Japan’s capital spending rose 6.5% in the fourth quarter, compared with a forecast of 3%. The figure came in 3.5 percentage points above expectations.
We saw Japan’s capital spending for the final quarter of 2025 come in at 6.5%, more than doubling the 3% forecast. This confirmed that corporate Japan entered 2026 with significant momentum and a confident outlook. This strong beat provides a solid foundation for bullish sentiment on the domestic economy.
Implications For Japanese Equities
This robust corporate investment likely translates into stronger future earnings, supporting further upside for the Nikkei 225. We’ve already seen the index push past the 41,000 mark in February 2026, and this data justifies buying call options targeting new highs. Implied volatility on these options might still be reasonable before the next major catalyst.
The real story here is how this pressures the Bank of Japan. With recent inflation figures for Tokyo in February holding stubbornly at 2.5%, this strong capex data makes it harder to justify ultra-loose monetary policy. We should be looking at positioning for a stronger yen, possibly through put options on the USD/JPY pair ahead of the BoJ’s late March meeting.
Looking back from our 2025 perspective, we recall how any hint of policy normalization caused bond market volatility. This Q4 data is a much stronger signal than anything we saw last year, suggesting the 10-year Japanese Government Bond yield could test the 1.0% level again. Selling JGB futures or buying put options on bond ETFs could be a prudent play against a policy shift.
Japan’s monetary base fell by 10.6% year on year in February. The result was below the forecast of a 10.2% fall.
This means the monetary base contracted 0.4 percentage points more than expected. The figures compare the February level with the same month a year earlier.
Implications For Monetary Policy
The faster-than-expected contraction in Japan’s monetary base confirms the Bank of Japan is more committed to tightening than we anticipated. This surprise hawkish signal suggests financial conditions are tightening more rapidly than the market had priced in. Consequently, we should expect increased pressure on Japanese assets in the short term.
This data strengthens the case for a stronger yen, as a shrinking money supply increases the currency’s scarcity value. We saw how the yen reacted sharply to policy normalization throughout 2025, and this trend appears to be accelerating. Derivative traders should consider buying JPY calls or implementing bear call spreads on USD/JPY, targeting key psychological levels as the pair has already slipped below 134 this morning.
For equities, this is a clear headwind, as reduced liquidity puts downward pressure on the Nikkei 225. Corporate earnings for major exporters are particularly vulnerable, with analysts already forecasting a 2% cut to Q2 profit estimates if the yen holds these stronger levels. We view buying Nikkei put options expiring in April as an effective way to position for a potential market downturn.
The move also implies higher Japanese government bond (JGB) yields, as the central bank is reducing its footprint in the market. The 10-year JGB yield has already ticked up 5 basis points to 1.30% in response, its highest level this year. Shorting JGB futures is a direct way to trade this expectation of rising rates over the coming weeks.
Finally, this unexpected development will likely fuel market volatility, not just in Japan but globally. Japanese investors are the world’s largest foreign creditors, and a stronger yen could trigger repatriation of their overseas investments. Implied volatility on yen cross pairs has already surged by over 15%, making long volatility strategies through options an attractive hedge against broader market uncertainty.
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Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.
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XAUUSD, USOil, USDX and SP500 enter the week driven by Fed rate cut expectations, with geopolitics adding an inflation shock channel through energy.
Crude oil is holding a massive risk premium at $72–$79/bbl; a breach of $80 could trigger a fast move toward $100 if the Strait of Hormuz remains restricted.
Friday’s Nonfarm Payrolls (NFP) forecast of 58K–60K (down from 130K) creates a dilemma: cooling jobs favour rate cuts, but sticky 0.4% wage growth plus surging oil could force the Fed to stay hawkish.
Gold Above $5,300 Amidst Sticky US Data and Safe Haven Demands
The macro backdrop is simple, but it is not comfortable. Traders want weaker labour demand without a fresh inflation pulse. This week’s releases decide whether Fed rate cut expectations gain conviction or drift back into doubt.
The labour market has already shown signs of cooling at the margin. US job openings fell to a more than five-year low in December, which supports the idea that demand for workers has softened. That puts extra weight on Friday’s payrolls and wages mix.
US job openings unexpectedly fell in December to the lowest level since 2020 and layoffs edged up https://t.co/hq05MuUTxp
Markets also keep one eye on inflation timing. Even when CPI is a week away, traders often position early if the jobs report gives them a directional push.
Why it matters: Fed rate cut expectations set the tone for USDX, and USDX tends to steer XAUUSD and risk appetite.
Oil Jumps Over $80 as Hormuz Blockade Fear Escalates
This is the part of the week when the market can feel jumpy. Oil does not need a confirmed supply hit to move. Traders only need to believe disruption risk has risen, and that belief can keep USOil supported for longer than the headlines feel “new”.
Rising oil prices risk delivering a fresh inflation shock to Japan, complicating Prime Minister Sanae Takaichi’s efforts to ease cost-of-living pressures, according to Monex Group’s Jesper Koll https://t.co/1yZ4fMrtHG
A firmer oil price matters because it leaks into inflation expectations and financial conditions. It can also change how traders price Fed rate cut expectations, even if the labour data softens.
Gold reacts differently. XAUUSD trades as insurance. When uncertainty rises, gold often attracts flow even before the data lands. If the dollar stays contained, that support can persist.
The most immediate impact from the escalating Middle East conflict is through market reaction as investors take flight to safe havens such as the dollar and gold, while stocks slump https://t.co/1wMSxKx47N
XAUUSD bid on geopolitics, with 5455 defining extension risk.
XAUUSD may pause if USDX breaks above 98.651 after wages surprise.
XAUUSD reacts hardest to NFP as Fed rate cut expectations reset into next week.
Oil (USOUSD)
USOUSD holds a risk premium, with 71.181 the breakout level on Iran headlines.
USOUSD volatility stays elevated while traders price disruption risk through the Strait of Hormuz.
USOUSD strength can tighten conditions and complicate Fed rate cut expectations into payrolls.
US Dollar Index (USDX)
USDX rejected 98.10 and now ranges, with 98.50 the next area on a push higher.
USDX above 98.651 invalidates bearish setups and can pressure XAUUSD intraday.
USDX direction will follow payrolls and wages as Fed rate cut expectations stay sensitive.
S&P 500 (SP500)
SP500 downside opens if 6777.90 breaks during NFP volatility.
SP500 can struggle if USOil stays bid and the market trims Fed rate cut expectations.
SP500 weakness can keep XAUUSD supported through hedge demand.
Bottom Line
XAUUSD starts the week supported by geopolitics and a market that still wants protection. The next pte cut expectations strengthen after the US jobs report, or whether wages keep the Fed cautious.
Oil is the swing factor. If USOUSD holds a premium, it can keep inflation pressure alive and make the ma timing of the first cut, even if payrolls slow.
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Frequently Asked Questions
1. How does the Iran–US–Israel situation affect gold prices? Rising geopolitical tension usually lifts safe-haven demand, which can support XAUUSD, especially if the US dollar does not surge at the same time.
2. Why is oil so important for Fed rate cut expectations right now? Higher oil prices can feed into inflation expectations, making the Fed more cautious and slowing the path toward rate cuts.
3. Can US Non-Farm Payrolls move gold and the dollar this week? Yes. A softer jobs report and cooler wages can weaken USDX and support XAUUSD, while stronger data can do the opposite.
4. What should traders watch on XAUUSD in the current environment? Traders are watching whether XAUUSD can hold above key support and challenge the 5,455 region, while tracking USDX and US data for confirmation.
5. How does VT Markets’ Week Ahead help traders? VT Markets’ Week Ahead gives a concise view of macro themes, key technical levels, and upcoming events, helping traders plan their positions for the week.
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Written on February 28, 2026 at 3:12 am, by anakin
As part of our commitment to provide the most reliable service to our clients, there will be maintenance this weekend.
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Written on February 27, 2026 at 10:02 am, by anakin
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Written on February 27, 2026 at 8:03 am, by anakin
Ho Chi Minh City, Vietnam – 26 February 2026 – VT Markets has successfully completed a community initiative in Vietnam, donating 100 official Newcastle United Football Club (NUFC) footballs to local youth groups in partnership with a youth-focused non-profit organisation named Liên Đoàn Hướng Đạo Nguyễn Trãi.
The initiative reflects the company’s expanding commitment to community development across Asia and forms part of a broader CSR line-up unveiled during its July 2025 event.
Designed to strengthen youth engagement, the donation provides students with quality equipment to support physical education and grassroots football development, helping create a more inspiring and inclusive sporting environment.
In collaboration with Liên Đoàn Hướng Đạo Nguyễn Trãi, footballs were distributed directly to selected communities, ensuring access to students who stand to benefit most from enhanced sporting resources. By supporting grassroots participation, the programme aims to create a more inclusive environment where young people can develop confidence, build friendships, and stay actively engaged in their communities.
“Sport has the power to inspire discipline, teamwork, and resilience – values that extend far beyond the pitch. Through this initiative, we hope to contribute meaningfully to youth development and community growth in Vietnam”, Dandelyn Koh, Head of Global Marketing at VT Markets said.
In recent months, the company has intensified its regional engagement through a series of on-the-ground initiatives, including beach clean-up campaigns and flood relief pack donations aimed at supporting vulnerable communities. With programmes already planned for the new year, VT Markets remains dedicated to deepening its local footprint, reinforcing its role not only as a global financial partner but also as a responsible and proactive community stakeholder.
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