AUD/USD hits its highest level since August 2022 as US payrolls beat forecasts, despite major downward revisions to 2025 data
AUD/USD hit its highest level since August 2022 on Wednesday. The move followed the delayed US Non-Farm Payrolls report, which showed 130K jobs added versus a 70K forecast.
The report also showed major downward revisions. March 2025 payrolls were revised 898K lower. Average monthly job gains for 2025 were revised down to 15K from 49K.
Commerzbank’s Moses Lim: USD/MYR remains rangebound near multi-year lows as Malaysian industrial output stays strong
Malaysia’s industrial production rose 4.8% year on year in December. This was above the 4.5% Bloomberg consensus and up from 4.3% in November. Growth was driven by electronics and other export-focused manufacturing.
Mining output fell 5.2% year on year, after a 2.3% rise in November. This was the first contraction since May 2025. The drop was linked to lower natural gas production. A recovery is expected in 2026 as more facilities come online after maintenance ends.
Ringgit Strength And Trading Range
USD/MYR fell 0.3% to around 3.92 and stayed near its lowest level since July 2018. The move was supported by foreign inflows and strong semiconductor exports. In the near term, USD/MYR is expected to trade in a 3.90 to 4.00 range. The article was produced with an AI tool and checked by an editor. Data from December 2025 pointed to strong industrial production, and that trend appears to be continuing. The Malaysian ringgit has strengthened against the dollar, pushing USD/MYR to levels not seen since mid-2018. Markets expect the pair to stay in a tight 3.90 to 4.00 band in the near term. This view is supported by new data. January trade figures, released last week, showed semiconductor exports rose 9.5% year on year, extending the strong performance from late last year. We also recorded net foreign inflows of $1.5 billion into the local bond market in January, which signals ongoing investor confidence.Volatility Strategies And Key Risks
With volatility expected to stay low, selling options may be attractive in the coming weeks. Short-dated strangles or iron condors with strikes outside the 3.90–4.00 range could benefit from time decay. One example is selling a 3.88 put and a 4.02 call. This strategy depends on the exchange rate staying within the range and avoiding major breakouts. Looking back at 2018, the last time the pair traded at these levels, it found strong support around 3.85–3.90 for several months. One risk to watch is the mining sector. If it rebounds as expected, it could add support to the ringgit and push USD/MYR toward the lower end of the range. Another key risk is a sudden rise in global risk aversion, which could lift the dollar and break above 4.00. For investors seeking yield, range accrual notes are another option. These products pay a higher coupon for each day USD/MYR closes within the 3.90–4.00 band. This matches the view that the currency will remain stable in the weeks ahead. Create your live VT Markets account and start trading now.INGING expects weak CPI to stay below 2% through 2026, allowing the PBOC to continue easing
ING expects China’s inflation trend to have only a small impact on People’s Bank of China (PBOC) policy in 2026. It expects the inflation target announced at the Two Sessions in March to be around 2% year-on-year, unchanged from 2025.
ING forecasts CPI inflation will again come in below the 2% target, as it has in recent years. It notes the target has mainly been used to limit inflation on the upside, not to lift inflation from low levels.
Inflation Target Likely Not A Constraint
Because of this, ING expects a CPI miss on the downside will not limit monetary policy. It says the PBOC is more likely to focus on broader economic conditions and the possible impact on banks and markets. ING also says recent soft domestic data supports further easing. It sees room for an initial move in the first half of 2026, including a 10bp rate cut and a 50bp Reserve Requirement Ratio (RRR) cut. With inflation likely to undershoot the 2% target again, ING sees few limits on monetary policy. Signs of a weak finish to 2025, along with January CPI of just 0.4%, strengthen the case for the PBOC to ease. The market should watch the Two Sessions in March for confirmation of economic targets, but the overall direction appears to be more support. This outlook could be positive for Chinese equities after a difficult 2025. Traders may consider buying call options on major stock indices such as the FTSE China A50 or the Hang Seng Index. This positions for a rebound that could be supported by extra liquidity in the first half of the year.Potential Trades Around Policy Easing
A rate cut would likely put downward pressure on the yuan. ING expects USD/CNY to move higher as the interest rate gap between China and the US widens. Buying call options on USD/CNY could be an appealing way to position for a weaker yuan in the coming weeks. For interest-rate traders, the chance of both a 10bp rate cut and a 50bp RRR cut supports a long position in government bonds. One way to do this is by buying Chinese government bond futures. A similar move happened after the last RRR cut in mid-2025, when bond prices rallied sharply and rewarded traders who were positioned early. Even before any decision, expectations of a policy move can lift short-term volatility. This can make options straddles on currency pairs or equity indices useful for trading a rise in market swings ahead of key PBOC announcements. Keep in mind that implied volatility often drops quickly once the policy decision is announced. Create your live VT Markets account and start trading now.Despite a 1% dip, AUD/JPY stays bullish as yen strengthens after Prime Minister Takaichi’s victory
AUD/JPY dropped more than 1% on Wednesday as demand for the Japanese yen jumped after Prime Minister Sanae Takaichi won a landslide election. At the time of writing, the pair was trading at 109.23.
The yen is also gaining support from expectations that the Bank of Japan may move toward policy normalisation, as well as the possibility that Japanese authorities could step in to support the currency in FX markets. The Nikkei Index has also climbed on speculation about more economic stimulus.
Technical Levels And Trend
Even with the decline, the broader trend is still up. Price is moving toward support near 107.99, where an uptrend line meets the 20-day SMA. A break below 108.00 could extend the pullback, with the 50-day SMA at 105.75 as the next key level. If selling pressure continues, the focus shifts to the 100-day SMA at 102.74 and the 200-day SMA at 99.08. If the pair pushes back above 110.00, it could retest the yearly high at 110.79. In 2025, Takaichi’s win triggered a sharp yen rally that sent AUD/JPY lower. The pair soon broke below 108.00 and later found support near the 50-day moving average, as expected. That move became a useful guide to how markets respond when investors price in stronger odds of Japanese policy normalisation. Today looks similar. The main driver is still the possibility of a Bank of Japan shift. Japan’s national core inflation is running at 2.5% year-over-year in the latest data, increasing pressure on the central bank to finally move away from negative interest rates. This backdrop makes it harder for the yen to weaken meaningfully.Options Strategy And Market Pricing
On the other side, the Reserve Bank of Australia faces a different environment. Australia’s quarterly inflation has eased to 3.8%, well below its peak, which reduces the need for further rate hikes. This split—potentially more hawkish BoJ expectations versus a more neutral RBA—creates a bearish fundamental setup for AUD/JPY. For derivatives traders, that may support positioning for further downside in the coming weeks. The current setup resembles 2025, when political developments pointed to policy change and ultimately helped strengthen the yen. Buying AUD/JPY put options is one way to target a decline while keeping risk defined. Current options pricing also looks supportive for this approach. Implied volatility in AUD/JPY is near a six-month low at 9.8%, which makes puts relatively cheap. This may offer an opportunity to position for a possible unwind of the carry trade if the Bank of Japan signals policy change at upcoming meetings. A break below the recent support at 107.50 could be the trigger for a move back toward 105.00. Create your live VT Markets account and start trading now.Cleveland Fed’s Hammack says unemployment is steadying and policy is near neutral after strong US January payrolls report
Cleveland Fed President Beth Hammack said the US unemployment rate appears to be stabilising after the strong January Nonfarm Payrolls report. She said the labour market seems to be moving toward a healthy balance.
Hammack said consumer spending is holding up and is being driven by higher-income households. She repeated that the Federal Reserve aims to bring inflation back to its 2% target.
Policy Appears Near Neutral
She said the current federal funds rate is “right around neutral,” meaning it is not strongly slowing the economy. She said it makes sense for the Fed to keep rates unchanged and that there is no need to fine-tune policy right now. Hammack also said US government debt is on an unsustainable path and needs to be addressed. The Federal Reserve has a dual mandate—price stability and maximum employment—and it mainly uses interest rates to reach these goals. The Fed holds eight policy meetings each year through the Federal Open Market Committee, which includes 12 officials. Quantitative easing increases credit and usually weakens the US Dollar, while quantitative tightening reduces bond reinvestment and is usually supportive of the US Dollar. Because policy is viewed as near neutral, we should not expect interest rate changes in the near future. This points to a steadier period, with the Federal Reserve likely to stay on hold for the next several meetings. Markets reflect this: pricing in the CME FedWatch Tool shows more than a 95% probability that rates will remain unchanged at the March 2026 meeting. The data supports this patient approach. The labour market is finding a healthier balance, while inflation remains stubborn. With the January 2026 unemployment rate steady at 3.8%, there is no urgent need to cut rates to support jobs. However, the latest Consumer Price Index reading of 2.9% is still too far from the 2% target to justify easing policy.Market Focus Shifts Beyond The Fed
From our perspective in early 2026, this is a major shift from 2025. Last year was shaped by uncertainty about when the hiking cycle that began in 2022 would end. Volatility was high around every inflation report and every Fed meeting. The current “on hold” message suggests a calmer and more predictable policy path in the weeks ahead. This backdrop suggests implied volatility in interest rate options may fall further or stay low. Strategies that benefit from stable rates and time decay—such as selling straddles on Treasury futures—may become more attractive. The MOVE Index, which tracks Treasury market volatility, has already fallen to 85. That is well below the peaks above 130 seen during the banking stress of 2023. With the Fed on the sidelines, attention may shift to other data for signals on the economy’s direction. We will be watching consumer spending closely, especially after Hammack’s comments that higher-income households are supporting demand. Any weakness there—or any signs of credit stress tied to the government’s unsustainable debt path—could drive volatility even without Fed action. Create your live VT Markets account and start trading now.UOB economists say Malaysia’s stronger labour market is stabilising the ringgit, with unemployment at 2.9% and participation at 70.9%
Malaysia’s labour market improved in 4Q25. The unemployment rate fell to 2.9% from 3.0% in 3Q25, while the participation rate stayed at 70.9%.
The 2.9% unemployment rate was the first time it fell below 3.0% since 4Q14. This points to stronger labour conditions at the end of 2025.
For 2026, unemployment is forecast to stay at 2.9%, which is still below 3.0%. The 2025 unemployment rate is also reported at 2.9%.
Factors that may support employment in 2026 include domestic growth, job measures in Budget 2026, ongoing national initiatives, tourism, and AI-related demand. The article says it was produced with help from an AI tool and reviewed by an editor.
Given the strong labour market in late 2025, the outlook for the ringgit looks stable. Unemployment fell to 2.9%, the lowest level in more than a decade, and this is expected to continue through 2026. This steady backdrop suggests less currency volatility in the near term.
Recent data supports this view. January 2026 inflation was slightly higher than expected at 3.1%, driven by firm domestic demand. The latest trade data also showed a 15% year-on-year rise in semiconductor exports, which supports the idea that the AI upcycle is real and ongoing. Together, these signals point to a solid economy that can support the currency.
For currency traders, this mix of stability and strength suggests a cautious, positive bias on the ringgit. Low-volatility strategies, such as selling out-of-the-money USD/MYR call options, may be worth considering in the coming weeks. Strong fundamentals reduce the risk of a sharp ringgit drop against the US dollar.
This backdrop also matters for interest rates. A rate cut by Bank Negara Malaysia looks unlikely. The central bank kept its policy rate at 3.25% at its late-January meeting. With a tight labour market, the next move is more likely to be a hold, or possibly a hike. Traders may want to avoid positions that rely on near-term rate cuts.
In late 2014, the last time unemployment was this low, growth depended heavily on commodity prices, which later fell sharply. Today’s picture looks more balanced. Growth is supported by a wider set of drivers, including national initiatives and a strong tourism rebound. This broader base suggests the current strength may be more resilient than it was a decade ago.
Standard Chartered economists say China’s 2025 fiscal deficit hit 8.1% of GDP and remains growth-supportive despite missing targets
China’s broad fiscal deficit was 8.1% of GDP in 2025. That was 0.9 percentage points below the approved target, but higher than the 7.2% recorded in 2024.
In 2025, spending missed the target by more than revenue did. As a result, some budgeted funds were not used and can be carried into 2026.
Deficit Outlook For 2026
In 2026, the broad deficit is forecast to rise to 8.5% of GDP. Part of this gap is expected to be covered by unused funds from 2025. The official deficit ratio for 2026 is expected to be 3.8% of GDP, down from 4.0% in 2025. This shift is linked to a lower expected growth target. Fiscal support in 2026 is likely to focus on major Five-Year Plan projects and boosting consumption. The gap between revenue and spending is expected to be wider than the official deficit. China looks set to keep a supportive fiscal stance through 2026. The government underspent in 2025, leaving funds available to use this year. That creates room for a positive fiscal impulse to support growth.Market Implications And Trade Ideas
We forecast a broad budget deficit of 8.5% of GDP for 2026, slightly above the 8.1% posted in 2025. The official target announced in March may be a bit lower. Even so, the main point is that China still has room to increase spending. This supports assets linked to Chinese growth in the weeks ahead. With spending likely to lean toward consumption, call options on large-cap Chinese equity ETFs may look attractive. Retail sales showed signs of stabilizing in late 2025, and continued fiscal support should help consumer-facing firms. Positioning for a broader market move higher ahead of March policy announcements could be a workable strategy. The focus on Five-Year Plan projects should also support industrial commodities. Copper has already firmed above $8,700 per tonne on the LME this month, driven by renewed demand expectations. Traders could consider long copper futures or bull call spreads to position for stronger infrastructure and manufacturing investment. Recent data also supports this constructive view. China’s Caixin Manufacturing PMI for January 2026 came in at 50.9, which signals expansion. This suggests the industrial sector is already growing, even before this year’s fiscal measures fully take effect, and may be able to absorb additional stimulus. If growth responds more strongly than expected, the yuan could also benefit. Stronger activity and sentiment could support an appreciation versus the dollar. Options that profit from a lower USD/CNH exchange rate offer another way to express this view. Create your live VT Markets account and start trading now.EUR/USD slips below 1.1900 to around 1.1885 after strong US jobs data and a hawkish Fed
EUR/USD slipped below 1.1900 on Wednesday as the US dollar rebounded after the US Nonfarm Payrolls report. The pair traded at 1.1885, down 0.07%, after hitting a daily low of 1.1833.
US payrolls rose by 130K in January. Private hiring increased by 172K, while government payrolls fell by 42K. The unemployment rate dropped to 4.3%, below the Fed’s 2026 estimate of 4.5%.
Labor Market Revisions And Rate Expectations
Annual revisions showed earlier job gains were overstated. The March 2025 level was revised down by 898K, and estimated 2025 job growth was cut to 181K from 584K. Rate expectations shifted after the report. Market pricing now implies about a 95% chance of no March cut, based on Prime Market Terminal data. CBOT data showed money markets pricing nearly 51 basis points of easing by year-end. Kansas City Fed President Jeffrey Schmid said inflation remains too high and warned that more cuts could keep inflation elevated for longer. In Europe, there were no major releases. ECB officials said inflation is under control, and added that the euro’s strength has already been factored in. Next, the Eurozone calendar includes speeches from Mario Cipollone, Philip Lane, and Joachim Nagel. The US schedule includes jobless claims for the week ending 7 February, housing data, and speeches from Lorie Logan and Stephen Miran.Trading Focus And Key Levels
Markets are focused on the stronger headline jobs number and the Fed’s firm stance. Together, these have pushed expected rate cuts further out. Bets on a March 2025 cut have almost disappeared, with futures pricing only a 5% chance. This reaction makes sense. January inflation data showed core prices still above 3%, giving policymakers little reason to ease. Still, the large downward revision to past job growth is hard to ignore. Nearly 900,000 previously reported jobs from 2024 were removed. In early 2024, a similar (but smaller) revision of more than 300,000 jobs pointed to cooling that markets initially missed. This suggests the labor market may be weaker than the latest headline number indicates. The gap between strong current data and weaker historical revisions adds uncertainty. For derivatives traders, that can create opportunity. Buying EUR/USD volatility could be attractive in the coming weeks. Options markets may not fully reflect the risk that investors have overestimated the economy’s true strength, which could lead to larger price swings. For direction, we lean toward a weaker dollar once the market focus shifts from one jobs report to the broader trend. A sustained move above resistance at 1.1916 could trigger long positions, with 1.2000 as the next key target. Upcoming Initial Jobless Claims will matter. A reading above the recent average near 220,000 could speed up this repricing. On the downside, a break below trend-line support near 1.1818 would weaken this view for now. It would suggest markets are still committed to the hawkish Fed narrative, despite signs of softening. In that case, we would reassess and look for support closer to 1.1750. Create your live VT Markets account and start trading now.UOB says stronger AI-driven momentum lifted Singapore’s Q4 2025 GDP, boosting 2025 growth and 2026 forecasts
Singapore’s 4Q25 GDP growth was revised up to 6.9% year on year and 2.1% quarter on quarter (seasonally adjusted). This is higher than the advance estimates of 5.7% year on year and 1.9% quarter on quarter. The upgrade was driven by stronger manufacturing output, and better results in services and construction.
Full-year 2025 growth was also revised higher, to 5.0% from 4.8%. This points to a stronger growth backdrop heading into 2026.
Growth Outlook And Key Drivers
The Ministry of Trade and Industry raised its 2026 GDP growth forecast range to 2.0% to 4.0%, from 1.0% to 3.0% previously. The research note links this better outlook to continued AI-related activity and updates to the government’s medium-term growth assumptions. With the government now forecasting 2026 growth of “2.0 to 4.0 per cent,” we should position for continued bullish momentum in Singapore-linked assets. The stronger-than-expected growth at the end of 2025, led by the AI sector, supports this view. This revision is an important signal for our strategies in the weeks ahead. We see an opportunity to increase long exposure through Straits Times Index (STI) futures, as corporate earnings often follow stronger economic growth. Recent data supports this: the January 2026 manufacturing PMI stayed in expansion at 50.8. We can also buy call options on the STI, targeting a move toward the 3,500 level by the end of the quarter. The strong 2025 GDP results, including 5.0% full-year growth, should also support the Singapore dollar. Core inflation in January 2026 edged up to 3.1%, giving the Monetary Authority of Singapore little reason to ease its gradual currency appreciation policy. We should consider buying SGD against USD using futures or options.Volatility Positioning And Premium Strategies
This clearer and more positive economic picture may reduce market volatility, as uncertainty fades. In past periods of steady growth, such as 2017 and 2018, implied volatility on STI options often declined for months. As a result, selling out-of-the-money puts on major Singapore blue-chip stocks or index ETFs could be a sensible way to collect premium. Create your live VT Markets account and start trading now.He took profits at the 7,000–7,020 resistance zone, then swift premarket Nasdaq shorts rewarded nimble, real-time followers
The S&P 500 rallied into overhead resistance at 7,000–7,020 yesterday, and traders took profits on swing longs in that zone.
In today’s premarket, the focus shifted to quick intraday setups, including a short Nasdaq trade. The trade worked, but it required fast execution and real-time updates through email and premium Telegram channels.
