Japanese Yen Plunges Past 155 Against the Dollar

Oil Prices Strengthen Despite Oversupply Expectations

OPEC+ Poised to Maintain Current Output Policy

Middle East Tensions Drive Risk Premium

Kazakhstan Supply Issues Add Further Support

Recent Production History Shapes Current Strategy

JMMC Monitoring Without Direct Policy Power

Extreme Volatility and Position Sizing Remain the Core Risk

Last week will not be forgotten for some time. Those with exposure to ultra-crowded markets will be acutely aware that trading any financial instrument with a 10-day realised volatility of 186%, as seen in silver, demands both an open mind as to where the collective may push price and a disciplined approach to position sizing. Correctly sizing exposure relative to such extreme levels of volatility is absolutely essential. As the new trading week begins and markets attempt to re-establish fair value and some form of balance, the eruptions seen in several more dysfunctional markets may yet prove to be aftershocks. Carrying risk when one cannot immediately react remains the primary consideration.

Market Flows, Liquidity and Event Risk Drive Price Action

Markets ultimately respond to flows, while liquidity conditions go a long way in explaining the magnitude of price movements. For risk managers, the event risks ahead must also be carefully assessed. Traders are right to ask whether an upcoming event is likely to generate an outsized move or a volatility shock that could materially impact existing exposures. Given the range of possible outcomes, it is also worth questioning whether there is any clear directional skew that provides a genuine trading edge.

US Nonfarm Payrolls the Marquee Scheduled Event Risk This Week

With that framework in mind, it is fitting that the economic calendar is particularly full in the week ahead. The Friday release of US nonfarm payrolls stands out as the marquee risk event. Markets are currently modelling a central estimate of 68,000 net new jobs created in January, with the unemployment rate expected to hold at 4.4%. If realised, this outcome would likely be viewed as supportive for risk assets such as equities, offering enough job creation to limit renewed concerns about the US labour market, but not so strong as to materially reduce expectations for Fed rate cuts in June or July, or the pricing of two 25 basis point cuts by December.

JOLTS and ISM Surveys Still Capable of Moving Risk

Elsewhere in the US, and while likely secondary to nonfarm payrolls, JOLTS job openings and the ISM manufacturing and services surveys still have the capacity to move markets if outcomes prove to be meaningful outliers relative to expectations. RBA Meeting Poses Near Term Risk for AUD Traders Outside the US, the RBA meeting on Tuesday presents a near-term risk for AUD exposures. Interest rate swaps price around 15 basis points of tightening for this meeting, implying a 71% probability of a 25 basis point hike. That said, even if the RBA does raise rates, any AUD reaction may fade quickly unless the accompanying statement is interpreted as sufficiently hawkish to lift expectations for further tightening at future meetings.

ECB and BoE Meetings Likely to Generate Only Short Lived Volatility

The ECB and BoE meetings are not expected to result in changes to policy rates. While there may be some review of ECB guidance and the potential for brief volatility in EUR and GBP pairs, any market reaction should be contained and short-lived.

US Earnings Season Accelerates with Major Tech in Focus

US equity indices will also command attention, with just under 30% of S&P 500 market capitalisation reporting earnings and guidance this week. Alphabet and Amazon are the major heavyweight releases, while trader favourites such as Palantir, AMD, Qualcomm, Iren, Reddit and Barrick are also on the radar.

European Earnings and Index Consolidation Continue

It is a similarly busy earnings week in Europe, with around 30% of Euro Stoxx market capitalisation due to report. European equity indices are consolidating after a modest pullback from recent all-time highs. Conviction around a clear directional move in the DAX or Euro Stoxx 50 remains low, and the indices likely require further work to attract meaningful flows in either direction.

Silver Volatility Highlights Structural Stress in Precious Metals Markets

Attention also naturally remains on silver, gold and the US dollar. Silver, and XAGUSD in particular, has become a case study in trading within a dysfunctional market, with products that typically move in close alignment becoming fractured and misaligned. XAG is trading with a 10-day realised volatility of 186%, equating to daily realised moves of nearly 12%, which is extraordinary. The CME's shift to percentage-based margining and successive increases in margin requirements have clearly contributed, alongside elevated positioning.

China Liquidity and SHFE Selling Triggered the Latest Silver Liquidation

China remains central to the silver narrative and appears to have provided the trigger for Friday's generational moves. Many traders outside China are now familiar with the UBS SDIC silver futures fund (161226), which had become the primary vehicle for Chinese retail investors to gain exposure to silver. When the Shenzhen Stock Exchange halted trading in the fund on Friday, investors were effectively locked in and forced to seek alternative ways to reduce exposure. That exit occurred through SHFE silver futures, with the resulting selling pressure rippling into COMEX futures and triggering a significant liquidation of positions.

Is Silver Near a Bottom or Are Further Aftershocks Ahead

Whether silver has reached a durable bottom is difficult to say. Another round of selling cannot be ruled out as Shanghai futures markets reopen, particularly given the residual stress across leveraged positions and market structure.

Good luck to all.

Source: Pepperstone

Southeast Asia's export-driven economies saw their trade surpluses with the United States climb sharply in 2025, a surprising outcome that defied the Trump administration's efforts to rebalance trade through new tariffs.

Official data shows that Malaysia, Thailand, and Vietnam—three of the region's primary manufacturing and export centers—posted significant gains. Their trade surpluses with the U.S. expanded by 45%, 44%, and 28%, respectively, providing a major boost to their overall trade performance.

A Surge in Exports to the U.S.

According to Malaysia's Ministry of Investment, Trade and Industry, exports to the U.S. "remained resilient," with value expanding by 17.2%. The ministry credited this growth to "robust demand for [electronics and electric] products, machinery, equipment and parts, processed food as well as manufactures of metal."

The numbers reveal a clear trend across the region:

• Malaysia: The trade surplus with the U.S. jumped to $23.2 billion in 2025 from $15.9 billion the previous year, according to CEIC Data. This figure is more than ten times larger than it was a decade ago.

• Vietnam: The country recorded the largest surplus with the U.S. among Southeast Asian nations, reaching a record $133.8 billion in 2025, a 28% year-on-year increase.

• Thailand: The trade surplus climbed to $51.3 billion in 2025, up from $35.6 billion a year earlier, driven largely by electronics exports.

Figure 1: Trade surpluses with the U.S. for Malaysia, Thailand, and Vietnam showed a steep upward trajectory through 2025, with Vietnam leading the expansion.

Navigating Trump's Tariff Strategy

The export boom occurred despite President Trump's announcement of "reciprocal" tariffs in April, which were designed to shrink America's trade deficit. Some Southeast Asian countries were initially hit with duties exceeding 40% before the tariffs took effect in August after bilateral negotiations led to reductions.

Businesses responded by front-loading shipments, accelerating exports to get ahead of the deadlines. Meanwhile, governments continued to negotiate with Washington to soften the blow.

In October, the U.S. lowered its tariff on most Malaysian goods from 25% to 19%. A list of 1,711 items, mainly in semiconductors, aerospace, and pharmaceuticals, now face zero tariffs. In exchange, Malaysia promised not to impose export bans or quotas on rare earth elements and critical minerals destined for the U.S.

"ASEAN will seek to secure preferential rates to limit the downside impact," noted DBS Bank senior economist Chua Han Teng in a report. "Notably, Malaysia is actively negotiating with the U.S. to maintain exemptions for its semiconductor exports from fresh tariffs."

The China Connection: Widening Deficits

While trade surpluses with the U.S. grew, the three nations' trade deficits with China widened considerably. This suggests an influx of goods from Asia's largest economy, which is also contending with high U.S. tariffs.

In 2025, Malaysia's trade deficit with China widened by 62% to $38.4 billion. Thailand's deficit grew 50% to $67.8 billion, and Vietnam's expanded by 40% to $115 billion.

"China exports cheap goods, and now with EV imports, [Malaysia's] trade deficit with China in future could be wider," commented Vaseehar Hassan Abdul Razack, executive vice chairman at KSI Strategic Institute for Asia Pacific.

Figure 2: While exports to the U.S. boomed, trade deficits with China deepened significantly for all three nations, particularly Vietnam.

Some analysts believe Chinese companies may be routing goods through neighboring countries like Vietnam before shipping them to the U.S. to bypass American tariffs. Jaideep Singh, an analyst at the Institute of Strategic & International Studies Malaysia, noted that Malaysia's share of domestic exports fell to 77%, its lowest level in at least seven years.

"This means that while most of Malaysia's exports are still manufactured and processed domestically, re-exports of goods produced elsewhere are rising," he said.

An Uncertain Outlook for 2026

Uncertainty over U.S. trade policy is set to continue into 2026. This month, President Trump announced an increase in tariffs on South Korean automobiles from 15% to 25%. He also threatened, but later retracted, a 10% tariff on European nations that opposed his efforts to acquire Greenland.

Analysts and governments in Southeast Asia warn that export growth could slow this year as the full-year impact of the tariffs takes hold.

Thailand's Commerce Ministry stated on January 23 that its 2026 export outlook is "expected to moderate, reflecting the clearer impact of U.S. tariff measures."

The DBS report echoed this sentiment, noting that Malaysia's goods exports are "likely to be negatively impacted by external headwinds from US tariffs." Chua also pointed out that the tariffs "will pose a major challenge to Vietnam's export-oriented manufacturing sector and its economy in 2026."

Archanun Kohpaiboon, a visiting senior fellow at the ISEAS-Yusof Ishak Institute, believes last year's trend is unlikely to continue. "The [U.S.] trade deal with many countries would be in effect," he said. "Hence, these economies tend to import more from the U.S. and the trade surplus would reduce. This would, of course, pose risk to the ASEAN economy in 2026."

Key Points:

WTI Surges on Iran Tensions — But Oversupply Threatens the Rally

Nearby WTI futures settled at $65.21 last week, up $4.14 or 6.78%—marking the sixth straight weekly gain. Traders are feeding off escalating U.S.-Iran tensions and tighter U.S. inventories, pushing both WTI and Brent to multi-month highs. But analyst consensus is screaming oversupply.

War Premium Is Real — Persian Gulf Risk Is Pricing In

The biggest catalyst? Geopolitics. President Trump warned Tehran it faces military action unless it accepts a new nuclear deal. The U.S. deployed additional naval assets to the Persian Gulf, and Iran just announced live-fire military drills in the Strait of Hormuz next week. Roughly 20% of global seaborne oil flows through that chokepoint.

Traders are pricing in disruption risk even without actual barrel losses. Stack that with drone strikes on Russian tankers in the Black Sea and tightening U.S. sanctions on Russian fuel exports to Asia, and you've got a risk premium that's hard to ignore.

U.S. Inventories Are Tightening — For Now

The latest EIA report showed a 2.3-million-barrel draw in commercial crude stocks. At 423.8 million barrels, U.S. inventories are sitting about 3% below the five-year seasonal average. That shift from earlier January builds is giving buyers confidence that near-term demand is absorbing supply.

But the Oversupply Math Isn't Going Away

Here's where bulls need to be careful. A recent Reuters poll of 31 economists and analysts forecasts Brent averaging just $62.02 per barrel in 2026, with WTI projected at $58.72—both well below current levels. Global oil markets face a structural surplus ranging from 0.75 to 3.5 million barrels per day this year.

OPEC+ paused production hikes for Q1 2026 after raising output targets by 2.9 million barrels daily last year. Analysts expect the group will watch consumption patterns closely before making any big moves.

What Traders Should Watch Next Week

Geopolitical risk premiums could extend if Iranian tensions escalate or we see actual supply disruptions—potentially pushing prices into the low-to-mid $70s. On the flip side, any clear de-escalation signals or a surprisingly bearish inventory report could trigger profit-taking back toward consensus forecast levels near $60. For now, the war premium is underpinning the rally, but the fundamental backdrop of excess supply capacity says don't get too comfortable chasing this move.

Weekly Light Crude Oil Futures

Technically, both the weekly swing chart and the 52-week moving average are signaling an uptrend, but the market is facing headwinds inside a key retracement zone. Traders will also be monitoring a long-term pivot for direction.

The breakout over the 52-week moving average at $60.64 triggered the huge rally. This is understandable since it had been capping gains since late September. This is the support.

The next surge was fueled by a recovery of the long-term pivot at $63.62. This indicator will determine the strength of the trend.

The intermediate range is $75.12 to $54.70. Its retracement zone at $64.91 to $67.31 is potential resistance. Buyers tested this zone last week before stopping at $66.48.

For longer-term traders, the 52-week moving average has to continue to hold as support. Short-term traders need to see a support base built over the pivot at $63.62. Enough momentum then has to build to trigger a breakout over the top of the retracement zone at $67.32.

If enough buyers don't show up to overcome the retracement zone then we're likely to become rangebound with the 52-week moving average the floor and the zone the ceiling.

Source: FX Empire

Trump Signals Willingness to Engage Havana

Negotiations Overshadowed by New Economic Measures

Cuba Condemns What It Calls Aggressive Policy

Energy Dependence and the Venezuela Factor

Fuel Shortages and Domestic Impact in Cuba

A Narrow Diplomatic Window

Russia’s Strategic Rationale Behind Reviving RIC

India’s Reluctance Rooted in Structural Mistrust

The Pakistan Factor and Compounding Security Concerns

Avoiding the Perception of a Western Counterweight

Economic Corridors and Overlapping Strategic Interests

Energy Trade, Sanctions Pressure, and US Leverage

Payment Systems and Divergent Monetary Agendas