RBA Deputy Governor Hauser made hawkish comments that helped the Australian Dollar, even as Australian bond yields fell. This suggests a gap between the AUD’s strength and what the rates market is pricing in. Hauser said inflation is still “too high,” and the Board cannot let it stay that way for much longer. Even so, OIS pricing remained muted.

Rba Hawkishness Versus Market Pricing

OCBC raised its end-2026 AUD/USD forecast to 0.73 from 0.69. The bank also noted that OIS markets are pricing in about 20bp of total hikes by May and around 36bp by year-end. The article also says it was produced using an AI tool and reviewed by an editor. It is attributed to the FXStreet Insights Team. We are seeing hawkish comments from the Reserve Bank of Australia support the Aussie dollar. Deputy Governor Hauser’s warning that inflation is “too high” has been a key driver. As a result, we have extended our bullish view and now forecast AUD/USD at 0.73 by the end of 2026. There is a clear disconnect between the currency market and the interest-rate market. While the AUD is rising, rate pricing shows investors are not convinced the RBA will deliver meaningful hikes. The rates market is pricing only about 36 basis points of hikes for the rest of the year.

Options Strategies For A Volatile Repricing

This caution from bond investors comes despite recent data showing inflation is still a concern. The latest quarterly CPI for Q4 2025 came in at a stubborn 3.8%, well above the RBA’s target band. In addition, January’s jobs report showed the unemployment rate steady at 4.1%, which gives the central bank room to act. A similar setup appeared in late 2024, when the bond market was slow to accept the RBA’s commitment to its final hike. That episode suggests the currency market may be better at anticipating policy than the more cautious rates market. Recent strength in Chinese import data for key Australian commodities adds to that view. For traders, this disconnect may create an opportunity in options. Buying AUD/USD call options offers exposure to further upside if the RBA follows through on its hawkish tone. It also limits risk if the rally fades. The gap between the RBA’s messaging and market pricing also points to higher volatility ahead. Buying a straddle could work well, as it aims to profit from a large move in either direction. This directly targets the chance that the market resolves its disagreement sharply in the weeks ahead. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

US payrolls data pushed markets to price in a more hawkish Federal Reserve. Even so, the US Dollar did not hold its gains. That suggests investors are still selling USD rallies for longer-term reasons, even as short-term US rates move higher. Unemployment fell to 4.3%, payrolls rose by 130k, and wage growth beat expectations. Payrolls were also about double the consensus forecast of 130k.

Dollar Rally Fades After Strong Jobs Print

After the initial jump, roughly half of the USD rally quickly reversed. This drop was not linked to doubts about the jobs data. Short-term dollar rates rose and stayed high. Markets appear to need more strong US data to support a more lasting USD rebound. Lower jobless claims alone are not expected to be enough. A higher-than-expected CPI reading could provide stronger support. The US Dollar Index (DXY) is expected to stabilise around 97.0. The article notes it was produced with the help of an Artificial Intelligence tool and reviewed by an editor. This looks like a familiar pattern from 2025, when a strong jobs report also failed to lift the dollar for long. The market still seems strategically bearish, treating strength as a chance to sell. That means the bar for a sustained USD recovery remains high.

Markets Look Past Jobs Data Toward CPI

Last week’s report showed payrolls beating consensus at 210,000 and unemployment steady at 3.9%. The Dollar Index (DXY) rose briefly, then settled back near 103.5. This suggests the market has already priced in a strong labour market. Traders now appear to be looking beyond jobs data for signals on Federal Reserve policy. Attention now turns to next week’s Consumer Price Index (CPI), the next key test for the dollar. For a meaningful rally, inflation would likely need to surprise to the upside. That could force markets to push back expectations for rate cuts. Derivatives traders should note that implied volatility in pairs like EUR/USD and USD/JPY may rise ahead of the release. With this setup, traders may look at strategies that benefit from an inflation surprise. Buying short-dated out-of-the-money call options on the DXY, or put options on EUR/USD, could be a relatively low-cost way to position for a more hawkish repricing. The VIX is near a historically low 14.5, which may signal complacency that could unwind quickly if CPI comes in hot. On the other hand, an in-line or softer inflation print would likely reinforce the market’s tendency to sell dollar rallies. That could pull DXY back toward the 102.50 support level. This longer-term bearish bias is tied to expectations of eventual Fed easing and broader global growth trends. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Sterling slipped against major currencies on Thursday after softer UK data. Even so, GBP/USD stayed above 1.3600 and edged up to around 1.3640, extending a mild rebound from last week’s lows. Early UK GDP figures showed growth of 0.1% in Q4 2025 and 1.0% year on year. Markets had expected 0.2% for the quarter and 1.2% for the year. Q3 GDP was also revised down to 1.2% from 1.3%.

Uk Output Weakness Weighs On Sterling

Weakness in manufacturing and services held back activity in Q4. Manufacturing output fell 0.5% in December after a 1.9% rise in November (revised from 2.1%). Services output was flat in Q4, missing expectations for a 0.2% increase. Markets are now pricing in more Bank of England rate cuts to support growth. That expectation could limit demand for the pound. In the US, nonfarm payrolls beat forecasts, which reduced expectations for near-term Federal Reserve rate cuts. However, the January job mix and a sharp revision to 2025 jobs growth have limited the US dollar’s rebound. With UK data disappointing, we view the pound’s ability to hold above 1.3600 as a potential selling opportunity. The weak 0.1% Q4 growth, together with shrinking manufacturing output, suggests the Bank of England may need to cut rates. Expectations for lower borrowing costs are likely to cap sterling gains in the near term.

Policy Divergence Favours The Dollar

The contrast with the US is growing. A strong nonfarm payrolls report gives the Federal Reserve more reason to keep rates unchanged. This policy gap—UK easing while the US stays on hold—is typically bearish for GBP/USD. As that view strengthens, the pound may face further downside pressure. UK headline CPI fell to 2.8% in January, down sharply from 4.5% in mid-2025, which gives the BoE more room to ease. By contrast, US core PCE—the Fed’s preferred inflation measure—has stayed above 3.0%, which reduces the chance of near-term US rate cuts. This widening inflation gap supports the case for a weaker pound. In the weeks ahead, consider buying GBP/USD put options with strikes below 1.3500 to position for a decline. This approach limits risk while keeping exposure to a move toward the 1.3400 support area seen late last year. Another option is to short GBP/USD futures near the current 1.3640 level for a more direct bearish trade. Historically, when UK quarterly growth stalls like this, sterling often underperforms over the next one to two months. Recent Commitment of Traders reports also show net short positions in the pound building, suggesting larger market participants share a bearish view. Implied volatility may rise, so entering positions before a BoE rate cut is fully priced in could be beneficial. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

GBP/USD traded at 1.3632 on Thursday. It recovered after a volatile session driven by a stronger US dollar following US labour market data. US employment rose by 130,000 in January, the largest increase in more than a year, while the jobless rate fell to 4.3%. Markets then adjusted expectations for Federal Reserve rate cuts. Traders now fully price the first cut for July rather than June. The chance of a move in March is seen at under 5%. The pair rebounded from around 1.3600 after weaker UK data, but the recovery did not extend much further. UK GDP rose by 0.1% in October-to-December, matching the third quarter and coming in below the Bank of England’s 0.2% forecast. That result increased expectations of a 25-basis-point cut as early as March. Sterling found some support as UK political tensions eased after Prime Minister Keir Starmer received backing from cabinet members and Labour MPs, avoiding an immediate leadership challenge. An Elliott Wave analysis said a view published on 14 January, when the pair was at 1.3428, broadly played out. However, it noted the drop from 27 January to 6 February was larger than expected. This may point to an alternative wave count, although no rules were broken. The strong January US jobs report has also shifted our view on the Fed’s timeline. With the CME FedWatch Tool now showing close to an 80% probability that the first cut is delayed until July, the dollar may stay firm. This is a clear change from last month, when markets still expected a spring move. In contrast, the UK outlook looks weaker, which raises the odds of a Bank of England cut. Fourth-quarter 2025 GDP growth of 0.1%, along with recent inflation data showing headline CPI easing to 3.8%, strengthens the case for a move by May. This widening gap between a patient Fed and a more dovish BoE adds underlying pressure to GBP/USD. For now, the pair is holding above the key 1.3600 level, helped in part by a temporary easing in UK political uncertainty. However, the technical picture is less clear. The sharp fall from late January to early February suggests the prior bullish trend may be running out of steam. This leaves the market sensitive to the next major data release, which could trigger a strong move. With fundamentals pointing one way and technical support still holding, trading volatility may be the better approach. Buying straddles or strangles ahead of next week’s US and UK inflation reports could help capture a breakout in either direction, without needing to pick the direction in advance. Traders who are already long may want to hedge. Buying put options with a strike just below the 1.3600 psychological support level could limit downside risk. A similar setup in 2024, driven by policy divergence, led to a quick breakdown once a key level failed, so protection against a repeat may be sensible.

here to set up a live account on VT Markets now

The US Dollar stayed in the low 152.00s against the Japanese Yen and traded near 153.00 on Thursday. Strong US jobs data lowered expectations for near-term Federal Reserve rate cuts, which helped support the Dollar. US Nonfarm Payrolls for January showed 130K jobs added, above the 70K forecast. The unemployment rate fell to 4.3% from 4.4% in December. Job gains were uneven. Healthcare added more than 80K jobs. Separately, 2025 job data was revised sharply lower to 181,000 net jobs from 584,000. The Yen was the strongest G8 currency this week and was on track for its best week in over a year. Markets reacted to Prime Minister Takaichi’s election win and expectations for a stable government. Markets also watched the likely impact of proposed stimulus programmes and tax cuts. Expectations for Bank of Japan rate hikes rose, with markets pricing in a move as soon as March and one or two more hikes this year. Bank of Japan policy, Japan–US bond yield gaps, and overall risk sentiment are key drivers of the Yen. The Bank has sometimes intervened in FX markets. Shifts in BoJ policy have also moved the Yen, including during 2013–2024 and again after 2024. We are seeing USD/JPY consolidate around 153.00. Wednesday’s stronger-than-expected US jobs report is supporting the Dollar. However, the large downward revision to 2025 job numbers—from 584,000 to 181,000—points to weaker underlying momentum. This push and pull may cap gains in the near term. The main story is the stronger Japanese Yen. It is heading for its best week in over a year after Prime Minister Takaichi’s election win. Futures markets now price an 85% chance of a 10 bp hike at the March 19 BoJ meeting. That would be the third hike since the BoJ ended negative rates in 2025. Rising hike expectations should be a strong headwind for USD/JPY. In the coming weeks, it may make sense to treat any USD strength into the mid-153.00s as a chance to build bearish positions. Implied volatility for options expiring after the March central bank meetings is rising, showing the market expects a bigger move. Buying USD/JPY puts or using put spreads can offer defined risk exposure to a policy-driven decline. We have seen similar setups before, especially in late 2023, when strong headline data hid a cooling trend that later showed up in revisions. The spread between US and Japanese 10-year government bonds has already narrowed by nearly 30 bp in 2026. That reduces the rate advantage that has supported the Dollar for years and adds to the bearish case for the pair.

here to set up a live account on VT Markets now

Greece’s Harmonised Consumer Price Index (CPIH) year-on-year rate was 2.9% in January. This was unchanged from the previous reading.

Inflation Proving Stubborn

Greek inflation held steady at 2.9%. We see this as a sign that price pressures across the Eurozone remain persistent. While this level is not alarming, it is still well above the European Central Bank’s 2% target. That makes the next steps for monetary policy more difficult. This reading also fits the broader picture in the bloc. Eurostat’s flash estimate puts overall Eurozone inflation at 2.5% for January 2026. That marks a change from the steady disinflation seen through most of 2025. As a result, the ECB meeting in early March now looks less likely to deliver a dovish shift. For interest rate derivatives traders, this suggests reconsidering wagers on a spring rate cut. We think markets may need to reduce the odds of an April cut and move expectations further into the summer. In other words, short-term rates may stay higher for longer. In equity options—especially linked to the Athens Stock Exchange—this backdrop may limit near-term upside. Stubborn inflation can keep borrowing costs elevated, which may pressure earnings and weaken sentiment. The index could remain range-bound, making strategies that benefit from sideways price action more attractive. This is a clear change from 2025, when inflation fell quickly and helped fuel a strong market rally. That easier phase now appears to be over. We may be moving into the final—and harder—stage of bringing inflation back to target. Traders should prepare for a period of less predictable policy signals.

Implications For Policy And Markets

Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Greece’s Consumer Price Index (CPI) rose 2.5% year on year in December. This was up from 2.4% in the prior reading. The data shows a 0.1 percentage point rise in the annual inflation rate. These figures measure how consumer prices changed versus the same month one year earlier.

Inflation Remains Sticky

December’s reading shows Greek inflation edging up to 2.5%. This suggests price pressures are still hard to shake across the Eurozone. The small rise implies that the easiest progress on inflation may be over. That makes the next steps in monetary policy harder. It also weakens the idea that rate cuts will arrive soon. Eurostat’s flash estimate for January 2026 supports this view. It shows headline inflation for the full bloc unexpectedly holding at 2.7%. Markets did not expect inflation to stay this firm, as many had priced in a steady drop through the first quarter. As a result, recent hawkish comments from ECB officials are being taken more seriously. For derivative traders, this points to a “higher for longer” rate outlook. One straightforward trade is to short futures on Greek government bonds. The idea is that yields may rise if markets push back their expectations for ECB rate cuts. If yields rise, bond prices typically fall, which would support this position. This inflation pressure is not just noise in the data. It also lines up with strong domestic demand in Greece. January data from Athens International Airport showed international arrivals up 8% versus 2025’s record levels. This supports a strong services sector and wage growth. That underlying strength suggests inflation could remain supported. With that uncertainty, volatility in the Athens Stock Exchange General Index may increase. Buying put options can hedge against a drop tied to more hawkish central bank policy. Another approach is a long straddle, which can benefit from a large move in either direction in the weeks ahead.

Market Volatility Risk

A similar pattern appeared in late 2023. Early optimism about falling inflation ran into stubborn core price data. That forced a sharp repricing in sovereign debt markets as traders adjusted their timelines for policy easing. Today’s setup looks similar, so caution may be wise. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Societe Generale raised its US growth forecast for 2026 and beyond after strong US labour market data in January. The upgrade reflects a stronger jobs market and other fast-moving indicators of activity. The Federal Reserve ties its policy choices to the labour market and inflation. With inflation still high and hiring still strong, Societe Generale updated its view of where the Fed funds rate is headed. The bank now expects just one Fed funds rate cut in 2026, most likely at the June FOMC meeting. It also warns that new data could keep rates unchanged until later in 2026. The article was produced using an AI tool and reviewed by an editor. It was published by the FXStreet Insights Team, which selects market observations from external experts and adds analysis from internal and external contributors. The strong January jobs report is making us rethink the Federal Reserve’s path for 2026. Payrolls rose by more than 350,000, far above the 180,000 consensus. This suggests the labour market is still very strong. Along with other high-frequency data, this pushes expected rate cuts further out. This echoes what happened in 2025, when markets priced in multiple cuts that never arrived. The latest CPI inflation reading is still firm at 3.4%, well above the Fed’s target. That leaves policymakers with little reason to cut soon. The story is changing from “when will cuts start?” to “will we even get cuts before the second half of the year?” In the next few weeks, interest rate futures are likely to reprice again. The chance of a cut priced into the March and May contracts could drop close to zero. Even the June SOFR futures contract may show lower odds of a cut. We are closing positions that depend on an early easing cycle. For options traders, more uncertainty around timing usually means higher implied volatility, especially for contracts linked to FOMC dates. Options that protect against rates staying high for longer—or even a surprise hike—will likely become more expensive. Selling volatility in rates has become much riskier. This also affects equity derivatives, especially in growth sectors that are sensitive to interest rates. Call options on indexes like the Nasdaq 100 may lag as a “higher for longer” outlook pressures valuations. The risk now points to a later Fed move, not an earlier one.

here to set up a live account on VT Markets now

BNY’s EMEA macro strategist Geoff Yu says the New Zealand dollar (NZD) should not be used as a direct stand-in for the Australian dollar (AUD). That view follows fresh policy divergence in the G10 after the Reserve Bank of Australia (RBA) raised rates. Markets still expect Reserve Bank of New Zealand (RBNZ) rate hikes in the second half of the year, but New Zealand’s growth outlook has been downgraded. Interest rate futures point to a more cautious path in New Zealand than in Australia, which caps NZD gains versus AUD. The December 2026 futures contract implies rates near 3%, but end-2026 pricing remains well below last year’s levels and has barely changed since December.

Inflation Trends And Policy Divergence

New Zealand inflation is still high, which supports a shift toward tighter policy. Further out, inflation is expected to return to target sooner, while longer-term growth and price risks remain unclear. The article points to mild fiscal tightening and weaker external demand as drivers of a large output gap that may need monetary support. It also notes that New Zealand’s smaller economy and more volatile output gap can weaken the case for pre-emptive tightening. Investors should avoid treating NZD as a simple substitute for AUD. Even though markets expect RBNZ hikes in the second half of this year, the projected pace is far less aggressive than for the RBA. Overnight Index Swaps suggest under 50 basis points of RBNZ tightening by December, versus about 75 basis points priced for the RBA. This caution reflects New Zealand’s softer economy, which became clearer through 2025. The final Q4 2025 GDP print confirmed the weakness, with a small 0.1% contraction. That helps explain why markets remain hesitant about the medium-term outlook. Australia, in contrast, still looks firmer. Its January 2026 jobs report showed a tight labor market. Inflation trends are also moving apart. New Zealand’s Q4 2025 CPI slowed to 4.5%, a sign inflation may be returning to target faster. Australia’s inflation has been more persistent, with Q4 2025 CPI at 5.2%, supporting the RBA’s more hawkish stance.

Implications For Aud Nzd Positioning

New Zealand’s growth forecasts were cut sharply last year, and rate futures have still not returned to early-2025 levels. That weakness has shown up in FX. AUD/NZD has recently moved toward multi-month highs near 1.1050, suggesting the market is leaning toward AUD on stronger fundamentals. With this divergence, it makes sense to position for AUD to outperform NZD in the coming weeks. Traders could consider buying AUD/NZD call options to gain upside exposure while limiting downside to the premium paid. This approach allows participation in further AUD strength, which looks plausible given the different central bank paths. Weaker external demand and a wide output gap in New Zealand also mean the NZD may not get the same valuation boost as the AUD, even if risk sentiment improves. As a result, NZD is a less reliable way to express a positive global growth view than AUD. Positions that benefit from NZD underperformance versus AUD therefore look well supported. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

UK GDP data suggests the economy ended 2025 on a weak note. Construction activity and business investment both softened. The Bank of England had already concluded that growth slowed late in 2025, based on data from October and November. Focus now shifts to next week’s UK jobs and inflation releases. Recent numbers have pointed to weaker hiring and a sharp slowdown in wage growth.

Uk Growth Backdrop And Policy Implications

ING expects the Bank of England to cut interest rates in March and again in June. The report connects these expected cuts with a stronger outlook for EUR/GBP. ING remains bullish on EUR/GBP and sets a short-term target of 0.88. The article also notes it was produced using an AI tool and reviewed by an editor. The UK economy ended 2025 in a weak position. GDP contracted by 0.1% in the final quarter, which supports our approach. Weakness in construction and business investment has continued into the new year. This strengthens the case that the Bank of England may need to act soon, making a near-term policy shift more likely. The main driver for EUR/GBP is the widening gap between central bank policy paths. We expect the Bank of England to cut rates in March and again in June to support a sluggish economy. By contrast, Eurozone inflation remains sticky at 2.5%. That makes the European Central Bank more likely to keep rates unchanged for longer.

Proposed Eur Gbp Options Expression

To express this view, we are considering buying EUR/GBP call options expiring in April 2026. This would help us benefit from potential volatility and upside moves around the expected March Bank of England rate cut. A strike near 0.8750 looks reasonable if the pair moves toward the 0.88 target. Next week’s UK jobs and inflation data will be key. The slowdown in wage growth seen at the end of 2025 needs to continue to strengthen the case for a March cut. The main risk is an unexpectedly high inflation reading, which could delay the Bank’s move and weaken this bullish view. A similar divergence was seen in 2014–2015. Different policy paths between the two central banks helped drive a sustained trend in the pair. That history supports the idea that the current setup—where the Bank of England is likely to cut before the ECB—could push the cross meaningfully higher. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now