DBS Group Research expects the Monetary Authority of Singapore (MAS) to make a small upward adjustment to the slope of the Singapore dollar nominal effective exchange rate (SGD NEER) policy band at its 14 April meeting. This would reverse the slope reduction implemented last year.

The expectation is based on Brent crude trading near USD100 per barrel and exports holding up, which may increase attention on imported inflation. MAS is also expected to update its inflation projections.

Expected Inflation Forecast Revisions

Core inflation is forecast to be raised to 1.5–2.5%, from 1–2%. The CPI-All Items forecast is also expected to be increased to reflect higher energy prices.

MAS is due to release 1Q26 advance GDP estimates at the same time as the policy decision. GDP is expected at 5.4% year on year and -1.1% quarter on quarter (seasonally adjusted), compared with 6.3% year on year and 2.1% quarter on quarter (seasonally adjusted) in 4Q25.

We anticipate the Monetary Authority of Singapore will tighten policy on April 14 by slightly increasing the slope of the SGD NEER policy band. This move would reverse the easing stance we saw last year in 2025. The aim is to allow for a faster, but still modest, appreciation of the Singapore dollar to combat rising prices.

The policy priority has shifted to tackling imported inflation, especially with Brent crude prices holding firm around the USD100 per barrel level throughout the quarter. Recent data supports this move, as Singapore’s non-oil domestic exports for March 2026 grew by a resilient 4.5%, showing the economy can withstand a stronger currency. This gives the central bank cover to focus on controlling inflation.

Trading Implications For Sgd

For derivative traders, this outlook suggests positioning for a stronger Singapore dollar against currencies like the US dollar. One could consider buying SGD call options, as a hawkish statement could cause the currency to strengthen. Historically, after the MAS tightened policy unexpectedly in 2022, the SGD appreciated significantly against the USD over the next three months.

The upcoming 1Q26 advance GDP estimate, which we expect to be a strong 5.4% year-on-year, further justifies a tightening move. Even though this is a moderation from late 2025, it confirms the economy is on solid footing. Therefore, using forward contracts to establish long SGD positions ahead of the meeting could be beneficial.

This policy shift will also likely put upward pressure on domestic interest rates. Traders should anticipate a rise in the Singapore Overnight Rate Average (SORA). Positioning for this through interest rate swaps could prove profitable, especially since March’s core inflation figure of 2.1% already justifies higher rates.

Implied volatility on SGD options will likely remain high leading into the announcement. The key will be the MAS raising its official inflation forecasts as we expect. An upgraded core inflation forecast to a range of 1.5-2.5% would confirm this hawkish pivot and likely sustain the Singapore dollar’s strength in the weeks ahead.

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USD/JPY traded around 159.30 on Friday, staying below 160.00 and within a one-month range. The Yen stayed weak as Middle East tensions raised concerns about Oil supply disruptions, even as the US Dollar softened.

Markets stayed cautious near 160.00, a level that previously led to intervention by Japanese authorities. Comments from Japanese officials kept focus on the risk of action to limit sharp moves.

Geopolitical Risk And Intervention Watch

Attention remained on the US-Iran ceasefire and talks due in Pakistan over the weekend. Iran’s Parliament Speaker Mohammad Bagher Ghalibaf said a ceasefire in Lebanon and the release of blocked Iranian assets must come before negotiations.

US President Donald Trump told The New York Post that US warships are being reloaded with “the best ammunition” to resume strikes on Iran if talks fail. This helped curb further falls in the Dollar after it dropped to one-month lows.

The US Dollar Index stood near 98.67 after an intraday low of about 98.50, and was on track for its biggest decline since January. In March, US headline CPI rose 0.9% MoM from 0.3%, and 3.3% YoY from 2.4%, matching expectations.

Bank of Japan Deputy Governor Ryozo Himino said he does not see stagflation, but noted challenges if conflict slows growth while lifting inflation.

Rate Differentials Drive The Trend

We recall looking at this situation back in 2025, when the market was nervously hovering below the 160 level in USD/JPY. The focus then was on Middle East tensions and the constant threat of intervention from Japanese authorities. However, the underlying driver was always the massive gap between US and Japanese interest rates.

That fundamental interest rate differential has since become even more pronounced, which is why we are now trading well above those 2025 levels. As of April 2026, the Federal Reserve’s key rate remains firm at 5.50% while the Bank of Japan struggles to move its policy rate beyond 0.1%. This reality continues to fuel the yen carry trade, making it profitable to borrow yen and invest in higher-yielding US dollars.

With USD/JPY now testing the 163.00 handle, the threat of intervention is more intense than ever, creating significant uncertainty. We saw in both 2024 and 2025 that direct intervention by the Ministry of Finance only provided temporary relief for the yen before the pair resumed its climb. This history suggests that any intervention-driven dips could be viewed as buying opportunities by long-term players.

For derivative traders, this means volatility should be the primary focus in the coming weeks. Buying long-dated call options on USD/JPY allows for participation in further upside while capping downside risk if authorities do step in forcefully. Given the persistent upward trend, paying a higher premium for these options could be a prudent way to stay in the game.

Conversely, those who believe an intervention is imminent and will be effective can consider buying short-term put options. This strategy offers a hedge against a sudden, sharp drop in the currency pair. A break below the 160 mark would be a key psychological victory for Japanese officials and could trigger a rapid move lower.

Ultimately, the steady income from the carry trade provides a powerful tailwind for the pair, which is reflected in the forward currency markets. This encourages holding long positions, as traders are effectively paid to wait for the currency to appreciate further. This underlying flow makes fighting the upward trend a difficult and costly proposition.

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The United States monthly budget statement recorded a deficit of $-164B in March. This was below expectations of $-156.75B.

The larger-than-expected budget deficit suggests increased government borrowing is on the horizon. This will likely mean a greater supply of Treasury bonds, which typically pushes their prices down and their yields up. We must position for a potential rise in interest rates across the board.

Rising Deficit Reinforces Higher Yield Trend

This fiscal data aligns with a broader trend we have been tracking. The U.S. national debt recently surpassed $36 trillion, and the 10-year Treasury yield has already climbed from 4.2% to 4.45% over the past month. This wider deficit only adds fuel to the fire, reinforcing the case for higher borrowing costs.

For derivatives traders, this points toward bearish strategies on fixed-income instruments. We are considering short positions in Treasury futures contracts, such as the 10-Year T-Note (ZN), or buying put options on bond-focused ETFs. The fundamental pressure of increased government debt supply supports this view for the next several weeks.

This environment of rising yields could also create headwinds for the stock market, as higher rates make equities less attractive relative to bonds. Protective put options on major indices like the S&P 500 or the Nasdaq 100 may be prudent to hedge against a potential downturn. Volatility, as measured by the VIX, could also see a spike, presenting opportunities in VIX futures or options.

Looking back to 2025, we saw how sticky inflation, partly fueled by government spending, forced the Federal Reserve to maintain a hawkish stance longer than many anticipated. The market learned then that fiscal policy has a direct impact on monetary policy. This March deficit figure suggests that inflationary pressures may persist, limiting the Fed’s ability to ease rates.

Dollar Strength In A Higher Yield Regime

In the currency markets, a higher yield environment could strengthen the U.S. Dollar by attracting foreign investment. The U.S. Dollar Index (DXY) has already shown strength, trading around 105.50. We view call options on the dollar against currencies with more dovish central banks as an increasingly attractive trade.

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Baker Hughes reported that the US oil rig count rose to 411. The previous count was 409.

This is an increase of 2 rigs. The figures relate to oil rigs in the United States.

Us Oil Rig Count Edges Higher

The U.S. oil rig count has ticked up to 411, a small increase but one that continues a subtle upward trend. This suggests producers are gaining confidence in current price levels to slowly expand operations. This slight rise points toward more supply coming online later this year.

This data reinforces the latest EIA outlook from March 2026, which forecast a gradual rise in U.S. crude output toward 13.4 million barrels per day in the second half of the year. The actual rig additions give credibility to these forecasts, which we should now price in with more certainty. This steady, non-dramatic increase in supply is a key factor for contracts dated for the third and fourth quarters.

We remember how rig counts remained stubbornly flat for much of 2025, as drillers prioritized capital discipline over production growth. After a year of focusing on returning cash to shareholders, this slow ramp-up indicates a potential shift in strategy. It appears the incentive to drill is quietly returning to the Permian Basin.

For the coming weeks, we should consider strategies that account for this potential cap on oil prices. Selling out-of-the-money call options or establishing bear call spreads on WTI futures for September 2026 delivery could be prudent. This allows us to benefit if prices move sideways or drift lower on the back of this confirmed supply growth.

Implications For Prices And Volatility

The slow, predictable nature of this increase may also keep a lid on market volatility. This environment could favor strategies like selling strangles, which profit from a lack of large price swings. However, this view assumes no unexpected geopolitical events from OPEC+ or other global hotspots disrupt the current balance.

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US shares fell on Friday, with the Dow down about 300 points (0.6%) and slipping back below 48,000 after two sessions of gains. The S&P 500 lost 0.15%, while the Nasdaq Composite rose 0.2% as mega-cap tech limited wider losses.

A two-week US-Iran ceasefire announced on Tuesday showed strain, with Donald Trump criticising Iran’s handling of the Strait of Hormuz and noting only a handful of tankers had passed. Trump also warned Iran against charging fees, while Israel and Iran-backed Hezbollah exchanged strikes in Lebanon and Iran’s parliamentary speaker cited ongoing attacks on Lebanon as a breach.

Markets React To Geopolitical And Inflation Signals

Benjamin Netanyahu said Israel had agreed to negotiate with Lebanon, and Vice President JD Vance travelled to Islamabad on Friday for weekend talks. Earlier in the week, the Dow posted its best single-day gain since April 2025 on Wednesday.

US CPI rose 0.9% month-on-month in March and 3.3% year-on-year, the highest since May 2024, matching forecasts. Energy costs jumped 10.9%, with petrol up over 21%, while core CPI rose 0.2% month-on-month and 2.6% year-on-year, below expectations; the Fed funds rate is 3.5%–3.75% and the March dot plot showed one cut this year.

The University of Michigan’s preliminary April sentiment index fell to 47.6 from 53.3, versus 52 expected, with 98% of responses gathered before the ceasefire news. One-year inflation expectations rose to 4.8% from 3.8%, and long-run expectations edged up to 3.4%.

WTI traded near $99 a barrel and Brent above $96, while petrol was about $4.30 per gallon. Airline shares gave back earlier gains linked to hopes of lower fuel costs.

The market is clearly trading on headlines, so we should expect implied volatility to remain elevated in the coming weeks. We saw the VIX, a key measure of market fear, jump nearly 15% on Friday, and this kind of instability makes strategies like straddles or strangles on the SPY ETF attractive. This environment is reminiscent of early 2022, when geopolitical events created sharp, unpredictable swings in both directions.

Oil Driven Volatility And Trading Opportunities

Oil is the most important factor right now, with WTI crude holding near $99 a barrel. Any sign that the weekend negotiations are failing should be seen as a signal to consider call options on energy ETFs like XLE, as prices could quickly challenge the $100 mark. Conversely, a breakthrough that reopens the Strait of Hormuz, which handles about 21% of global petroleum liquids consumption, would make put options on oil a powerful trade.

The tame core CPI reading gives the Federal Reserve some breathing room, but we shouldn’t get complacent about interest rates. The market is pricing Fed Funds futures with a lower probability of a rate cut than it was just a week ago, and that trend will continue if energy prices don’t fall soon. We need to watch the Fed’s language closely; if they start expressing concern that high energy costs are bleeding into the core inflation number, rate cut hopes for this year could evaporate entirely.

With consumer sentiment hitting a record low, the pain at the gas pump is clearly taking a toll. We saw gasoline demand fall by over 5% in the U.S. last month, a clear sign consumers are cutting back where they can. This suggests a pairs trade could be effective: buying put options on consumer discretionary stocks (XLY) while buying call options on consumer staples (XLP), betting that households will prioritize necessities over wants.

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GBP/USD rose on Friday as risk appetite improved after US-Iran talks began in Pakistan. The pair traded at 1.3461, up 0.20%.

US inflation increased in March in line with expectations. Markets treated the rise as a one-off move.

Risk Appetite And Sterling Support

Optimism about Middle East peace negotiations supported demand for risk assets. This helped lift the pound against the US dollar.

We recall a similar period in 2025 when risk appetite improved on the back of US-Iran talks, sending GBP/USD higher. Today, however, that optimism has faded as negotiations have stalled over the past few months. This reversal in sentiment suggests the geopolitical support for sterling seen last year is no longer present.

Last year’s view that rising US inflation was a one-time event has been proven wrong. The latest US CPI data for March 2026, released this week, showed a headline inflation rate of 3.1%, surprising markets that had only priced in a 2.8% rise. This persistent inflation is strengthening the US dollar as markets expect the Federal Reserve to remain hawkish.

In contrast, the UK’s inflation has cooled more effectively, with the most recent figures showing a drop to 2.3%, much closer to the Bank of England’s target. This divergence in inflation paths suggests the Bank of England may be in a position to cut interest rates sooner than its US counterpart. This policy difference is creating significant downward pressure on the GBP/USD pair.

Positioning And Volatility Signals

Given this environment, traders should consider positioning for a weaker sterling against the dollar. One-month implied volatility for GBP/USD has already climbed from around 7% to 9.5% in recent weeks, reflecting rising uncertainty. Buying put options or establishing put spreads could be an effective way to capitalize on expected downside while managing the rising cost of premiums.

Recent CME data confirms this shift, showing speculative net short positions on the pound have grown to their highest level since the fourth quarter of 2025. The market is increasingly pricing in a scenario where the Fed holds rates firm while the BoE eases policy. This fundamental backdrop makes a test of lower support levels far more likely than a rally back toward the 1.3400 handle seen this time last year.

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GBP/USD rose on Friday as risk appetite improved ahead of planned US-Iran talks in Pakistan. The pair traded at 1.3461, up 0.20%.

US CPI rose 3.3% year on year in March, in line with forecasts and up from 2.4% in February. Core inflation rose from 2.5% to 2.6%, below the 2.7% estimate.

Dollar Reaction And Sentiment

After the data, the US Dollar Index fell 0.13% to 98.66, near four-week lows. The University of Michigan sentiment index dropped to 47.6 in April from 53.3, versus a 52 forecast.

The survey cited higher energy costs, with petrol at $4 per gallon. One-year inflation expectations rose from 3.8% to 4.8%, and five-year expectations rose from 3.2% to 3.4%.

UK rate pricing showed 2026 tightening expectations rising from 32 to 42 basis points, based on LSEG data. The coming week includes UK Retail Sales and GDP, plus US housing data, PPI, jobs figures, and central bank speakers.

On the chart, GBP/USD stayed above the 50-, 100- and 200-day SMAs near 1.3435. Support is also noted near 1.3035, while resistance is linked to a descending line from about 1.3869.

Given the improved risk appetite stemming from the US-Iran talks, we should position for further GBP/USD strength. The market is clearly looking past the high headline inflation in the US, focusing instead on the softer core reading as a sign that price pressures are contained to energy. This suggests that positive news from the peace negotiations in Pakistan could push the pair higher in the near term.

Geopolitical Risk And Hedging

We see the primary driver as geopolitical de-escalation, which could cause a significant drop in energy prices. Recent trading in WTI crude futures supports this, with the June contract already pulling back from over $110 to near $102 a barrel in anticipation of a potential ceasefire agreement. Looking back at how oil prices reacted to the 2015 Iran nuclear framework, we could see a further 10-15% drop in crude if a deal is formalized, which would strengthen the case for a lower US dollar.

However, the risk of the talks collapsing is significant and must be hedged. US consumer sentiment is at a record low precisely because of high gas prices, so a negative outcome would likely cause a sharp risk-off move, strengthening the dollar. We should consider buying cheap, out-of-the-money GBP/USD put options with a strike below the key 1.3435 support level to protect against a sudden reversal.

The growing policy divergence between the Bank of England and the Federal Reserve provides a strong underlying support for sterling. As we saw during late 2025, the BoE has shown a tendency to be more hawkish than markets expect, and with expectations for 42 basis points of hikes growing, this trend continues. This fundamental backdrop makes being long GBP a more comfortable position, even if geopolitical optimism fades slightly.

Considering the binary nature of the geopolitical situation, we should keep a close eye on implied volatility in the options market. The Cboe FX Volatility Index for the pound has likely risen, reflecting the uncertainty around the talks. If we gain strong conviction that a deal is imminent, selling some of this elevated volatility through option strategies could be profitable as certainty returns to the market.

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USD/CAD reversed earlier losses on Friday, with market caution driven by uncertainty over planned US-Iran talks. The pair traded near 1.3833 and was set for its first weekly fall after two weeks of gains.

The US Dollar Index was around 98.70 and was heading for its biggest drop since January. A US-Iran ceasefire improved risk mood, but concerns about its durability kept trading volatile.

Canadian Labor Market Signals

Canada’s jobs data showed net employment rose by 14.1K in March after a fall of 83.9K the prior month, versus a 15K forecast. The unemployment rate held at 6.7%, below the 6.8% expectation.

The Bank of Canada kept rates at 2.25% at its last meeting. Policymakers are monitoring the effects of an oil-driven inflation shock.

In the US, CPI rose 0.9% month-on-month in March from 0.3% previously. Annual CPI rose to 3.3% from 2.4%, matching expectations, supporting the view that the Federal Reserve may stay on hold.

US-Iran talks are due this weekend in Pakistan. Iran’s Parliament Speaker Mohammad Bagher Ghalibaf linked talks to a Lebanon ceasefire and the release of blocked Iranian assets, while Donald Trump said US warships are being reloaded to resume strikes if talks fail.

Policy Divergence And Market Volatility

Last year, around this time in 2025, we saw geopolitics driving USD/CAD volatility as markets watched the US-Iran negotiations. Today, on April 10, 2026, the focus has shifted entirely to the diverging paths of the Bank of Canada and the Federal Reserve. This creates a different kind of uncertainty, one rooted in economic data rather than military posturing.

The latest US Consumer Price Index data for March 2026 came in hotter than expected at 3.5% year-over-year, reinforcing the idea that the Fed may delay any potential rate cuts. With the labor market also adding a robust 275,000 jobs last month, traders should consider using options to hedge against the risk of the Fed maintaining its hawkish stance longer than anticipated. This environment suggests buying call options on the USD or selling cash-secured puts on USD/CAD to capitalize on potential strength.

In Canada, the picture is weakening, recalling the caution seen from the BoC back in 2025 when the unemployment rate was a similar 6.7%. The latest jobs report for March 2026 showed a net loss of 2,200 positions, pushing the unemployment rate up to 6.1%, its highest level in over two years. This weak data increases the probability of the Bank of Canada cutting rates before the Fed, a divergence that could put sustained upward pressure on the USD/CAD pair.

Looking back at the headline-driven volatility of 2025, today’s price action is more tied to economic releases and central bank commentary. Implied volatility for USD/CAD options has risen to 7.2% for 3-month contracts, up from 6.5% a month ago, showing the market is already pricing in more significant swings around policy meetings. Traders could look at long volatility strategies, like straddles, ahead of upcoming rate decisions to profit from a large move regardless of the direction.

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AUD/USD was steady on Friday after four days of gains, trading near 0.7076 and down 0.10% on the day. It was still set to finish the week up over 2.50%.

US March CPI rose 0.9%, up from 0.3% in the prior month, while annual inflation increased to 3.3% year on year from 2.4% in February. Higher energy prices were linked to Middle East tensions.

Dollar Focus Shifts To Geopolitical Risks

The US Dollar did not gain clear support from the data, with focus on risks around the Strait of Hormuz. US and Iran officials were expected to start peace talks in Pakistan this weekend.

On the four-hour chart, AUD/USD traded around 0.7078, above the 20-period and 100-period SMAs at 0.7044 and 0.6959. The 14-period RSI was near 66.

Resistance was at 0.7093, with support at 0.7072, 0.7070, and 0.7054. Further support levels were the 20-period SMA at 0.7044 and the 100-period SMA near 0.6959.

We recall how in March 2025, a hot US Consumer Price Index of 3.3% and conflict in the Middle East created significant uncertainty. Today, the situation has shifted, with the latest CPI data showing annual inflation has cooled to a more manageable 2.9%. This calmer inflation reading changes the entire landscape for Federal Reserve policy expectations.

Market Pricing Points To Rate Cuts

Last year, the Fed’s higher-for-longer stance was reinforced, but now the market is pricing in a different future. The CME FedWatch Tool currently indicates a greater than 60% probability of at least one interest rate cut by the end of the third quarter. This outlook puts a ceiling on the US Dollar’s strength compared to the dynamics we faced in 2025.

The geopolitical risk premium in energy has also subsided significantly since the tensions around the Strait of Hormuz peaked last year. WTI crude oil is trading near $85 a barrel, a stark contrast to the volatile spikes we saw during the height of the conflict. This stability is generally supportive for risk-sensitive currencies like the Australian dollar.

In April 2025, AUD/USD was trading near 0.7076, with risk-off sentiment capping its potential. Today, with the VIX index holding near a relatively calm level of 15, implied volatility in currency markets is much lower. This suggests that the sharp, headline-driven moves of last year are less likely in the immediate future.

Given the lower volatility, strategies involving selling options to collect premium appear more attractive now. For AUD/USD, selling a strangle with strikes at 0.6500 and 0.6800 could be a viable strategy to capitalize on range-bound price action. This is a shift from last year when buying options was a more prudent way to hedge against unpredictable geopolitical events.

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Russia’s consumer price index (CPI) rose by 0.6% month on month in March. This compared with a forecast of 0.5%.

The result shows inflation increased slightly more than expected over the month. The data point measures average price changes for goods and services in Russia.

Implications For Monetary Policy

With March inflation coming in slightly hotter than we expected, it signals that price pressures in the Russian economy are more persistent than the market was pricing in. This small beat, 0.6% versus an expected 0.5%, reduces the likelihood of any near-term dovish pivot from the Central Bank of Russia (CBR). This reinforces the CBR’s recent decision in its February and March 2026 meetings to hold the key rate at a restrictive 16%, citing sticky inflation.

Looking back to 2025, we saw how the central bank was forced to maintain high rates for an extended period to bring inflation down from its post-2022 peaks. This history suggests they will not rush to cut rates at the first sign of moderation, making this stronger inflation print significant. The latest data shows annual inflation is still hovering around 7.6%, well above the CBR’s 4% target.

For the coming weeks, we should consider positioning for a stronger ruble. A hawkish central bank tends to support its currency, so buying call options on the USD/RUB pair falling below 90 could be a viable strategy. The higher interest rate differential makes holding the ruble more attractive.

In the interest rate markets, this data suggests bets on rate cuts are premature. We should look at derivatives that profit from rates staying higher for longer, such as selling short-term interest rate futures. The market will now have to push back its timeline for any potential monetary easing.

This outlook could also create headwinds for Russian equities. Prolonged high borrowing costs can squeeze corporate profits, so we should consider protective strategies like buying put options on the MOEX Russia Index. This provides a hedge against a potential market dip driven by the central bank’s firm stance.

Risk Considerations And Next Steps

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