USD/JPY extends four-day decline as Japan election boosts yen amid ongoing intervention fears
USD/JPY fell for a fourth straight day on Thursday. The Yen strengthened, pushing the pair toward 152.80. This move puts USD/JPY down about 2.75% for the week.
The Yen stayed supported after Prime Minister Sanae Takaichi won Japan’s general election last Sunday. Markets are also factoring in the chance that the Bank of Japan could raise rates as soon as March or April.
The US 30-year bond auction yield fell to 4.75% from 4.825% previously
The U.S. 30-year bond auction yield fell to 4.75% from 4.825%. That is a drop of 0.075 percentage points.
A strong 30-year auction, with yields down at 4.75%, points to solid demand for long-term government debt. It also suggests investors are more confident the Federal Reserve has largely finished its inflation fight. Markets are increasingly pricing in interest rate cuts ahead. Traders can read this as another sign that the high-rate era may be starting to fade.
Bond Auction Signals Shifting Rate Regime
This view lines up with recent January 2026 data. The annual Consumer Price Index cooled to 2.5%, coming in below expectations. The latest jobs report also showed wage growth slowing to 3.8%, which reduces worries about a wage-price spiral. Together, these numbers support the more dovish shift reflected in this auction. In interest rate derivatives, this favors trades that benefit from lower yields in the weeks ahead. Consider buying call options on Treasury bond futures (/ZB) or using SOFR futures positions that would gain if the Fed cuts rates later this year. The auction outcome supports the idea that rate momentum is moving lower. This is a clear change from 2025, when sticky services inflation kept the Fed on alert. It also differs from the sharp mood swings seen during the rate volatility of 2023 and 2024. Current data suggests the market is moving into a new phase. In equity derivatives, a lower-rate backdrop is often supportive for rate-sensitive areas such as technology and growth stocks. Traders may look at long exposure in Nasdaq 100 futures (/NQ) or call spreads on tech-focused ETFs. When discount rates fall, the present value of future earnings rises, which tends to help these companies.Cross Asset Trading Implications
Falling long-term yields can also reduce market volatility if investors view it as evidence of a “soft landing.” Selling VIX call options could work if the data keeps cooling gradually rather than weakening sharply. In FX, lower U.S. yields can pressure the dollar, which may favor long positions in pairs like EUR/USD. Create your live VT Markets account and start trading now.With January inflation at 2.1% below target, Hungary’s central bank has room to cut rates further
Hungary’s inflation rate fell to 2.1% year-on-year in January 2026, according to the Hungarian Central Statistical Office. This was below the National Bank of Hungary’s 3% target and below market expectations.
Core inflation, which strips out more volatile items, dropped to 2.7% year-on-year. This was the first time since January 2019 that both headline and core inflation were below 3%.
Drivers Of The Inflation Surprise
The weaker-than-expected data were tied to government price-shield measures, a stronger forint, and delayed tax and excise duty increases. The price-shield measures were extended again for three months. The text forecast inflation of about 1.5% in February. If these low readings continue, the expected rebound in inflation could be pushed back to later in 2026. Average inflation for 2026 now looks more likely to be around 3%, versus a previous 3.3% forecast. The text also said 25bp base-rate cuts in both February and March were possible, unless a geopolitical shock weakens the forint. January inflation came in much lower than expected at 2.1% year-on-year. With core inflation also down to 2.7%, both measures are now clearly below the central bank’s 3% target for the first time since early 2019. This supports the view that disinflation is strengthening and that policy can shift. This low print increases the chance that the National Bank of Hungary (NBH) continues its easing cycle. We now see a high likelihood of 25 basis point cuts at both the February and March meetings, especially if inflation drops toward 1.5% next month. This also fits with market pricing, which has pointed to a more dovish central bank for weeks.Trading Risk And Hedging
For interest-rate traders, this may favor receiving fixed on short-dated swaps, as the front end of the yield curve could move lower. Forward Rate Agreements (FRAs) for the months ahead may also be attractive, since they can directly reflect expected policy-rate cuts. In the easing cycle that began in 2023, the front end re-priced quickly after dovish surprises. Rate cuts usually weigh on a currency, but the forint has held up, helped by Hungary’s improving external balance through 2025. Still, as the rate gap versus the Eurozone narrows, traders may want to consider EUR/HUF call options. This provides exposure to a weaker forint while limiting losses if the currency stays stronger than expected. The broader economic backdrop also supports this path. Q4 2025 GDP growth was still weak at 0.9%. The government’s extension of price shields on certain goods, while temporary and artificial, also keeps near-term inflation lower. That gives the NBH more room to cut, similar to the early stage of the 2024 easing cycle, when the base rate was steadily reduced from its 13% peak. The biggest risk to this dovish view is a sudden rise in geopolitical tensions. The forint often reacts sharply because it is seen as a regional risk currency. Any escalation in the Ukraine conflict, for example, could trigger a flight to safety and force the central bank to pause cuts. For that reason, it is important to monitor implied volatility in the forint. Create your live VT Markets account and start trading now.Near 97.00, the US Dollar Index fluctuates after the Fed keeps rates at 3.50%–3.75% following cuts
The US Dollar Index is holding near 96.92 ahead of Friday’s delayed US Consumer Price Index (CPI) report. A strong January jobs report has pushed expectations for the next Federal Reserve rate cut out to mid-2026.
The Fed held rates at 3.50% to 3.75% on 28 January, after three quarter-point cuts in 2025. Two FOMC members voted for another cut, but Chair Powell pointed to stronger growth and a more stable labour market.
Market Focus Before Cpi Release
January Nonfarm Payrolls rose by 130K, the biggest gain in more than a year, and the unemployment rate fell to 4.3%. Treasury yields moved higher, expectations for the next cut shifted from June to July, and the odds of a March cut are now below 5%. Swaps are pricing around 49 basis points of easing through December, down from 59 before the jobs report. Headline CPI is expected at 2.5% year-on-year, down from 2.7%. The release was rescheduled after a brief shutdown. The dollar is also facing pressure from a stronger Japanese yen, linked to official comments and policy plans under Prime Minister Takaichi. On the chart, the index remains below the 200-period EMA at 97.04. It has traded between 96.80 and 96.95, with support at 96.80, then 96.49 and 96.43. Resistance sits at 97.04, then 97.27. As of February 13th, 2026, markets are in a holding pattern, with the US Dollar Index waiting for today’s key CPI data. Last week’s strong jobs report has pushed back expectations for Fed cuts and increased uncertainty. That has kept the dollar locked in a narrow range just below 97.00.Trading Implications Into The Data
In 2025, the Federal Reserve cut rates three times, then paused in January. The Fed said a better growth outlook supported the pause, but two dissenting votes show policymakers are still divided. Markets are now looking to July as the next possible move, since a stronger economy gives the Fed more time to wait. After much of 2025, when core inflation struggled to stay below 3.0%, markets are looking to today’s CPI for signs of progress. The CME FedWatch Tool shows March cut odds below 5%, a sharp drop from a few weeks ago. Traders are now pricing in just under two quarter-point cuts for the full year. For derivatives traders, this backdrop points to higher short-term volatility around the CPI release. The CBOE Volatility Index (VIX), recently near 16, could jump on any inflation surprise. That can make strategies that benefit from a large move—such as buying straddles or strangles on currency ETFs like UUP—more appealing for the event. Technically, the Dollar Index remains boxed in, with key resistance near 97.04. Options traders may sell call spreads above 97.30 to bet that the ceiling holds, or buy puts below 96.80 to position for a downside break. A clean move beyond these levels after the CPI report would likely force fast position adjustments. A firmer Japanese yen is also weighing on the dollar. This could limit any rally in the Dollar Index even if inflation prints hotter than expected. As a result, upside may be more capped than downside. The first reaction to today’s CPI report will matter, because it will feed directly into rate-cut expectations for July. Treasury yields and interest rate swaps will be key to watch as markets re-price the Fed path. Any meaningful move away from the expected 2.5% inflation reading could set the dollar’s direction for the next several weeks. Create your live VT Markets account and start trading now.Bloomberg reports that Russia is reconsidering U.S. dollar settlements, reversing efforts to reduce reliance on the dollar
Russia may be looking at rejoining the US Dollar settlement system, according to a Bloomberg report. The report cites an internal Kremlin memo that outlines possible areas for US–Russia cooperation.
The memo lists a possible return to US Dollar-based settlement, joint oil and natural gas ventures, cooperation on critical raw materials, and work in nuclear energy. It also mentions AI-related projects and preferential terms for US companies that return to Russia.
Potential Areas For Us Russia Cooperation
The memo says any move would depend on the US lifting sanctions on Russia, including restoring access to US Dollar transactions. Western officials quoted in the report question whether Russia would shift away from China, which supplies many components used in Russia’s war economy. The memo says US Dollar integration would help stabilise Russia’s balance of payments and support its foreign exchange markets. For the US, it would strengthen the US Dollar’s position as a reserve currency and could change global energy trade costs between China and America. After the report, the US Dollar Index (DXY) pared earlier losses. It had dropped to about 96.74, then traded around 96.93 and moved toward 97.00. This adds a major geopolitical factor to a situation that has been fairly steady for the past few years. Because markets still remember the extreme volatility of 2022, implied volatility in options on currency and energy futures may rise sharply. For traders, this points to strategies that can benefit from a big move in price, even if the direction is unclear.Market Implications And Trading Considerations
The US Dollar Index, currently trading near 104.5, could be one of the main winners if Russia makes a credible move back into the dollar system. It would directly challenge the de-dollarization theme that has grown since sanctions began, and it could trigger a strong rally in the greenback. We see value in buying long-dated call options on the DXY or related currency futures to position for that outcome. We also need to look at the ruble, which has stayed weak against the dollar and has traded above 140 for most of 2025. If policy shifts are confirmed and sanctions are lifted, the ruble could strengthen sharply. While most traders have limited access to direct ruble derivatives, this highlights the large “all-or-nothing” risk in assets tied to the Russian economy. In energy markets, with Brent crude holding above $85 a barrel, this development is a clear bearish risk. Joint ventures and renewed Russian access to Western energy markets could mean more stable, long-term supply. Because of that, we should consider buying put options on crude futures for late 2026 to hedge against, or profit from, a possible decline in prices. Still, many remain skeptical that Russia would pivot away from China, so this outcome is far from guaranteed. Talks could fail, and markets could quickly return to where they were. That uncertainty supports using defined-risk option strategies, such as straddles, to trade the chance of a major move without needing to pick the direction. Create your live VT Markets account and start trading now.Accelerated tech selling sparks broader declines as the Dow Jones Industrial Average falls 555 points (1.1%)
US stocks fell on Thursday. The Dow dropped 555 points (1.1%), the S&P 500 fell 1.2%, and the Nasdaq slid 1.7% as selling spread beyond big technology names.
Apple and Amazon each fell about 3%. AppLovin dropped more than 4% even though it beat fourth-quarter expectations. The stock is down about one-third in the first six weeks of 2026.
Rotation Beyond Big Tech
Walmart rose 3% and Boeing gained 2% as money moved into more cyclical stocks. Cisco fell about 7% after reporting revenue of $15.35 billion and adjusted EPS of $1.04. Non-GAAP gross margin was 67.5%, below the 68.1% estimate. Cisco also raised full-year revenue guidance to $61.7 billion from $61.2 billion. That was still below the $62.1 billion target. McDonald’s edged lower after adjusted EPS of $3.12 on revenue of $7.01 billion. US comparable sales rose 6.8%. Existing home sales fell 8.4% in January to 3.91 million, below the 4.15 million estimate. The median price rose 0.9% to $396,800, marking the 31st straight year-over-year increase. Initial jobless claims were 227K, and continuing claims were 1.862 million. January nonfarm payrolls showed 130K jobs versus 55K expected. The Fed held rates at 3.50–3.75%. Markets are pricing about two rate cuts in 2026, and headline CPI is expected to be 2.5% year-on-year. Because the selloff is broad and led by tech, it may make sense to prepare for more downside in growth stocks. The rotation away from tech appears to be speeding up. One way to hedge, or to speculate on further weakness, is to buy put options on the Nasdaq-100 tracking ETF (QQQ). The drop in mega-caps like Apple and Amazon suggests the selling is meaningful and not limited to smaller companies. Sentiment around AI and software has turned sharply negative after years of optimism. After the AI-driven rally of 2023, investors are now focusing more on the path to profits and the risk of tighter margins. You could consider shorting certain software ETFs or buying puts on companies like Cisco, which has pointed to rising AI-related costs as a headwind.Positioning For Continued Volatility
At the same time, money is moving into cyclical and value-focused areas. Opening long positions using call options on ETFs like the Industrial Select Sector SPDR Fund (XLI) or the Consumer Staples Select Sector SPDR Fund (XLP) could help capture this shift. This approach aims to benefit from relative strength in the parts of the market that investors prefer in a risk-off environment. With markets looking more unstable, volatility could rise. The CBOE Volatility Index (VIX), often called the market’s “fear gauge,” traded near 14 in late 2025. It could move back toward the 20–25 range seen during uncertain periods in 2023. Buying VIX call options is one way to position for a jump in market stress in the weeks ahead. The sharp drop in existing home sales is also a warning sign for the economy. It mirrors the weakness seen in 2023, when sales fell to the lowest level in nearly 30 years. This could support bearish positions in homebuilder stocks, such as buying puts on the SPDR S&P Homebuilders ETF (XHB). High prices combined with falling sales volume are a major challenge for the housing sector. With the CPI report approaching, investors are uneasy about inflation and the Fed’s next steps. The market’s repricing of rate cuts looks similar to the “higher for longer” period in late 2023, which pressured equities. Short-term options on the SPDR S&P 500 ETF (SPY) can be used to hedge against a hotter-than-expected inflation reading that could trigger another leg down. Create your live VT Markets account and start trading now.America’s four-week Treasury bill auction yield stays at 3.63%, signalling unchanged short-term borrowing costs
The United States sold 4-week Treasury bills at an auction yield of 3.63%. The yield was unchanged from the prior auction.
This result points to stable short-term borrowing costs for the US Treasury over the four-week term. The report did not include additional details.
Market Expectations For Fed Policy
A steady 3.63% yield at the 4-week Treasury bill auction suggests the market does not expect an immediate move from the Federal Reserve. This comes after several rate cuts in 2025, which brought the policy rate down from its cycle highs. For now, the market expects a pause while the Fed waits for clearer economic data. That view aligns with the latest inflation and jobs figures. January 2026 data showed the Consumer Price Index stuck at 2.9%, still above the Fed’s target. The labor market also remains firm, with the latest report showing 190,000 jobs added and unemployment holding at 3.9%. Together, these numbers give policymakers little reason to cut rates to support growth or raise rates to bring inflation down faster. For derivatives traders, this backdrop can mean lower implied volatility in short-term rate markets. Strategies that benefit from stable policy expectations may fit better in this environment. Options on short-term rate futures, such as 3-Month SOFR, may look expensive if they are pricing in large policy swings. Selling short-dated options volatility could work in the coming weeks if this calm continues. With the front end of the yield curve anchored, attention shifts to the curve’s longer-term shape. If the economy starts to slow, the curve could steepen as markets begin to price in rate cuts later in the year. Derivatives such as futures spreads can help position for changes in the 2-year versus 10-year yield relationship, which tends to react more to shifts in the growth outlook.Positioning For Curve Dynamics
Create your live VT Markets account and start trading now.Strong US jobs data dampens rate-cut hopes, pushing silver down near $82.85 after a weekly peak of $86.30
Silver fell on Thursday, trading near $82.85, down 1.95% on the day. The metal pulled back after hitting a weekly high of $86.30, following a rebound from last week’s lows near $64.00.
US labor data slowed silver’s recent rise. Bureau of Labor Statistics figures showed January Nonfarm Payrolls increased by 130K versus 70K expected, while the Unemployment Rate dipped to 4.3%.
Fed Policy Expectations
The data lowered demand for near-term rate cuts. Federal Reserve officials have also said inflation is still above target, supporting the case for keeping rates restrictive in the near term. Markets still price in close to 50 basis points of rate cuts by year-end. This has helped limit further declines in silver. The US Dollar struggled to extend its rebound on Thursday, which supported precious metals. Geopolitical risk and uncertainty about the timing of any Fed shift have kept price swings elevated. Silver prices can be influenced by interest rates, the US Dollar, and investor demand through products such as Exchange Traded Funds. Industrial demand (including electronics and solar), mining supply, recycling, and moves in gold prices can also affect silver.Looking Back And Ahead
This time last year, in early 2025, a strong jobs report briefly pushed silver down from above $86. The drop happened because markets worried the Federal Reserve would delay interest rate cuts. It was a short-term dip within a broader bullish trend. Now, on February 12, 2026, the labor market looks softer. The latest January 2026 report showed Nonfarm Payrolls rising by a more modest 95,000, while the unemployment rate ticked up to 4.5%. Unlike last year’s strong data, this cooler report is bringing back expectations of a Fed pivot sooner rather than later. Even so, inflation remains sticky. The latest January 2026 Consumer Price Index showed inflation at 2.9% year over year. This is keeping the Fed cautious after a single 25-basis point cut in late 2025. With policy still uncertain, volatility in silver is likely to stay high in the coming weeks. One major support for silver is strong industrial demand, especially from green energy. Global solar panel manufacturing accelerated through 2025 and now accounts for a record share of silver demand. This creates a stronger fundamental floor than we saw early last year. For derivatives traders, this setup favors strategies that can benefit if prices rise, while still protecting against Fed-driven risk. Interest has increased in call options with strike prices above $95 for late-spring expirations. At the same time, protective put options can help hedge against unexpectedly hawkish policy comments. The Gold/Silver ratio has also tightened, trading near 75:1, down from highs above 85:1 seen during parts of 2025. This suggests silver has been outperforming gold. If industrial demand stays strong, that trend may continue. For traders, long silver versus short gold pair trades may be appealing because they focus on silver’s industrial drivers. Create your live VT Markets account and start trading now.Sterling rises against the dollar as weak US jobless claims offset subdued UK GDP data
GBP rose against the US Dollar in Thursday’s North American session after fresh US jobs data weakened the USD. This came even after a strong Nonfarm Payrolls report the day before.
UK growth was weaker than expected, but the Pound still held onto its gains. GBP/USD traded at 1.3664, up 0.28%.
Relative Surprises Drive Currency Moves
Looking back at 2025, the Pound rose against the Dollar even though UK GDP was weak. Markets paid more attention to unexpectedly high US jobless claims, which pushed the Dollar lower at the time. This shows that short-term currency moves often come from data surprises, not just overall economic strength. Now the story has changed. The main driver is a clearer split in central bank policy. The Bank of England has stayed cautious, keeping its bank rate at 4.5% at its last meeting. The US Federal Reserve has signaled a pause in its easing cycle. This policy gap is now the key driver for GBP/USD, which is trading much lower—around 1.2850. Recent Office for National Statistics data showed UK Q4 2025 GDP growth at a weak 0.1%, confirming a soft domestic backdrop. By comparison, the latest US GDP report showed 1.9% annualized growth, supporting the Dollar. This broader economic picture is weighing on Sterling more than short-term shifts in labor data. For derivatives traders, this points to continued pressure on the Pound. Implied volatility in GBP/USD options has been rising, with three-month contracts recently at 8.9%. This reflects uncertainty about the Bank of England’s next move. One approach is to buy put options to hedge risk—or to position for a break below the key 1.2800 support level.Labor Markets Remain A Key Watch
Labor markets still matter, since they were the main focus in the 2025 report. Last week, US jobless claims dropped to 205,000, a very low level that suggests the US labor market remains tight. This contrasts with the UK unemployment rate, which has edged up to 4.4%. That gap supports the case for a firmer Dollar in the weeks ahead. Create your live VT Markets account and start trading now.Nordea’s Helge J. Pedersen says Denmark’s inflation fell to 0.8%, boosting purchasing power amid tax cuts
Danish inflation dropped to 0.8% year-on-year in January, down from 1.9% in December. The fall was driven by a large cut to the electricity tax and lower prices for goods.
The electricity tax was cut to almost 1 øre per kWh (including VAT), from 90 øre previously. Core inflation also eased, falling to 1.9% in January from 2.3% in December.
