The dominant theme this month has been geopolitical shock from the Middle East conflict (Iran-related tensions and Hormuz Strait risks). This triggered a massive oil spike, risk-off flows, a firmer USD, and mixed safe-haven behavior (JPY underperformed as a haven, gold weakened on stronger dollar + inflation fears). The table below shows month-to-date cross-asset movers. Oil-supply-driven fears pushed Brent crude near $120/bbl before pulling back to shy of $100/bbl; we had no

RBA: Analysts expect a 25bp hike to 4.10% (from 3.85%), with ~65–80% market probability, driven by persistent inflation and energy price surges. 23/30 economists polled by Reuters anticipate the move, though some see a hold if data softens. Press conference with Governor Bullock key for future signals BoJ: Expected hold at 0.75%, but ~60% chance of signaling a hike by June (to 1.00% end-2026). Analysts note ongoing normalization amid wage growth, though energy shocks could de

The USD/JPY is flashing bullish seasonal signals from here to April, both present among the highest win rate ratios in the calendar year. In fact, the January to April period is the strongest seasonal window for the dollar to rise against the yen, looking back at the past 20 years. The upside is supported by fiscal year-end demand. The pair has been in a clear ascending channel since mid-February lows (~154–155 zone), printing higher highs and higher lows. Momentum remains up

As of March 11, 2026, the national average price for regular unleaded gasoline stands at $3.578 per gallon — the highest level since mid-2024. That’s a blistering +21.8% month-to-date surge from ~$2.937 just one month ago (and roughly +50–55 cents in the past 10 days alone). Weekly jumps of 27–49 cents have been the largest seen since the early days of the Russia-Ukraine war or Hurricane Katrina. February CPI (released this week) looked tame: headline +2.4% y/y, core +2.5% y/

Our own momentum factor is holding gains in the month of March. The basket is a diversified carry expression as it holds long aussie, kiwi and franc. On the short side of the equation, we have the dollar, the yen, and the euro. Momentum is doing justice to its past record of outperformance to other strategies, despite the spike in risk premiums, which I would have expected to hurt the kiwi and aussie longs. Shorting the yen and the euro and long Aussie have been the largest c

This week's dollar rally is taking most G10 currencies down as volatility spikes push flows into safe-haven assets. It's interesting to see both CHF and JPY, textbook low-risk currencies, fall to the dollar despite the escalation of tensions in the Middle East. Past vol spike episodes have seen both the franc and the yen outperform the dollar. Other assets like gold are barely working as the spot market posts losses and Treasuries remain offered this week. So where is this re

Rate differentials still matter (positive slope), but geopolitics, oil, and risk sentiment are dominating right now—pushing the correlation down from historical norms. In calmer times (no wars or shocks). Currently, the slope in the relationship of G10FX pairs vs policy rates stands at around 0.44, in less geopolitically turbulent times, we could see this strengthen up to 0.55.

Here's a table summarizing the approximate 120-day beta (sensitivity) of major G10 currencies to Brent crude oil prices, based on daily close regression analysis over the last 4 months (roughly Nov 2025 to early March 2026). Beta here measures how much the currency pair (or index) moves for a 1% change in Brent crude—positive beta means the currency tends to strengthen when oil rises (commodity-linked positive exposure); negative means it weakens or inversely correlates (e.g.

Japan has one of the highest exposures to crude oil price fluctuations among major economies, primarily because it is almost entirely dependent on imports for its oil needs and relies heavily on oil in its energy mix. This vulnerability is amplified by heavy concentration in Middle East supplies, making it particularly sensitive to geopolitical disruptions (like the current US-Israeli strikes on Iran and risks around the Strait of Hormuz). The most recent metrics show that oi

An FX carry trade is when you borrow (funding) a low-yielding currency to buy a high-interest currency (target) to exploit the carry or rate differential in the exchange rate. This trade works as long as there is low volatility and the spot does not move against you dramatically. Volatility spikes can cause global portfolios to trim risk and move money back into funding currencies. That is why carry trades are mostly considered a "risk on" strategy. The MXN/JPY carry trade (l

Global reserve trends showed gradual USD share erosion (e.g., IMF data on dollar dipping in reserves), with some diversification into gold, euro, or yen amid geopolitical/trade noise. The USD posted losses against all major currencies in 2025; the chart below shows the EUR/USD rising (dollar weakness) from near parity to breaching 1.20 in 2026. A Reuters note reported the ECB reducing its USD exposure in early 2025. The piece reports that the European Central Bank sold a smal

The 2s10s curve un-inverted around late August 2024 and has since steepened significantly—reaching 74bps in spots by early 2026-reflecting Fed easing, softer short rates, and markets pricing in moderate growth with some term premium returning on the long end. However, in very recent weeks, there's been some bull-flattening chatter: longer-dated yields (like the 10-year) have fallen faster than shorter ones amid safe-haven flows, PPI surprises, geopolitical risks (e.g., Iran/C

The traditional positive correlation (dollar up when VIX up) that held over much of the prior 5 years weakened or flipped in parts of 2025 and into early 2026. Goldman Sachs noted earlier that the dollar's appeal as a haven diminished, with correlations turning opposite (dollar weakening amid rising volatility) for much of 2025, signaling reduced safe-haven demand. More recently (late 2025 into 2026), correlations have trended toward more "normal" behavior again — meaning the

Market sources pointed out that the broad USD position remains net long as of Monday's session; the proprietary indicator shows hedge-funds and real money leading the dollar long. However, hedge funds sold dollars on Friday's session as the U.S. Supreme Court delivered its ruling on President Trump's tariffs. Additionally, sources saw the Australian dollar as the most bought currency at the time of the headline release on Friday. The trading volumes were in line with prior tr

**As seen in Online Tools>Inflation Monitor, subscribe at cablefxm.co.uk In the U.S., headline CPI slowed to 2.4% y/y in January 2026 (down from 2.7% in December 2025), the lowest since mid-2025. Core CPI eased to around 2.5%. This reflects base effects, softer energy, and some shelter moderation, supporting expectations of gradual Fed policy normalization. Across the pond, HICP dropped to 1.7% y/y in January 2026 (from 2.0% in December 2025), the lowest in over a year, drive

Year-to-date, G10 currencies have mostly strengthened against the USD, with the greenback emerging as the weakest performer amid Fed easing expectations, US policy uncertainties (e.g., tariffs, fiscal risks), and global rotation into pro-cyclical assets. The CAD has been a close laggard due to USMCA renegotiation jitters. High-beta currencies like NZD, SEK, and AUD have led gains, supported by resilient growth, carry appeal, and risk-on sentiment.

Speculation has built around an earlier/next BoJ hike, potentially as soon as April 2026. Comments from former BoJ board member Seiji Adachi highlighting April as likely timing. This narrowed the US-Japan yield spread appeal and supported yen demand, pressuring USD/JPY lower (e.g., sharp drop after Bloomberg report on Feb 17). Another factor supporting the strength of the yen has been the recent unwinding of carry positions, which has had a notable impact on currency dynamics

The correlation between USDJPY and the Nikkei 225 remains strongly positive overall—when the dollar strengthens against the yen (USDJPY up, yen weaker), the Nikkei tends to rise too. This has been the case since around two thousand two, driven by export boosts for Japanese companies and carry trade flows. In recent months, the relationship holds firm. From late 2025 data, the twenty-day rolling correlation was around 0.81, and the past-month figure sat at about 0.79—still hig

**As seen in Online Tools > Risk Map, get full access at cablefxm.co.uk Risks ahead: U.S. Non Farm Payrolls U.S. CPI U.S. jobless claims Switzerland CPI Euro output

How does Lagarde describe the recent moves seen in the FX market and is the ECB worried about recent currency moves? We continue to think the ECB will keep rates at current levels this year, and see the risk picture gradually moving towards rate hikes, though as the start of the year has reminded us, downside risks have not disappeared either. We do not expect actual hikes until the second half of 2027, though. Current market pricing suggests a small remaining bias towards a