Japan’s Tertiary Industry Index fell by 0.4% month on month in February. This followed a 1.7% rise in the previous month.

The latest reading shows a reversal from growth to contraction over the month. The index tracks monthly output in Japan’s service sector.

The recent data showing Japan’s Tertiary Industry Index fell by 0.4% in February is a significant reversal from the strong 1.7% growth seen previously. This is a clear signal of weakness in the domestic service sector, which is the backbone of the economy. We believe this challenges the narrative of a sustained Japanese economic recovery that many had priced in.

This downturn in services makes it highly unlikely the Bank of Japan will consider tightening policy in the near future. Recent March core CPI data, which came in below consensus at 1.9%, further supports a dovish stance from the central bank. Therefore, we are looking at strategies that benefit from a weaker yen, potentially targeting a move in USD/JPY above the 158 level.

For equity traders, this points to headwinds for the Nikkei 225, as domestic consumption appears to be faltering. The disappointing March retail sales figures released last week, which showed growth missing expectations, confirm this consumer weakness. We are therefore considering buying put options on the index to hedge against a potential downturn over the next few weeks.

Looking back, the broad optimism we saw in the latter half of 2025, when services activity was consistently strong, has now faded significantly. The market’s focus has shifted from recovery to concerns about stagflation, especially with global commodity prices remaining firm. This abrupt change in the domestic picture requires a reassessment of long-held bullish positions.

Given the potential for increased market volatility leading into the late April Bank of Japan meeting, we see an opportunity in options. The conflicting signals between a weak domestic economy and a potentially stable global environment could cause sharp price swings. Buying straddles on major currency pairs like EUR/JPY allows us to profit from a significant move, regardless of the direction.

Gold prices in Malaysia fell on Monday, based on FXStreet data. Gold was MYR 609.53 per gram, down from MYR 614.26 on Friday.

Gold eased to MYR 7,109.47 per tola from MYR 7,164.64 per tola on Friday. Other listed prices were MYR 6,095.33 for 10 grams and MYR 18,958.91 per troy ounce.

FXStreet calculates Malaysia’s gold prices by converting international prices using the USD/MYR rate and local units. Rates are updated daily at the time of publication and are for reference, with local prices possibly differing slightly.

Central banks are the largest holders of gold and use it to diversify reserves. They added 1,136 tonnes worth around $70 billion in 2022, the highest yearly purchase on record, according to the World Gold Council.

Gold often moves inversely to the US Dollar and US Treasuries, and can also move opposite to risk assets such as shares. Prices may also shift with geopolitical events, recession fears, and changes in interest rates, as gold is priced in US dollars (XAU/USD).

Gold prices have seen a slight dip, which we see not as a sign of weakness but as a potential consolidation within a larger uptrend. This minor pullback could present an opportunity for positioning in the coming weeks. Traders should look beyond the daily noise and focus on the underlying macroeconomic factors.

The market is increasingly pricing in potential US Federal Reserve interest rate cuts later this year, putting pressure on the dollar. A weaker dollar and lower rate expectations are strong tailwinds for gold. Recent data shows the Dollar Index (DXY) has fallen from its early 2026 highs, which supports this outlook on precious metals.

Looking back from 2025, we recall the record-breaking central bank purchases in 2022, a trend that has not stopped. World Gold Council data through 2024 confirmed that central banks were massive net buyers, absorbing over 1,000 tonnes for two consecutive years. This consistent demand provides a strong floor under the market, limiting the downside of any pullbacks.

Ongoing geopolitical instability also reinforces gold’s role as a safe-haven asset, adding to its appeal. Therefore, we are considering buying call options with expirations in the third quarter of 2026 to capitalize on potential upside. This strategy allows for leveraged exposure to rising prices while defining our maximum risk.

EUR/JPY rose after falling by nearly 0.5% in the previous session, trading near 186.80 during Asian hours on Monday. The daily chart shows price action moving higher inside an ascending channel.

The cross remains above the nine- and 50-period Exponential Moving Averages (EMAs), which supports the near-term upward trend. The 14-day Relative Strength Index is 62.30, showing positive momentum without reaching extreme levels.

Immediate resistance is seen at 187.00, followed by the all-time high of 187.95 set on 17 April. If the move extends, the pair could test the upper channel boundary near 188.60.

On the downside, first support is the nine-day EMA at 186.58, then the lower channel boundary around 186.00. If price breaks below the channel, it may move towards the 50-day EMA at 184.51.

We see the bullish technical trend in EUR/JPY is fundamentally supported by monetary policy divergence. The current interest rate differential, with the European Central Bank’s policy rate at 3.5% versus the Bank of Japan’s 0.1%, continues to make holding the Euro more attractive. This policy gap is the primary driver behind the sustained uptrend.

Given the room for upside indicated by the RSI, we are looking at buying call options with strikes near the 188.00 level. This strategy aims to capitalize on a potential move towards the recent all-time high and the upper channel boundary. The latest Eurozone inflation report, showing a steady 2.4%, suggests the ECB will not rush to cut rates, which further strengthens our conviction.

For risk management, the nine-day EMA at 186.58 is our first line of defense. We remember the sharp pullback on intervention fears back in the third quarter of 2025, so a confirmed break below the 186.00 channel support would prompt us to reduce long exposure. Cautious traders might consider buying protective puts below this level to hedge against a similar sudden downturn.

USD/CHF rose 0.13% to near 0.7830 in the Asian session on Monday as the US Dollar strengthened. The US Dollar Index (DXY) was up 0.1% at about 98.30.

Iran said it would not attend a second round of talks with the United States, according to the Islamic Republic News Agency (IRNA). IRNA cited “excessive demands, unrealistic expectations, constant shifts in stance, repeated contradictions, and the ongoing naval blockade”.

Earlier, US President Donald Trump said Iran had breached ceasefire terms in a Truth Social post. He said Iran fired at a French ship and a freighter from the United Kingdom.

Markets are also waiting for US Retail Sales data for March, due on Tuesday. Retail Sales are forecast to rise 1.3% month-on-month, up from 0.6% previously.

We remember looking back to 2025 when Mideast tensions pushed USD/CHF up towards 0.7830. The US Dollar became the preferred safe haven then, even over the Swiss Franc. That period showed us how geopolitical flare-ups can quickly shift currency dynamics away from fundamentals.

Today, the situation is driven more by central bank policy divergence, with the pair trading much higher around 0.9150. The Swiss National Bank surprised markets with a rate cut last month to 1.25%, while the Federal Reserve is holding steady as US inflation hovers at a persistent 2.8%. This difference in policy is creating a strong underlying bid for the US Dollar against the Franc.

For traders, this points towards strategies that can benefit from continued upward momentum and heightened uncertainty. One-month implied volatility on USD/CHF options has climbed to 9.5%, reflecting market nervousness about potential central bank surprises and global risks. Buying call options or setting up bull call spreads could be a way to capture further upside while defining risk.

We also see value in using options to hedge against any sudden reversal, should upcoming US inflation data show an unexpected cooling. The next US CPI release is critical and could cause a sharp move if it misses expectations. Therefore, purchasing some out-of-the-money put options could offer cheap protection against a dollar downturn in the coming weeks.

Asian equities rose on Monday even as renewed conflict in the Strait of Hormuz drove oil prices sharply higher. Higher oil prices raised inflation worries and increased the chance of further central bank rate rises.

Japan’s Nikkei 225 was nearly 1% higher at 59,050. Hong Kong’s Hang Seng Index rose 0.60% to above 26,300.

China’s SSE Composite gained 0.59% to near 4,070. South Korea’s Kospi advanced 1.30% to near 6,270.

India’s GIFT Nifty was up 0.14% at 24,450, pointing to a positive-to-flat open for the Nifty Index. Traders were expected to remain cautious due to ongoing uncertainty.

Iran briefly indicated on Friday that the Strait would reopen, but reversed course on Saturday. This followed US President Donald Trump refusing to lift the blockade on Iranian ports.

Iran’s military said the US breached a ceasefire by firing on an Iranian commercial vessel and said it would retaliate. Trump said the US Navy fired on and seized an Iranian-flagged cargo ship in the Gulf of Oman after it did not stop when ordered.

Trump said on Truth Social that US officials would go to Islamabad for talks with Iran on Monday. IRNA reported that Tehran has declined to resume negotiations, citing “unrealistic expectations”.

Given the sharp rise in oil prices and the breakdown in US-Iran talks, we see a clear case for buying volatility over the coming weeks. The CBOE Volatility Index (VIX) has already surged over 30% to 22.5 this morning, reflecting rising market anxiety. Any further military escalation in the Gulf of Oman would likely send implied volatility even higher across asset classes.

The most direct trade is a bullish position on crude oil, with West Texas Intermediate futures already pushing past $98 a barrel. We remember how a similar, smaller disruption in the fall of 2025 caused a 15% spike in oil prices in under two weeks. Considering that over 20% of global oil supply transits the Strait of Hormuz, we are positioning for higher prices through long call options.

We should be wary of the current optimism in Asian equities, as sustained high energy prices will inevitably feed into global inflation figures. This could force central banks, including the Federal Reserve, to delay anticipated rate cuts or even adopt a more hawkish tone. Protective put options on broad market indices like the S&P 500 are a prudent hedge against a potential downturn driven by these inflation fears.

This kind of geopolitical instability typically triggers a flight to safety, which benefits the US dollar. The dollar index (DXY) is already showing signs of strength, and we anticipate it will test recent highs. This suggests a cautious stance on emerging market currencies, which are often negatively impacted by both a stronger dollar and higher energy import costs.

The US Dollar Index (DXY), which tracks the US Dollar against six major currencies, traded near 98.30 in Asian hours on Monday. It posted mild gains linked to renewed US-Iran tensions.

Iran’s Foreign Ministry spokesman Esmail Baghaei said a US blockade of Iran’s ports and coastline is an act of aggression that breaches the ceasefire, according to the Guardian. Iran also said on Sunday that it does not plan to join a second round of talks with the US.

US President Donald Trump ordered US negotiators to travel to Pakistan a few days before a Middle East ceasefire is due to expire on 22 April. Reports of weaker prospects for a peace deal supported demand for the US Dollar as a safe-haven currency.

US Retail Sales data is due on Tuesday. Retail Sales is forecast to rise 1.3% month-on-month in March, up from 0.6% in February. A softer-than-expected inflation outcome could weigh on the DXY in the near term.

The US Dollar Index (DXY) is trading near 104.50 as we face a mix of geopolitical uncertainty and questions over the Federal Reserve’s interest rate path. This environment of pulling and pushing forces creates significant potential for sharp moves in the dollar. For derivative traders, this means volatility is the key theme for the coming weeks.

We are seeing a renewed flight to safety reminiscent of past events, such as the US-Iran tensions back in 2020. Current disruptions around the Bab el-Mandeb Strait and tense naval exercises in the South China Sea are pushing investors toward the dollar. This safe-haven demand is providing a strong floor for the DXY, preventing any significant sell-offs.

However, the economic data at home is painting a conflicting picture for the Fed. The latest CPI report showed inflation remains sticky at 3.4%, suggesting rates should stay high, which is bullish for the dollar. Conversely, last week’s retail sales report was weaker than expected, showing only a 0.2% increase and hinting at a cooling economy.

This conflict between inflation and growth is making options pricing particularly sensitive. Implied volatility on dollar-related pairs has been rising, so traders should consider strategies that benefit from this, such as long straddles on currency ETFs like UUP. Traders who are more directional may look at DXY call options to bet on geopolitical risk winning out, or puts if they believe a slowing economy will force the Fed to signal a rate cut sooner than expected.

AUD/USD opened on Monday with a bearish gap to about 0.7115, then rebounded and moved back above the mid-0.7100s in Asia. It has paused after pulling back from Friday’s peak near 0.7220, the highest level since June 2022.

The US dollar started the week firmer amid renewed US-Iran tensions around the Strait of Hormuz, which weighed on AUD/USD early on. Reduced expectations of a US Federal Reserve rate rise limited further US dollar gains, while the Reserve Bank of Australia’s hawkish outlook supported the Australian dollar.

Technically, the pair has risen strongly from the 100-day simple moving average and broke above the 0.7115 resistance last week. Buying interest around 0.7115, now seen as support, points to a continued upward bias.

Momentum signals lean positive, with MACD above its signal line and RSI near 62, which does not indicate overbought conditions. A move above 0.7200 could open the way to a retest of 0.7220–0.7225.

Support is first seen near 0.7115, with further support around 0.7100. The 100-day SMA is near 0.6900.

Looking back at the bullish technical setup from early 2025, we remember the strong momentum that carried the AUD/USD past the 0.7115 level. The positive signals from indicators like the MACD and RSI were valid at the time, supporting a continued push. That analysis correctly identified the near-term path of least resistance as being to the upside.

However, that rally toward 0.7225 proved to be a peak as the fundamental outlook shifted later that year. The Reserve Bank of Australia paused its hiking cycle sooner than anticipated, while the US Federal Reserve maintained a restrictive stance longer than the market priced in. This divergence in central bank policy eventually unwound the Aussie’s strength through the second half of 2025.

Today, on April 20, 2026, the situation is completely different, with the pair trading near 0.6550. We now see Australian inflation down to 3.1%, with markets pricing in a 75% chance of an RBA rate cut by August. In contrast, US inflation is holding firmer at 2.8%, making the Fed cautious about easing policy too soon.

For derivative traders, this environment suggests positioning for either further downside or range-bound activity. One-month implied volatility for AUD/USD is currently at a relatively low 8.5%, making it cheaper to buy options than it was a year ago. This presents an opportunity to structure trades with a favorable risk-reward profile.

Given the dovish RBA sentiment, traders anticipating a break lower could consider buying put options targeting the 0.6400 level. Alternatively, constructing bear put spreads would reduce the upfront cost while still profiting from a modest decline. This strategy defines the risk should a surprise geopolitical event or a shift in Fed language cause a dollar downturn.

For those who believe the major central bank moves are already priced in, the low volatility makes selling options attractive. A short strangle, selling both an out-of-the-money call and put, could be a viable strategy to collect premium. This would be profitable if we expect the AUD/USD to consolidate in its current 0.6500-0.6650 range ahead of the next major economic data releases.

Silver traded near $80.50 per troy ounce in Asian hours on Monday, trimming losses but staying in negative territory. Tensions around the Strait of Hormuz lifted oil prices, adding to inflation worries and raising the chance of further central bank rate rises.

Iran’s military said the United States breached a ceasefire by firing on an Iranian commercial vessel, according to Bloomberg. Iran warned of imminent retaliation for what it called “maritime aggression”.

US President Donald Trump said the US Navy fired on and seized an Iranian-flagged cargo ship in the Gulf of Oman. He said the ship failed to comply with orders to stop while leaving Hormuz.

Iranian state media IRNA reported that Tehran has declined to resume negotiations with US officials, citing “unrealistic expectations”. Trump said US officials will travel to Islamabad for talks with Iran on Monday.

Iran briefly said on Friday that the strait would reopen, then reversed that on Saturday after Trump refused to lift the blockade on Iranian ports. Trump also criticised Iran’s decision to re-close the strait and renewed threats to target Iranian infrastructure, including power plants and bridges.

Given the high tension in the Strait of Hormuz, we should anticipate a significant spike in market volatility in the coming weeks. The CBOE Volatility Index (VIX), which has been hovering around 19, could easily surge above 30, a level we haven’t seen since the banking turmoil back in 2025. This environment suggests that buying options, rather than outright futures, may be a prudent way to manage risk and define potential losses.

The situation with silver at $80.50 is complex, as the metal is caught between two powerful forces. While geopolitical chaos typically boosts safe-haven assets, the fear of aggressive Federal Reserve rate hikes to combat oil-driven inflation is currently winning, strengthening the dollar and pressuring non-yielding silver. We saw a similar dynamic in 2022 when the Fed’s initial aggressive hikes temporarily capped precious metal gains despite high inflation, so traders should consider buying puts on silver or establishing straddles to play the expected price swings.

The most direct trade is to be long crude oil, as any disruption to the Strait of Hormuz directly chokes global supply. This geopolitical shock has already sent WTI crude prices surging over 25% in the past month, breaking through the $110 per barrel resistance level not seen since late 2024. Buying call options on oil futures or related ETFs provides direct exposure to further escalation with a capped downside if a diplomatic solution suddenly materializes.

Consequently, we must prepare for a downturn in broader equity markets. The combination of soaring energy costs and the prospect of higher interest rates creates a powerful headwind for corporate earnings and stock valuations. Shorting S&P 500 futures or buying put options on major indices is a logical hedge against the stagflationary risk that now looms over the economy.

This environment strongly favors the US dollar, which benefits from both a flight to safety and rising interest rate expectations. After the Federal Reserve brought rates to 6.0% last year, the market had priced in a pause, but that is now being reconsidered. We should expect the Dollar Index (DXY) to push towards the highs we saw in late 2025, making long dollar positions against currencies with more dovish central banks an attractive strategy.

WTI, the US crude oil benchmark, traded near $86.70 during Asian hours on Monday. Prices rose amid renewed tensions between the US and Iran in the Strait of Hormuz.

Iran’s military said the US violated a ceasefire by firing at an Iranian commercial ship, according to Bloomberg. Iran said it would respond to what it called maritime and armed robbery by the US military.

On Sunday, Iran said it would not take part in new peace talks with the US. This came hours after US President Donald Trump said Iranian negotiators would go to Pakistan on Monday for a second round of talks.

Market focus is also on the American Petroleum Institute (API) inventory report due on Tuesday. A larger-than-expected crude draw can suggest stronger demand and support prices, while a bigger build can point to weaker demand or excess supply and pressure prices.

WTI stands for West Texas Intermediate and is one of three major crude types, alongside Brent and Dubai. It is a light, sweet crude sourced in the US and distributed via the Cushing hub.

WTI prices are driven mainly by supply and demand, OPEC decisions, political unrest, and the US Dollar. API reports are released on Tuesdays and EIA data follows a day later, with results within 1% of each other 75% of the time.

With West Texas Intermediate crude holding firm around $86.70, we are watching renewed tensions in the Strait of Hormuz closely. Last week’s incident involving a US naval vessel and an Iranian commercial ship has put the market on edge. This situation introduces a geopolitical risk premium that could easily push prices toward $90 in the short term.

We remember the market volatility during similar standoffs with Iran back in 2025, which created sharp, unpredictable price swings. This is also reminiscent of the supply fears following the events of 2022, which taught us how quickly geopolitical conflict can add $10 or more to a barrel of oil. This history suggests that any escalation in the Strait of Hormuz will have an immediate and significant impact on prices.

Beyond the Middle East, we are seeing signs of solid demand which supports these higher prices. China’s latest Caixin Manufacturing PMI, released in early April 2026, came in at 51.2, signaling continued expansion in the world’s largest oil-importing nation. This underlying economic strength provides a stable floor for crude prices, even without the current geopolitical threats.

However, the strength of the US Dollar is a factor we must watch. After March 2026 inflation data came in hotter than expected, the Dollar Index (DXY) has climbed to a six-month high of 106.50. A stronger dollar traditionally acts as a headwind for oil, making it more expensive for foreign buyers and potentially capping a major price rally.

On the supply side, OPEC+ has maintained its production cuts, but we see US output continuing to climb, recently hitting a record 13.4 million barrels per day according to the latest EIA report. This robust non-OPEC supply is a key reason prices have not broken out above $90 despite the global tensions. This tug-of-war between OPEC discipline and US production will continue to define the upper limits of the market.

This week, we are focused on the American Petroleum Institute (API) report due on Tuesday. Market consensus expects a crude inventory draw of about 2.1 million barrels, which would be bullish. We will be paying close attention to gasoline inventories, as a surprise build could signal weakening consumer demand ahead of the summer driving season.

Given these conflicting signals, we expect implied volatility to rise in the coming weeks. For derivative traders, this makes strategies like buying straddles or strangles attractive to capitalize on a significant price move, regardless of direction. For those with a bullish bias, bull call spreads could offer a defined-risk way to profit from a potential grind higher toward the $90 level.

USD/CAD opened with a modest bearish gap on Monday, then rose back above 1.3700 in the Asian session. The move ended a five-day decline after Friday’s drop to just below the mid-1.3600s, the lowest level since 13 March.

Tension between the US and Iran around the Strait of Hormuz increased risk aversion and supported the US Dollar after Friday’s rebound from a near two-month low. Higher crude oil prices supported the Canadian Dollar and limited further gains in the pair.

Iran said it is closing the Strait of Hormuz again to commercial vessels and that ships approaching it will be targeted. This followed an escalation of the US naval blockade of Iranian ports, which Iran described as a breach of the ceasefire, and it cited this as a reason for cancelling a second round of peace talks.

The developments raised supply concerns and pushed oil prices higher. The US Dollar then eased from a one-week high as expectations of a Federal Reserve rate rise fell, which also restrained USD/CAD.

A correction was issued on 20 April at 02:30 GMT to amend the title to “the Canadian Dollar retreats from over one-month high vs USD”, not “one-month low”.

We remember this time last year when tensions in the Strait of Hormuz created mixed signals for the USD/CAD pair. The market was caught between a flight to the safe-haven US dollar and the strengthening effect of higher oil prices on the Canadian loonie. This dynamic led to choppy trading around the 1.3700 level.

Today, while the geopolitical situation is quieter, the influence of energy prices remains a key factor for traders. With West Texas Intermediate (WTI) crude oil currently trading firmly above $95 a barrel, significantly higher than the average price in early 2025, the Canadian dollar has a strong underlying support. This persistent strength in oil is a constant headwind for anyone expecting a major rally in USD/CAD.

The dominant theme now, however, is the divergence in central bank policy, a factor that was only beginning to emerge last year. The Bank of Canada is now openly discussing rate cuts to support a slowing economy, whereas recent US inflation data, like last month’s 3.1% year-over-year CPI reading, has forced the Federal Reserve to maintain a hawkish stance. This policy gap is the main reason we see the pair trading above 1.3800 today.

For the coming weeks, we believe selling cash-secured puts on USD/CAD could be a viable strategy to take advantage of high volatility. This allows traders to collect premium while setting a target to buy the pair on any potential dips caused by oil price strength. Alternatively, buying call option spreads can offer a cost-effective way to position for further upside driven by central bank policy, while capping potential losses.