear miss versus the 3.1% forecast and points to a softer economy. That could push USD/COP, now near 4,150, toward 4,300, a level last seen in late 2025.
This weak growth number also increases pressure on the Banco de la República to cut interest rates sooner than planned. Inflation is still high at 5.9% in January, but the central bank may need to respond to a slowdown of this size. Traders may want to look at interest rate swaps that benefit if short-term rates fall by mid-year.
For currency traders, buying USD/COP call options is a direct way to express this view. Options with strikes around 4,250 and 4,300, expiring in April or May, could gain if the peso drops. A similar move happened in Q3 2023, when a growth scare led to a fast 4% peso devaluation over the next six weeks.
On the equity side, the MSCI COLCAP index looks exposed because slower growth can reduce earnings expectations. Put options may help hedge against a decline toward the 1,300 support level. Consumer discretionary and industrial stocks are likely to be hit hardest.
Because this miss was unexpected, implied volatility may rise across Colombian assets. The COLCAP’s volatility gauge has already moved up from 18% to 21% in early trading. In this setting, strategies that benefit from bigger price swings—not only a one-way bet—may work best.
DBS’s Taimur Baig says US consumer spending is easing as retail sales soften and GDP nowcasts are downgraded
US consumers make up nearly 30% of global consumption, even though the US has only 4.2% of the world’s population. Consumption growth was strong in 2025, but 4Q25 data suggests it is slowing.
Retail sales lost momentum in 4Q25. Real-time GDP estimates were also revised lower, pointing to weaker near-term demand.
