FX and Commodities Monthly Insights - February 2026

Highlights:

• The US dollar weakened in January, driven by heightened geopolitical uncertainty and persistent negative sentiment towards the US. Speculation around possible US intervention in the Japanese currency market increased volatility, while the Federal Reserve’s decision to maintain rates provided limited support. However, the market viewed Kevin Warsh’s nomination as the next Fed Chair as hawkish, prompting a partial recovery in the dollar later in the month
• Neutral view on USD, still skewed to the downside: While we do not anticipate further rate cuts in 2026 and the new Fed Chair nomination is seen as hawkish, ongoing geopolitical tensions, steady economic data, and unresolved structural issues (including Supreme Court decisions, mid-term elections, and global trade policy) continue to weigh on sentiment around USD

G10 Currencies:

• Our preferred G10 currencies are still EUR and AUD, as they continue to prove the best alternative to the US dollar. Australia’s fundamentals are robust, with minimal risk of rate cuts (even risks of rate hikes), while early monetary easing and fiscal support in the Eurozone underpin positive sentiment for EUR. Conversely, we have downgraded our outlook on EUR/CHF and EUR/GBP to neutral due to increased geopolitical risks between the Eurozone and the US
• We maintain a bearish view on CAD despite some domestic improvements, particularly in the labour market. Our stance remains neutral on GBP, JPY, CHF, and NZD. In developed Asian markets, we prefer SGD

EM Outlook:

• Given elevated global market volatility, we are selective in EM exposure, favouring CNY, recently upgraded, KRW, and ZAR, while exercising caution with TRY
• The upgrade of CNY reflects a more constructive outlook on the currency due to the recent PBoC’s preference for a gradually stronger yuan, supportive fundamentals in the country, and potential further USD weakness

Commodity Space: 

• Bullish on Gold: We remain bullish on gold, viewing it as a valuable portfolio diversifier, particularly with prices having retraced below USD 5,000/oz, despite recent volatility
• Neutral on Silver and Oil: Our neutral outlook on silver persists due to significant price swings and limited hedging benefits compared to gold. The oil market is expected to remain stable, with softer demand balancing ongoing supply uncertainties