Forex News

OCBC strategists Sim Moh Siong and Christopher Wong note that recent equity market turbulence has coincided with further Swiss Franc gains, with EUR/CHF consolidating well below 0.92. The bank warns that persistent CHF appreciation raises the risk of inflation undershooting the Swiss National Bank’s forecasts and could eventually challenge its tolerance for currency strength, potentially prompting a softer policy stance similar to recent Riksbank concerns over SEK.

Franc gains raise policy dilemma

"Last week's equity market turbulence coincided with further gains for the CHF, which is consolidating well below 0.92 in EURCHF."

"Further CHF gains raise the risk of additional downside surprises relative to the SNB’s inflation forecasts, even as last week's CPI was in line with the 0.1% YoY 1Q26 projection."

"This could potentially challenge the SNB’s recent tolerance for currency appreciation, even if the bar for returning to negative rates remains high."

"Dovish Riksbank minutes—highlighting SEK strength as a downside inflation risk—underscore the possibility that the SNB could also soften its stance if persistent CHF appreciation leads to further inflation undershoots."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

HSBC highlights that the Australian Dollar has been the top-performing G10 currency in early 2026, helped by the Reserve Bank of Australia’s February rate hike, a soft Dollar and strong commodity and equity markets. The bank argues that expectations of further rate increases and favourable structural fundamentals should keep the AUD supported, even if external tailwinds fade.

Domestic support underpins Australian Dollar

"The AUD has appreciated by more than 6.0% against the USD so far this year, outperforming other G10 currencies, with the NOK and NZD following closely behind (Bloomberg, 12 February). The AUD’s robust performance is largely attributed to the Reserve Bank of Australia’s (RBA) rate hike on 3 February − the first such move among G10 central banks in 2026."

"Additional momentum has come from external drivers, such as a soft USD and strong commodity and equity markets."

"Looking ahead, expectations of further rate increases, and Australia’s favourable structural fundamentals are likely to underpin continued AUD strength, even if external tailwinds subside."

"Notably, net inflows from portfolio investment and foreign direct investment (FDI) are more than sufficient to offset the current account deficit."

"Collectively, these factors suggest the AUD is well positioned for ongoing outperformance."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

ING’s Warren Patterson and Ewa Manthey say Oil remains supported by a sizeable risk premium as markets await US-Iran and Russia-Ukraine talks in Geneva. They argue that a more de-escalatory tone could see bearish fundamentals reassert and push prices lower. Analysts also highlight OPEC+ supply decisions for April as a key driver for the balance sheet surplus.

Risk premium tied to geopolitics and OPEC+

"While oil prices edged higher on Friday, helped by a lower-than-expected US CPI print, ICE Brent still settled down week-on-week. However, there is still a large risk premium priced into the market given the uncertainty over how the situation between the US and Iran evolves. Comments from President Trump at the end of last week, saying that regime change would be best for Iran, will likely not ease concerns."

"These comments come ahead of further US/Iran talks scheduled in Geneva for Tuesday. Meanwhile, the US will also be leading the Russia/Ukraine talks starting the same day in Geneva. A tone which is more de-escalatory should see the market start pricing in a smaller risk premium, which would allow more bearish oil fundamentals to take centre stage, driving oil prices lower."

"There is growing noise around what OPEC+ may decide for April production levels when they meet on 1 March. The group had suspended supply increases in the first quarter of this year due to seasonality. However, with our balance sheet continuing to show a large surplus in the second quarter, there is no need for the group to bring additional supply onto the market from April."

"Despite this, some OPEC+ members reportedly believe that the market can cope with additional supply increases. In our balance sheet, we are not assuming further increases from the group, so clearly, if further supply is brought onto the market, it will only lead to our surplus expectations growing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• WTI Crude prices remain trapped between $62.00 and $63.00 on Monday.
• Investors are awaiting the outcome of the US-Iran nuclear negotiations.
• Rumours of further output hikes from April are keeping upside attempts limited.,

The US benchmark West Texas Intermediate (WTI) Oil has opened the week in the same weak tone seen at the end of the previous one, although prices remain steady within Friday’s trading ranges. Upside attempts are capped at above $63.00, while support at the $62.00 area is holding bears so far, keeping Crude prices about 4% below last week’s highs in the area of $65.65.

Investors are looking from the sidelines on Monday, with all eyes on the nuclear talks between Washington and Tehran, and trading activity subdued. Markets have been closed in most Asian countries, celebrating the Lunar New Year holidays and a long weekend in the US amid the President’s Day bank holiday.

All options open with Iran

Comments from Iranian authorities confirmed that energy, mining, and aircraft deals are on the table in negotiations aimed at delivering economic benefits for both sides.

US Secretary of State Marco Rubio affirmed this weekend that the US administration is seeking a negotiated outcome, without ruling out military action. Washington has sent a second aircraft carrier to the Middle East, and news reports released over the weekend affirmed that US President Trump pledged support to Israeli’s attacks on Iran’s missile program if negotiations fail.

Meanwhile, rumours that OPEC+ countries might be considering resuming output hikes from April, bracing for an expected increase in global demand for the western summer, are keeping a lid on Oil rallies so far.

• USD/JPY rises while US and Japanese markets remain closed for holidays.
• Weak Japanese Gross Domestic Product figures curb tightening expectations.
• Investors await speeches from Federal Reserve Vice Chair for Supervision.

USD/JPY trades around 153.60 on Monday at the time of writing, up 0.54% on the day, in a low-liquidity environment due to the closure of several Asian markets for the Lunar New Year and US markets for President’s Day. The relative stability of the US Dollar (USD), amid an extended weekend in the United States (US), supports the pair at the start of the week.

The US Dollar Index (DXY), which measures the Greenback’s performance against a basket of six major currencies, stands near 97.00, posting a modest gain. Investors remain cautious ahead of a busy macroeconomic week and are closely watching a speech from Federal Reserve (Fed) Vice Chair for Supervision Michelle Bowman, which could provide fresh clues on the policy outlook.

On the Japanese side, the release of preliminary fourth-quarter Gross Domestic Product (GDP) figures weighed on the Japanese Yen (JPY). The Japanese economy expanded by 0.1% QoQ, below the 0.4% expected by the consensus, while the annualized growth rate comes in at 0.2%, well under the 1.6% forecast. In the previous quarter, Japan recorded a contraction of 0.7%, with a 2.6% annualized decline.

These disappointing figures call into question the scenario of a rate hike as soon as March by the Bank of Japan (BoJ). Speculation was also fueled by a meeting between the Prime Minister and BoJ Governor Kazuo Ueda. The BoJ chief, however, clarified that discussions focused on general economic and financial developments and denied any explicit request regarding interest rates.

In theory, improving economic prospects tend to enhance the appeal of the domestic currency. In this case, the relative weakness of the latest data reduces the likelihood of near-term monetary tightening in Japan, limiting the Japanese Yen’s upside potential and mechanically supporting USD/JPY. The pair’s direction will now depend on signals from major central bank officials and the upcoming macroeconomic releases scheduled for the week.

• The Pound Sterling consolidates around 1.3645 against the US Dollar amid holiday in the US.
• Investors await the UK employment and the inflation data, releasing on Tuesday and Wednesday, respectively.
• Fed’s Bowman is scheduled to speak during North American trading hours on Monday.

The Pound Sterling (GBP) trades calm near 1.3645 against the US Dollar (USD) during the European trading session on Monday. The GBP/USD pair consolidates as investors shift focus to the United Kingdom (UK) labor market data for three months ending December.

Economists expect UK ILO Unemployment Rate to have remained steady at 5.1%, the highest level seen since January 2024. Average Earnings Excluding Bonuses, a key measure of wage growth, is expected to have risen at an annualized basis of 4.2%, slower than the prior reading of 4.5%.

Signs of slowing wage growth and weak employment demand would prompt expectations of interest rate cuts by the Bank of England (BoE) in the near term, at times when policymakers are confident that price pressures would return to the 2% target in the second quarter this year.

For more cues on the current state of the UK inflation, investors will focus on the Consumer Price Index (CPI) data for January, which will be released on Wednesday. The UK headline inflation is seen lower at 3% Year-on-Year (YoY) from 3.4% in December.

Also, the US Dollar (USD) trades stably amid an extended weekend in the United States (US) due to holiday on Monday. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally higher to near 97.00.

In Monday’s session, investors will focus on the speech from Federal Reserve (Fed) Governor Michelle Bowman for fresh cues on the US interest rate outlook.

BNY's EMEA Macro Strategist Geoff Yu expects the Reserve Bank of New Zealand to hold rates at 2.25% (February 18) but acknowledges markets are increasingly pricing in tightening as inflation stays stubborn. The bank argues that confirming a shift in direction could help NZD valuations, especially as the currency is relatively underheld. RBNZ can use stronger crosses to limit tradables inflation pressures.

On-hold RBNZ with hawkish tilt

"The RBNZ is expected to remain on hold at 2.25%, but as markets have steadily pivoted toward pricing in tightening while inflation remains stubborn."

"However, affirming a change in direction could help NZD realize richer valuations, though we expect the path to remain volatile given the nature of New Zealand’s policy cycles."

"Overall, the currency is also relatively underheld and could become an enticing position on the crosses, which the RBNZ can in turn encourage to limit gains in tradables inflation."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)