MUFG said China’s slower CPI growth in January was heavily affected by Chinese New Year base effects. Food and services were the main drags on headline inflation. MUFG said the underlying reflation trend is still slow and gradual. The note said PPI deflation eased as global metals prices improved and demand linked to the tech sector strengthened. It added that “anti-involution” measures are unlikely to speed up reflation. It said the PBOC has signalled an easing bias for 2026 and described policy as “moderately loose”. China’s GDP growth slowed to 4.5% year on year in Q4. It said more easing may be needed in H1 2026 to support growth and boost credit demand. It also said markets will watch the PBOC meeting on 20 February for possible easing steps aimed at structural slowdowns. The note said this policy stance could keep USD/CNY on a mild downward path in 2026. It also said the yuan may stay near the lower end of its trading range. We see January inflation, which rose only 0.1% year over year, as being largely distorted by holiday base effects. This supports our view that reflation in China will be slow and gradual. Even with government support, underlying demand remains weak. This slow momentum—shown by the 4.5% GDP growth rate in Q4 2025—supports the People’s Bank of China’s clear easing bias this year. This is very different from the United States, where inflation has stayed firmer than expected. That has pushed back hopes for Federal Reserve rate cuts. This policy gap is a key reason the dollar has been stronger against the yuan. With the PBOC meeting on February 20, we think traders should be ready for more easing. A cut to the key policy rate is now a realistic possibility. One way to express this view is to buy short-dated USD call options against the yuan. This can benefit from a rise in USD/CNY while keeping risk defined. It also fits our expectation of a mild yuan depreciation. In the forward market, it may make sense to lock in a higher exchange rate. The steady message of “moderately loose” policy—reinforced after the reserve requirement ratio cut in late 2025—points to a managed depreciation as the most likely outcome. We expect USD/CNY to test 7.35 in the coming quarter, up from about 7.28 now.

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Standard Chartered raised its Hong Kong GDP growth forecast for 2026 to 3.2%, up from 2.5%. It cited strong momentum in Q4, higher financial activity, and improved consumer sentiment. The bank expects more financial-sector activity, including IPO fundraising and wider use of the Renminbi internationally. It also expects consumer sentiment to keep improving during the current stock market rally. It forecasts a modest rebound in the housing market. However, the outlook is still cautious because of structural changes and global risks. HIBOR is expected to stay lower in the first half of the year, then rise gradually again by Q4. The article says it was produced using an AI tool and reviewed by an editor. We see the upgraded 3.2% GDP growth forecast as a strong positive signal for equities. The Hang Seng Index has already risen more than 15% since November 2025, which supports this momentum. Over the next few weeks, buying call options on the index looks like a direct way to gain from the expected continued strength. The stock market rally also seems to be lifting consumer confidence. January retail sales rose 4.8%, which supports a modest housing rebound. Housing prices just posted their first monthly gain after a weak 2025. This makes call options on property and retail-focused stocks worth considering. Expectations for lower HIBOR in the first half of the year also create an opportunity in interest-rate markets. The 3-month HIBOR has already dropped from its 2025 highs above 5.5%, which supports this view. Traders may consider positions that benefit from falling short-term rates, such as going long HIBOR futures. We are also watching for a pickup in financial activity, especially IPOs, after a quiet 2025. With a stronger pipeline of new listings expected in Q2, volatility could rise. That could make selling put options on financial-sector ETFs attractive, allowing traders to collect premium while taking a bullish-to-neutral view.

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Malaysia’s GDP grew 6.3% year on year in 4Q25, the fastest pace since 4Q22. For 2025, full-year growth was 5.2%. Real GDP growth is projected at 4.5% in 2026. The Ministry of Finance estimates 2025 growth at 4.0%–4.5%. Domestic demand is expected to support growth in 2026, helped by government measures and national master plan initiatives. Other drivers include the rollout of approved investments, stronger tourism from Visit Malaysia Year 2026, and increased activity linked to AI. Malaysia’s current account surplus rose to MYR31.8bn (1.6% of GDP) in 2025, up from MYR27.7bn (1.4%) in 2024. The surplus is projected at MYR38.0bn (1.8% of GDP) in 2026, compared with the Ministry of Finance estimate of MYR23.2bn (1.1%). External risks have increased due to renewed geopolitical tensions and new US tariff announcements in mid-January. These measures included: – A 25% tariff tied to countries doing business with Iran (12 Jan) – A 25% levy on certain advanced computing chips (14 Jan) A one-year pause in US–China tariff escalation is in place until Nov 2026. Related US Supreme Court proceedings were also delayed. We expect a mixed outlook for Malaysian markets in the coming weeks, even after last year’s strong data. Headline GDP growth is likely to slow to 4.5% this year from 5.2% in 2025. Still, strong domestic demand should provide a meaningful cushion. This could lead to a split between the broader FBMKLCI index and domestically focused sectors. The main risk is external. President Trump’s new tariffs on advanced chips and on countries trading with Iran were announced last month. This uncertainty has already weighed on the Bursa Malaysia Technology Index, which fell 3% in early February as markets priced in the new risks. We think protective put options on the FBMKLCI, or on technology-focused ETFs, are a sensible hedge against further negative surprises from US trade policy. The local story remains supportive. Government spending and firm consumer activity are helping, and January 2026 retail sales rose 5.8%. For derivatives traders, this backdrop may support selling put options on fundamentally strong banks or consumer staples names to collect premium, based on their relative stability. This approach leans on domestic strength that is less exposed to global trade shocks. The Ringgit outlook is more complicated. The projected rise in the current account surplus to 1.8% of GDP is supportive. However, risk-off sentiment could still pressure the currency, as shown by the VIX rising above 20 last month. USD/MYR has been volatile but mostly range-bound around 4.70 since January. That setup can suit options strategies such as straddles for traders expecting a breakout but uncertain about the direction. Visit Malaysia Year 2026 is a clear positive. Tourism-related stocks have already gained in early February. Call options on airlines and major hotel operators may offer a focused way to express this theme. This can also provide a long exposure to balance hedges on more vulnerable export-oriented sectors. This setup echoes 2018–2019, when US–China trade tensions drove sharp swings in Malaysian equities despite a stable local economy. Traders who hedged export exposure while staying long domestic themes tended to outperform. We expect a similar pattern in the next few months, rewarding investors who can manage a strong local economy alongside volatile external risks.

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Silver (XAG/USD) rose on Friday after rebounding from near $74. It gained more than 2.50% and traded around $77.20 per troy ounce. The move followed a softer-than-expected US inflation report, but silver is still set to end the week lower. Silver is down 0.85% for the week after opening near $80.00. US stocks fell on Thursday, and that decline pulled silver lower because silver has recently moved in line with equities.

Key Technical Levels

The Relative Strength Index (RSI) suggests sideways trading. Resistance sits near the 50-day SMA at $79.08. Support is at $64.41, where the 100-day SMA is located. If silver falls below $75.00, the next support is the 13 February low at $74.01. Below that, the next level is $70.00, ahead of the 100-day SMA. If silver climbs back above $80.00, resistance is at the 29 December high of $83.75. The next resistance is the 11 February high of $86.30. Looking back at this time last year, the market was optimistic after a soft inflation report. Silver rose on the news but still failed to retake the key $80.00 level. That failed breakout in February 2025 pointed to weakness that continued through the rest of the year. The main problem was inflation stayed higher than markets expected in 2025. CPI ended the year at 3.1%, well above the Federal Reserve’s target. That forced the Fed to keep rates higher for longer, which tends to weigh on non-yielding assets like silver. As a result, silver prices slowly declined and broke below the technical support levels highlighted in last year’s outlook.

Market Outlook And Positioning

Today, silver is trading near $68.50. That means last year’s 100-day moving average level at $64.41 is no longer far below—it is now key support to watch closely. Last year’s RSI signal of sideways trading eventually broke lower as macro pressures stayed in place. For traders, put options with strikes below $65 may help protect a portfolio if prices fall further. Industrial demand—especially from solar panels—rose by an estimated 12% in 2025, which provides a solid fundamental base for prices. This creates a push-and-pull: tight monetary conditions versus strong physical demand. Because of that, selling cash-secured puts or using bull put spreads around $64–$65 could be a practical way to collect premium while keeping risk defined. Overall, the market shows low conviction. Implied volatility in silver options is still below the highs seen in late 2025. That favors strategies that work in a range until there is a clear catalyst, such as a Fed shift or a major change in industrial demand expectations. Regaining $70.00—highlighted in last year’s analysis—would be the first sign that the downward pressure may be easing. Create your live VT Markets account and start trading now.

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US CFTC data shows net non-commercial positions in oil fell to 117.8K, down from 124.6K in the previous report. Large speculators are cutting bullish bets on crude oil. The drop in net long positions suggests hedge funds and other major traders have less confidence that prices will rise. Overall sentiment is turning more cautious and could be shifting bearish. This pullback matches recent economic data. Global manufacturing PMI for January 2026 slipped into mild contraction at 49.7. This continues the trend from late 2025, when signs of slower industrial demand—especially in Asia—started to appear. Slower factory activity usually means lower energy use, which helps explain the reduced speculative buying. Supply is also weighing on sentiment. The latest EIA report showed U.S. crude inventories rose by 1.8 million barrels, surprising a market that expected a small draw. This adds to a pattern of steady U.S. shale output, which has partly offset OPEC+ supply cuts. Extra supply makes traders less willing to hold large long positions. Given this setup, derivatives traders may want to reduce exposure to outright long futures in the near term. If you are already long, consider hedging with put options or using a collar to limit downside risk, especially if WTI moves toward the $70 per barrel support area. The rise in speculative shorts also points to growing momentum for a downside test. A similar pattern played out in fall 2025, when falling net length came before a short but sharp price drop. Watch upcoming inventory data and Chinese import numbers for confirmation. If prices fail to hold key technical levels, speculative selling could accelerate in the weeks ahead.

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Eurozone CFTC non-commercial net positions in the euro rose to €180.3K, up from €163.4K previously. This is an increase of €16.9K between the two reports. Bullish sentiment on the euro is rising. Speculators now hold 180.3K net long contracts, up from 163.4K. This suggests large traders are increasing their bets that the euro will gain in the coming weeks. It is the highest net long level in more than six months. This shift likely reflects recent data that shows a gap between the Eurozone and the U.S. Eurozone core inflation for January 2026 held at 2.5%, which surprised analysts. Meanwhile, last week’s U.S. retail sales fell by 0.4%. Together, these numbers imply the European Central Bank may have less need to cut rates than the U.S. Federal Reserve. A similar setup appeared in Q3 2025, when net longs moved above 150K. After that, EUR/USD rose steadily from 1.08 to 1.11 over the next two months. Today’s positioning could point to a repeat of that move. If acting on this view, one direct approach is to buy call options on euro futures that expire in April or May 2026. We would look at strike prices slightly above the current market level to capture upside if the euro rallies. This can offer strong leverage if the move continues. A more conservative strategy is a bull put spread. This means selling a put with a higher strike and buying a put with a lower strike. The goal is to collect a net credit while expecting the euro to stay steady or rise. Risk is capped, and the position can benefit from time decay if the market moves sideways. Still, this much one-way positioning can become a crowded trade. A sharp reversal could follow unexpected hawkish comments from the U.S. Federal Reserve. We would use trailing stops on futures positions and watch option implied volatility for signs of rising market stress.

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Australia’s CFTC data shows AUD non-commercial net positions rose to 33.2K. The previous reading was 26.1K. This means non-commercial traders are holding a larger net long position in Australian dollar futures. The figure increased by 7.1K from the prior report.

Speculators Increase Aussie Dollar Exposure

Net long positions in the Australian dollar held by speculators have climbed to 33.2K contracts, up from 26.1K. This jump suggests large traders are becoming more confident about further AUD gains. This rise in bullish positioning is a trend to watch in the weeks ahead. One key driver is ongoing strength in commodity markets, helped by improving data from China. China’s industrial production for January 2026 rose 5.1% year over year, beating forecasts. Iron ore prices have also stayed firm above $130 per tonne. Since China is Australia’s largest trading partner, these demand signals support the AUD. Interest rate expectations are also moving in Australia’s favor. In late 2025, Australia’s inflation remained elevated at 3.4%, which kept the Reserve Bank of Australia cautious about signalling rate cuts. In the United States, inflation has been closer to 2.8%, increasing expectations that the Federal Reserve could be the first to cut rates this year.

Potential Trading Approaches For A Stronger Audusd

With positioning turning more bullish, traders may look at strategies that benefit from a higher AUD/USD exchange rate. Buying call options can provide upside exposure while limiting risk. For traders with a moderately bullish outlook, selling out-of-the-money put options may offer a way to earn premium as the trend plays out over the next few weeks. Create your live VT Markets account and start trading now.

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US CFTC data shows S&P 500 NC net positions rose to -105.1K. The previous reading was -132.9K. The latest figure is less negative than before. This means net positioning is moving closer to zero.

Speculative Positioning Shifts

Speculative positioning is shifting in a clear way. Large traders are cutting bets that the S&P 500 will fall. The move from a net short of -132.9K contracts to -105.1K suggests bearish conviction is fading. This is the biggest weekly drop in short positions since the fourth quarter of 2025. This shift follows the market volatility seen late last year, which was driven by concerns that inflation would stay high. But government data released last week showed the January Consumer Price Index eased to 2.9%. This was the first reading below 3% in more than eighteen months. That surprise likely pushed traders who were positioned for worse news to rethink their view and cover shorts. This raises the chance of a short-covering rally in the coming weeks. Many traders are still positioned for a decline. If more positive economic news arrives, it could trigger additional buying and lift the market. Because of this, it may be wise to avoid starting new bearish positions until the move stabilises. A similar pattern appeared in late 2022. Very bearish speculative sentiment came before a strong rally through 2023. Historically, when positioning becomes so one-sided and then starts to unwind, the market move that follows can be fast and long-lasting. The fall in short positions now suggests the market may be nearing a similar turning point in early 2026.

Historical Parallels And Market Implications

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US CFTC data shows that gold net positions for non-commercial traders fell to 160K, down from 165.6K. The latest figures show that large speculators are trimming their bullish gold bets. The drop from 165,600 to 160,000 net long contracts suggests traders are becoming more cautious. We see this as a sign that confidence in a continued rally is fading. This change likely reflects the latest inflation data. The January 2026 report showed the annual Consumer Price Index steady at 2.5%. With inflation looking more controlled, some funds feel less need to hold gold as an inflation hedge. The Federal Reserve’s recent comments have also strengthened the view that it plans to keep interest rates at current levels. The U.S. dollar is also worth watching. The Dollar Index has stayed firm near 104.5 for the past month. A stronger dollar makes gold more expensive for buyers using other currencies, which often weighs on demand and prices. That dollar strength also gives traders a reason to lock in profits. Overall, this looks like consolidation after gold’s strong run in late 2025, when geopolitical risks were higher. It also echoes the pattern seen in 2023, when speculative interest cooled as the Fed signaled its rate-hiking cycle was nearing an end. Traders who bought during the rally may now be taking profits. In the coming weeks, this setup may favor strategies for flat or slightly lower prices. One approach is selling covered calls on existing long positions to earn income while holding gold. Another is buying put spreads, which can hedge downside risk at a lower cost, especially if prices move toward key support levels.

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UK CFTC data shows GBP non-commercial net positions at -25.8K. This compares with the previous reading of -13.9K. The latest data shows a clear jump in bearish sentiment toward the British Pound. Speculators have almost doubled their net short positions. This suggests traders are increasingly confident that Sterling will fall. It is the biggest week-to-week rise in short positions since Q3 2025. This gloom likely reflects recent economic data from late 2025 and early 2026. Last month’s inflation report surprised to the upside at 3.8%. At the same time, the Office for Budget Responsibility cut its Q1 2026 growth forecast. Together, these reports support the view that the Bank of England is stuck: it must fight inflation without tipping the economy into recession. For the next few weeks, we see buying put options on GBP/USD as a simple way to target more downside. The pair is struggling to stay above 1.2150. Buying puts with a strike near 1.2000 could offer an attractive risk-reward setup. To reduce upfront cost, defined-risk put spreads may be the better choice. Still, this trade is becoming crowded. When positioning gets too one-sided, reversals can be sharp. A similar (but larger) build-up in shorts happened in 2022 and ended in a violent short squeeze. Any unexpectedly hawkish signal from the Bank of England could trigger the same type of move. Because of that risk, traders who short via futures should use strict stop-loss orders. The goal is to stay with the bearish trend while limiting damage if sentiment flips. Political risk also leans negative for the Pound: recent polls show the government trailing by 15 points, adding pressure that could weigh on Sterling.

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