South Korea’s trade balance fell to $0B in January, down from a previous $8.74B surplus
South Korea’s trade balance fell to $0bn in January, down from $8.74bn in the previous period.
This means South Korea did not keep the earlier surplus in January.
In February, Rightmove’s UK monthly house price index fell from 2.8% to 0%
Rightmove’s UK House Price Index showed that month-on-month growth fell to 0% in February, down from 2.8% in the previous period.
The data suggests asking prices were unchanged from the prior month. This marks a pause after the earlier rise.
Housing Market Momentum Stalls
The housing market has lost momentum. Monthly price growth has stalled at 0%, a sharp drop from January’s 2.8%. This suggests buyer demand is fading faster than expected, and it signals a potential slowdown for the wider UK economy. This shift also affects interest-rate expectations. It weakens the case for any further Bank of England rate hikes this year. Derivative markets may start pricing a higher chance of a rate cut before the end of 2026. Recent SONIA futures already point to a slightly more dovish outlook, with late-year contract yields edging lower. For equity traders, this may be a negative signal for UK domestic stocks, especially homebuilders and banks. A similar pattern appeared in early 2025, when mortgage approvals fell below 60,000 per month and the FTSE 250 later dropped around 10%. This could support the case for put options on housebuilder ETFs as either a hedge or a speculative trade. The outlook for the British pound also looks weaker. A cooling housing market and the possibility of lower UK interest rates versus the US and Europe could weigh on GBP. Watch whether GBP/USD retests 1.24, a level it struggled to hold last quarter.BoE Tradeoffs And Market Volatility
This slowdown makes the Bank of England’s job harder, especially with January inflation still elevated at 2.6%. The Bank now faces a difficult balance: bringing down sticky inflation while avoiding further damage to a cooling economy. This tension is likely to increase volatility in both Gilt and FX markets in the weeks ahead. Create your live VT Markets account and start trading now.Japan’s fourth-quarter GDP rose 0.1%, missing the 0.4% forecast
Japan’s gross domestic product rose 0.1% quarter-on-quarter in the fourth quarter.
This was 0.3 percentage points below the 0.4% forecast.
The weaker fourth-quarter GDP result for 2025 points to a slowing domestic economy in Japan. It also makes a near-term Bank of Japan (BoJ) interest rate hike less likely. In our view, this supports a more dovish BoJ policy stance in the coming months.
This backdrop makes shorting the Japanese Yen an attractive trade. We should consider buying call options on USD/JPY to benefit from expected Yen weakness. The low 0.1% growth rate suggests the interest-rate gap between the U.S. and Japan is likely to stay wide.
Recent data from late January 2026 supports this view. Core inflation fell to 1.8%, dropping below the BoJ’s 2% target for the first time in more than a year. This gives the central bank even less reason to tighten policy and support the currency. We think the Yen is more likely to weaken than strengthen.
A weaker Yen is also usually positive for Japanese stocks, especially the export-heavy Nikkei 225. We should consider going long Nikkei 225 futures. A favorable exchange rate can lift overseas earnings for exporters like Toyota and Sony, often offsetting concerns about a soft domestic economy.
We have seen this pattern before, including during the 2024 rallies when a falling Yen helped push the Nikkei to record highs. The latest January 2026 trade data, which showed exports up 7% year over year, suggests this dynamic is still in place. The weaker currency is feeding through into stronger overseas sales.
Japan’s year-on-year GDP deflator was steady at 3.4% in the fourth quarter, unchanged from the previous quarter.
Japan’s GDP deflator rose 3.4% year over year in the fourth quarter. This was the same as the prior reading.
The GDP deflator is a broad measure of price changes across the economy. Since the rate did not change, overall price pressure remained steady compared with the previous quarter.
A GDP deflator of 3.4% in the fourth quarter of 2025 suggests inflation in Japan is persistent, not temporary. This steady, elevated inflation increases pressure on the Bank of Japan to rethink its monetary policy stance. In our view, a more hawkish shift is becoming a matter of when, not if.
We believe the Bank of Japan’s small policy tweaks in 2025 were not enough, and this data supports that view. Markets have been slow to price in the risk of meaningful rate hikes. One sign is the 10-year Japanese government bond yield, which struggled to stay above 1.2% late last year. This data could be a catalyst for yields to rise in the coming weeks.
Traders should consider positioning for a stronger yen, as interest rate differentials with the U.S. may narrow. USD/JPY repeatedly failed to break 155 in late 2025. This inflation reading could be the trigger for a move lower. We are considering out-of-the-money USD/JPY puts or selling futures contracts to position for that move.
This outlook is also bearish for Japanese equities, which rallied more than 20% in 2025. The Nikkei 225 looks especially exposed to higher borrowing costs and a stronger yen, both of which can hurt exporter profits. Hedging long equity portfolios with Nikkei put options or using short futures positions should be a priority.
In rates markets, the message is to prepare for higher yields across the curve. We see value in pay-fixed positions in Japanese interest rate swaps, expecting fixed rates to rise as the market accepts a more aggressive central bank. The market is still pricing in only about 25 basis points of hikes by mid-year. Given persistent inflation, that seems too low.
Uncertainty around the Bank of Japan’s next move also suggests volatility may rise. Buying yen or Nikkei straddles could be a sensible way to benefit from a large move in either direction. The Nikkei VIX, which averaged a calm 16 in the last quarter of 2025, looks unsustainably low in this environment.
Japan’s annualised GDP grew 0.2% in the fourth quarter, missing the 1.6% forecast
Japan’s annualised gross domestic product grew by 0.2% in the fourth quarter. This was below the 1.6% forecast.
The 0.2% result shows the economy grew more slowly than expected. The report compares actual output growth with the market estimate.
Japan Growth Miss Raises Stagnation Risks
Japan’s final-quarter 2025 GDP came in at 0.2%, a major surprise and well below the 1.6% we expected. This suggests the economy is close to stagnation, especially after the small contraction in the third quarter last year. The data points to domestic demand weakening faster than anticipated. This weak number puts the Bank of Japan under pressure and makes a near-term rate hike very unlikely. As the rate gap with other major economies widens, the yen could weaken further. We are adding to USD/JPY call option positions and targeting a move toward the 158 level in the coming weeks. For equity traders, the picture is mixed. Slower growth is negative, but a weaker yen helps Japan’s large exporters, which make up much of the Nikkei 225. We think the currency boost will outweigh the weak domestic backdrop. So, we prefer using put options on the yen rather than directly shorting the Nikkei. Expectations that the Bank of Japan will end its accommodative policy at the March meeting should now be dropped. January data already showed core inflation falling to 1.8%, below the bank’s 2% target for the first time in more than a year. This GDP report makes it even more likely that policy will stay ultra-loose for some time. This looks similar to much of 2024, when weak data repeatedly delayed policy normalisation and supported the yen carry trade. Positioning data from early February 2026 also showed speculative short yen positions close to their highest levels since last October. We expect this trend to pick up quickly in the near term.Yen Weakness And Carry Trade Momentum
Create your live VT Markets account and start trading now.New Zealand’s BusinessNZ PSI fell to 50.9 in January from 51.5 previously
New Zealand’s BusinessNZ Performance of Services Index (PSI) was **50.9** in January, down from **51.5** in the previous month.
A PSI reading **above 50** means the services sector is **expanding**. A reading **below 50** means it is **contracting**.
The latest PSI shows the New Zealand economy is still growing, but growth has clearly slowed since December. The drop to **50.9** suggests last year’s high interest rates are starting to reduce business activity. This is a key sign that the momentum seen in **2025** is fading.
This data makes the Reserve Bank of New Zealand less likely to raise rates at its next meeting. Inflation has been easing to **3.5%**, and unemployment rose to **4.1%** at the end of last year. Together, these trends weaken the case for more hikes. We should consider **buying NZD put options** or **shorting NZD/USD futures** to position for a weaker New Zealand dollar.
Interest rate markets will likely respond by removing any remaining chance of a rate hike this year. As traders adjust, **short-term government bond yields** could fall. This supports positions in **interest rate swaps** that benefit if the central bank holds rates steady, or cuts later in the year.
For the local stock market, slower growth is a negative for earnings, especially in consumer-facing service industries. Based on how markets reacted to slowing conditions in 2025, we expect some weakness in the **NZX 50**. Traders could consider **buying put options** on the index, or on selected service-sector stocks, as a hedge against a downturn.
We should also watch the New Zealand dollar versus the Australian dollar. Australia’s latest inflation print was slightly higher than expected at **3.7%**, which suggests its central bank may stay hawkish for longer. This policy gap supports a weaker **NZD/AUD**, making it an attractive pair to short.
Risk appetite returned as S&P 500 premarket selling halted on Friday ahead of the CPI release
The S&P 500 stabilised after Friday’s premarket sell-off and did not drop further ahead of the CPI release. Investors focused on rising oil and fuel prices, which raised fears of a higher CPI reading and a more hawkish Federal Reserve.
After the CPI was released and came in as expected, markets moved higher. The S&P 500 and Nasdaq rose and then extended their gains. This eased near-term inflation worries.
Cyclical shares and rate-sensitive stocks moved the most. Gold regained much of the prior day’s drop, while silver recovered less.
The US dollar was mostly unchanged, suggesting little change in its near-term trend.
Markets are turning nervous again after the January 2026 CPI report came in at 3.3%, slightly above our 3.1% forecast. This brings back memories of the inflation scare in fall 2025, which triggered a sharp but brief pullback. With the Fed not expected to cut rates until at least the summer, this report increases the odds policymakers will stay on hold.
Because of this uncertainty, volatility looks likely in the coming weeks. The VIX has already moved up from lows near 14. We think traders should consider buying protective puts on SPY. If you expect limited upside, another approach is selling out-of-the-money call spreads. These trades can benefit from either a pullback or a sideways market driven by renewed rate fears.
Rate-sensitive sectors are showing the most weakness, especially technology and high-growth stocks. These names helped push the S&P 500 to recent highs near 5,900. We are also seeing more bearish positioning in QQQ options. A short-term tactical trade could be buying puts on specific, overextended tech stocks that are most exposed to higher borrowing costs.
On this news, the US dollar index has strengthened above 105, which is weighing on commodities. This is a very different reaction from similar events in 2025. That shift may create an opportunity in futures options—for example, buying puts on gold as it struggles to hold support. This directly reflects the market’s growing view that interest rates may stay higher for longer.
New Zealand’s electronic card retail sales rose 0.4% year on year, recovering from -1%
New Zealand’s electronic card retail sales rose 0.4% year on year in January. This comes after a -1% year-on-year fall in the prior period.
The new number marks a shift from negative to positive annual growth. It points to a small improvement in electronic card retail spending versus a year ago.
The move back to 0.4% year-on-year growth is a clear change from the negative trend seen at the end of 2025. It suggests consumer pressure may be starting to ease. This could help set a bottom in the recent slowdown. For traders, it also weakens the view that a near-term rate cut is a sure thing.
In light of this, it may be time to rethink bets on an early rate cut from the Reserve Bank of New Zealand. Swap markets may now lower the odds of a cut in the first half of the year. That creates a chance to trade against earlier, more bearish expectations. The RBNZ will likely want more evidence before hinting at any policy shift, especially since inflation in Q4 2025 was 3.8%, still well above target.
A change in rate expectations could support the New Zealand dollar. If the RBNZ holds rates steady while other central banks, like the U.S. Federal Reserve, move toward cuts later this year, New Zealand’s yield advantage supports NZD. One idea is to buy NZD/USD call options, looking for upside as this policy gap becomes clearer to the market.
Even a small pickup in consumer spending is also supportive for local equities. It suggests earnings for consumer-facing firms may hold up better than expected. Traders could consider NZX 50 index futures, as a steadier consumer backdrop helps the case for a broader market recovery after a tough 2025.
New Zealand’s monthly electronic card retail sales fell to -1.1% from -0.1% previously
New Zealand’s electronic card retail sales fell 1.1% month on month in January. This followed a 0.1% month-on-month fall in the prior month.
The January result (-1.1%) is a clear sign that consumer demand is weakening. It is much softer than expected and suggests the New Zealand economy is cooling faster than we thought. We should prepare for a more dovish Reserve Bank of New Zealand (RBNZ).
This also tests the RBNZ’s firm stance through much of 2025, when it held the Official Cash Rate at 5.50% to fight inflation that stayed above 3%. Inflation in Q4 2025 was still sticky, but this spending data is the first strong evidence that high rates are starting to bite. Markets may now bring forward expectations for RBNZ rate cuts later this year.
We should consider entering interest rate swaps to receive fixed rates. This would position for lower rates ahead. Recent labor data supports this view: unemployment rose to 4.2%, pointing to a softer job market. Weak spending plus a cooling labor market makes further hikes less likely and rate cuts more likely over time.
For FX traders, this outlook is negative for the New Zealand dollar. We can consider buying NZD/USD put options to position for a move lower from around 0.6200. This gives downside exposure while limiting risk to the option premium.
We have seen similar setups before, such as in the late 2010s. In those episodes, weaker retail data came before a dovish RBNZ shift and a fall in the Kiwi dollar. This surprise data may also lift implied volatility. That could make long-volatility trades, such as NZD straddles, attractive in the coming weeks.
MUFG’s Michael Wan says the interim US–India deal helps India externally and may limit the rupee’s rise above 90
More information has come out about an interim US–India trade deal, including tariff cuts and exemptions. The report says this should support India’s external position.
The report adds that USD/INR could briefly drop below 90 in the coming months. It also says any Rupee rebound is likely to be limited.
The report forecasts USD/INR at 89.50 in Q1 2026. It then expects the pair to rise again to 93.00 by December 2026.
It links the later rise in USD/INR to continued FDI repatriation. It also points to strong import demand and a wider current account deficit.
The report notes there could be political pushback in India over agricultural concessions. It also says the article was created with help from an AI tool and reviewed by an editor.
We view the recent US–India trade deal as a short-term positive for the Rupee. The tariff cuts should help push USD/INR down toward our 89.50 target by the end of March. Early data from January 2026 supports this view: exports rose 4.5%, the strongest start to a year since the post-pandemic rebound in 2023.
For the next few weeks, we think buying USD/INR put options is a good way to benefit from this expected dip. A strike near 90.00 with an April 2026 expiry would position for a move toward our target. After the uncertainty of 2025, implied volatility has fallen to a 12-month low of 4.8%, which makes this a relatively cheap way to position for Rupee strength.
We do not expect this Rupee strength to last, and we think traders should plan for a reversal later in the year. Our forecast has USD/INR rising back to 93.00 by the end of 2026. A key reason is likely FDI repatriation. Central bank surveys from last year suggest more than $15 billion could flow out as early investments mature.
Because of this, we see any dip toward 89.50 as a chance to build long USD/INR exposure for the second half of the year. One approach is to buy call options with strikes near 91.00 or 92.00 and expiries late in 2026. This fits with the wider current account deficit seen in Q4 2025, which reached 2.8% of GDP and looks likely to keep widening.
