1 d - Josef Brynda
The beginning of the week brought one of the biggest energy shocks of recent years. Brent crude oil briefly surged to nearly 120 dollars per barrel after the market opened, before giving up part of its gains on news that the G7 countries are preparing to release oil reserves of 400 million barrels and stabilised slightly lower. This is the highest level since 2022 and at the same time one of the fastest movements in the oil market in recent years. Markets are reacting mainly to another escalation of the conflict in the Middle East, which is beginning to have direct impacts on global energy supplies.
A key point of tension is primarily the area of the Persian Gulf and tanker transportation through the Strait of Hormuz. This narrow maritime corridor is one of the most important energy arteries of the world economy, because approximately one fifth of global oil consumption normally passes through it. Any disruption of operations in this area immediately triggers a sharp reaction in commodity markets. Concerns about the limitation of export flows and attacks on energy infrastructure are among the main factors pushing oil prices significantly higher.
The energy shock is beginning to have immediate macroeconomic impacts. If oil prices were to remain above the level of 100 dollars per barrel for a longer period, roughly another 2–3 weeks, it would mean a new inflationary impulse for the global economy. Markets only a few weeks ago were counting on a gradual easing of monetary policy and interest rate cuts mainly in the United States, and in Europe there was speculation about a possible single rate cut. Oil approaching 120 dollars, however, significantly complicates these scenarios. Higher energy prices may accelerate inflation again and central banks may therefore be forced to keep interest rates at higher levels for longer than the market expected.
Foreign exchange markets are reacting with a classic “risk-off” scenario. The US dollar strengthened at the beginning of the week, because investors traditionally move capital into more liquid and safe assets such as the US dollar during periods of geopolitical tension. The euro and the British pound weakened against the dollar and pressure is also visible on other riskier currencies. The current situation creates a relatively strong combination of factors for the dollar – on the one hand it functions as a safe haven, and on the other hand higher energy prices increase the probability that the US Fed will not cut interest rates as quickly as was expected only recently.
Tension in the energy market is immediately reflected also in equity markets. Futures on US indices weakened at the beginning of the week and a similar development can be seen in European markets. The greatest pressure is visible in sectors sensitive to energy costs, especially industrial companies, banks and technology companies. On the contrary, energy companies and commodity producers are performing relatively better, as they directly benefit from rising oil prices.
One of the most affected continents is Europe, primarily because of its structural dependence on energy imports. Another reason is lower flexibility in the short-term adjustment of energy sources. In recent years Europe has significantly invested in renewable energy sources, which is strategically important in the long term, but at the same time it means that during the transition period it still requires large volumes of imported gas and oil as a stabilising source. The DAX, which is the index of the 40 largest German companies, even fell by 4% after the weekend, and EURUSD was also nearly one percent lower after the open. These facts indicate strong concerns in the case of a prolonged conflict and the stability of the European economy.
That this is a geopolitical crisis is also confirmed by the behaviour of US bonds relative to the US dollar. Higher energy prices increase inflation expectations and the market begins to count on the fact that the Fed will not be able to cut rates as quickly as was expected recently, or that it will keep them high for longer. Higher US yields and geopolitical uncertainty increase demand for the dollar as a liquid and relatively safe currency. The strengthening of the dollar is also due to its liquidity, investors institutions banks reps participants in the market are forced to hold cash in dollars, because dollars can be exchanged the fastest of all currencies, they are the most liquid.
For markets in the coming days, three factors will be key above all. First, the development of the situation in the area of the Strait of Hormuz and the stability of tanker transportation. Second, a possible reaction of governments and coordinated release of strategic oil reserves, which some G7 countries have already begun discussing. And third, a reassessment of expectations regarding monetary policy, because higher energy prices may significantly change the inflation outlook in the major world economies.
6 d - Josef Brynda
The current escalation of tensions between the United States and Iran has caught the global economy in a phase of extreme sensitivity regarding the trajectory of interest rates. After a long period of restrictive monetary policy, markets had anticipated a continuation of the easing cycle just a few days ago; however, current developments have practically erased this vision, at least for the upcoming rate adjustment. From the perspective of economic theory, this conflict is specific in that it does not only attack geopolitical stability but directly impacts inflationary expectations through a supply shock in the energy sector. Given that core inflation in the US remained at elevated levels around 3% in early March 2026, any further impulse in the form of more expensive oil forces the Fed and other central banks to keep rates "higher for longer," or even consider further hikes to reanchor price stability.
The main transmission mechanism at the moment is the price of Brent crude oil, which in the last 24 hours attacked the $84 per barrel mark, representing a 12% increase in just two days. A key risk remains the disruption of transit in the Strait of Hormuz, through which approximately one-fifth of global oil and liquefied natural gas (LNG) production flows. Should a more permanent blockade occur, economic models predict a sudden jump in fuel prices, which would immediately translate into logistics costs and final consumer goods prices.
Central banks thus find themselves in a profound dilemma. Lowering rates would support potentially weak economic growth but would simultaneously add fuel to the fire of inflation. Conversely, raising rates dampens price pressures but risks slowing down the economy. Under current conditions, it seems more likely that banks will resort to restrictive policies to prevent an inflationary spiral from spinning out of control. Everything will depend on the duration of the conflict and its impact on fundamental data in the coming weeks.
The reaction of financial markets in recent hours corresponds to a typical "risk-off" regime, from which the US dollar primarily benefits as a safe haven. However, the market is extremely sensitive to news. For example, when the New York Times recently published information about a possible diplomatic agreement between Iran and the US, the dollar weakened instantly and oil corrected its gains. For active trading, this volatility is ideal, as the market is currently driven almost exclusively by news headlines, allowing for the opening and closing of speculative positions with high potential.
In the long term, this conflict could signify a structural break where cheap credit becomes a thing of the past. A potential prolongation of the war will force a recalibration of global supply chains with an emphasis on energy security, a process that is extremely capital intensive. This would mean that the "floor" for interest rates would shift higher. The dollar benefits from this situation, and thanks to oil exports, the Canadian dollar also remains stable. Conversely, currencies such as the EUR, AUD, and NZD are losing their strength. The Euro is suffering due to Europe's energy dependence and proximity to the conflict, where gas has risen by more than 50%, while the Australian and New Zealand dollars, typical "commodity and risk" currencies are suffering due to capital outflow toward safer assets and concerns over a global trade slowdown, upon which these export economies depend.
8 d - Josef Brynda
Saturday morning, Central European Time, brought a dramatic escalation of tensions in the Middle East. A joint military operation by Israeli and American forces targeted strategic locations in Iran, a direct consequence of the long-standing failure of diplomatic talks regarding the country's nuclear program. According to allies, Tehran has crossed a critical threshold in uranium enrichment intended for the production of a nuclear arsenal. This strike immediately triggered a domino effect across global financial markets, as investors began a panicked reassessment of their portfolios.
The current behavior of market participants serves as a fascinating case study in crisis management. So far, assets labeled as "safe havens" where capital retreats during times of peak uncertainty have benefited the most from the conflict. This dominant position is held by gold, the US dollar, and the Swiss franc. The logic behind this movement is rooted in a deep distrust of risky assets; while the fiat currencies of developing nations may devalue in times of chaos, gold is perceived as a universal store of value independent of governments. Similarly, the US dollar, as the world's most liquid currency, offers investors necessary stability and immediate access to funds.
In sharp contrast to precious metals, equity indices have recorded significant losses. The primary culprit is the threat of an oil shock, which a conflict in this key region inevitably triggers. Rising oil prices do not function merely as an isolated energy issue; they act as dangerous cost push inflation. Unlike demand pull inflation, this form of price growth is toxic for markets because it increases input costs for companies while simultaneously draining consumer purchasing power. This creates a dual pressure on corporate margins and future earnings.
A very specific development can be observed in commodity currencies. The Australian dollar, heavily tied to the global economic cycle and export channels to China, initially weakened sharply due to its "risk-on" character. Although it managed to recover some losses following reports of US willingness to negotiate, this optimism was quickly dampened by Iranian officials, who categorically rejected any dialogue with Washington. Even though commodity prices are rising, it is not a positive signal for the Australian currency. This is not a natural demand impulse driven by economic growth, but rather speculative growth fueled by fears of supply disruptions. The Canadian dollar is in a similar position, showing losses that are less drastic only because it is partially supported by high oil prices. However, this support lasts only until the crisis fully transforms into a broader global economic downturn.
Our risk model prepared strategies for this scenario in advance, and current market movements precisely align with our predictions. In the coming days, it will be crucial to monitor the duration of the conflict. Should the situation stabilize, markets will breathe a sigh of relief; however, a protracted conflict could lead to deep economic crises, similar to those seen after the outbreak of the war in Ukraine, when energy prices cooled global growth.
Beyond geopolitics, this week will be extremely important from a fundamental data perspective, as a "packed" economic calendar awaits us. On Monday, we will monitor the February ISM Manufacturing PMI data, which will reveal more about the health of the US industrial sector. Wednesday brings important labor market figures in the form of the ADP Employment report for February. On Thursday, attention shifts to the regular weekly Initial Jobless Claims data. The week will then culminate on Friday with the release of January Retail Sales data and, most importantly, the closely watched government February Jobs Report. This combination of wartime tension and pivotal macroeconomic data will dictate the direction of the markets for the remainder of the month.
20 d - Josef Brynda
Global tensions between the United States and Iran reached an extremely sensitive phase as of February 18, 2026, following the expiration of the previous deadline on February 17 and the simultaneous paradox of “diplomatic progress vs. military demonstrations.” Indirect talks in Geneva concluded with a potential framework agreement on “guiding principles” and a two-week pause to finalize the specific terms. At the same time, however, the U.S. has visibly increased military readiness in the CENTCOM area of responsibility, while Iran has demonstrated its capacity for escalation through exercises simulating the closure of the Strait of Hormuz, which we witnessed yesterday. This has created a situation of a “fragile truce with a live fuse” for markets and allies alike, where outcomes may hinge on days and incidents.
Arguments in favor of an immediate strike rest on operational indicators and the non-negotiability of red lines. Particularly important in this context is Vice President JD Vance’s statement following the Geneva meetings that Iran still refuses to acknowledge and engage with the president’s key “red lines.” Vance also indicated that if diplomacy reaches its “natural conclusion,” the president reserves the full right to pursue a military option to prevent the emergence of a nuclear-armed Iran. This framing shifts the crisis into a binary structure: either an agreement meets U.S. security requirements, or the probability of coercive force increases.
On the other hand, the very existence of a two week window argues against an immediate strike, serving as a procedural brake. Trump’s style typically relies on maximum economic pressure as a negotiating lever rather than a willingness to enter into a prolonged conflict with the risk of an oil shock. The greatest threat lies in the economy and oil prices: escalation in the Strait of Hormuz could trigger an energy shock, a resurgence of inflation, and renewed pressure on central banks politically and macroeconomically toxic outcomes.
In currency markets, the key transmission channels are risk sentiment, energy, and yields. In an escalation scenario, the U.S. dollar typically strengthens, while risk-sensitive currencies (such as AUD and NZD) and those exposed to global growth tend to weaken. For the euro, the conflict is a double-edged sword: an oil shock harms Europe through higher energy import costs and a deterioration in terms of trade, which generally pressures the euro lower; however, the euro may temporarily hold up against more risk-sensitive currencies. Escalation can also benefit “oil currencies” (such as CAD and NOK) due to higher oil prices at least until fears of a global slowdown begin to dominate.
Across commodities and equities, the most sensitive channel is energy. Any signal of a real disruption in the Strait of Hormuz quickly increases the geopolitical risk premium in oil and raises volatility across markets. Oil has an asymmetric profile (sharp spikes on incidents versus gradual unwinding of the premium under diplomacy), while gold functions as a barometer of fear (risk-off -> gains; easing tensions -> correction). In equities, higher energy prices translate into higher inflation expectations and upward pressure on yields, which typically weigh on the broader market while benefiting the energy sector; defensive sectors tend to hold up relatively better. Until the two-week window expires, pricing across FX, commodities, and equities will remain heavily driven by headline risk and Vance’s emphasis on “red lines” ensures that markets will interpret every new statement from Washington and Tehran as a direct signal of direction.
2. 2. 2026 - Josef Brynda
The Australian economy enters February 2026 at a critical turning point. Following 2025, during which the Reserve Bank of Australia eased monetary policy three times to a level of 3.60%, the tide is turning. The upcoming board meeting, scheduled for the night of February 2nd to 3rd, is viewed by markets as the catalyst for a new "fine-tuning" phase. The primary driver for this shift is unexpectedly rigid inflation in the final quarter of 2025, where the trimmed mean reached 3.4%. For Governor Michele Bullock, this sends a clear signal: the path to the 2–3% target range is thornier than models predicted, and current rates are likely no longer sufficient to anchor inflation expectations.
Current market sentiment speaks volumes. The probability of a 25-basis-point hike to 3.85% climbed to 72% at the end of January. This sharp rise in expectations reflects a "hawkish" cocktail of domestic labor market data, where the unemployment rate fell to 4.1% and job advertisements jumped by a record 4.4% in January. Australia is thus grappling with capacity constraints, where demand for labor, alongside investments in energy transition and data centers, is exerting upward price pressure.
While a February hike is largely priced in, the real battle among analysts centers on the outlook for the remainder of 2026. Major banking institutions such as CBA and Westpac are betting on a "one-and-done" scenario, arguing that given the high debt levels of Australian households, even a modest shift to 3.85% will be sufficiently restrictive. Conversely, National Australia Bank (NAB) warns that if inflation in services and government levies does not subside, we will witness a further tightening to 4.10% in May. For borrowers with an average mortgage of AUD 600,000, every 25-point hike represents an increase in repayments of approximately $90 a politically and socially sensitive issue in the context of the rising cost of living.
For the AUD/USD currency pair, the RBA meeting represents a key test of resilience. While the Australian dollar touched two-year highs above 0.7090 in late January, a strong US dollar and cooling in the iron ore market have created significant resistance. If the RBA confirms a hawkish stance in its accompanying commentary, the AUD could return to an upward trend targeting 0.7200. However, if the bank adopts a cautious tone and labels the hike as a "preemptive step," there is a risk of a "sell the fact" sell-off. On Tuesday night, we await more than just a change in numbers; we await the definition of the monetary narrative for the entire first half of 2026.
Crucially, the broader perspective on the USD will be paramount. Donald Trump’s nomination of Kevin Warsh as Fed Governor is having a positive impact on the USD. Warsh intends to utilize a strong dollar to dampen inflationary pressures, which would subsequently allow the new Governor to lower interest rates. This would provide relief to both consumers and manufacturers, and most importantly reduce the servicing costs of the massive US national debt while increasing the purchasing power of Americans abroad. Furthermore, in a context where the USD has been undergoing a period of instability, any stabilization combined with persistent positive fundamentals like labor market stability and GDP growth above the inflation target could trigger a return of investors to the Greenback.
It will therefore be vital to monitor Governor Bullock’s accompanying commentary as well as the emerging rhetoric regarding the future leadership of the Fed.
27. 1. 2026 -
The dollar slumped to a four-month low on the news of a possible yen intervention. Japanese Prime Minister Sanae Takaichi herself said that her government would “take necessary steps against speculative or very abnormal market moves” to support the yen.
Tokyo intervened in the market a few times, last being the 2024 interventions, which saw roughly $100 billion spent trying to keep USD/JPY below 160, the level almost reached on Friday. After the Fed contacted the BOJ, pair declined to todays 153.
If the Fed decided to intervene, we see even more dollar weakness, for which we are preparing.
20. 1. 2026 - Josef Brynda
The current weakening of the US dollar can be read as more of a short-term episode in the context of a longer horizon, rather than the start of a prolonged structural decline. In recent days, the exchange rate has mainly been driven by expectations about monetary policy and expectations surrounding the appointment of a new governor. Political and geopolitical risks are also influencing USD moves, especially the topic of tariffs and trade disputes. When the probability of tougher tariffs rises or tensions between the US and Europe escalate, the market often reacts instinctively and punishes the dollar in the short term due to uncertainty and the risk of a deterioration in global trade. In such moments, a “sell America” narrative can gain traction, driven more by psychology and positioning than by pure macro fundamentals. But this layer is inherently volatile: once it becomes clear that heated rhetoric is ending in compromise, the exchange rate can snap back quickly. That alone, however, does not say anything definitive about what the dollar will look like twelve months from now.
Some recent commentary therefore works with a “V-shaped” scenario in 2026: the dollar may remain weaker in the first half of the year, but it should have room to rebound in the second half. The logic is fairly straightforward. If fiscal expansion and tariffs lift inflation pressures, the Fed may be forced to slow the pace of easing sooner than the market currently expects, or at least signal a higher terminal rate. And even without new hikes, it can be enough if it becomes clear that the rate-cutting cycle will be shallower or shorter. In that environment, the dollar typically finds support from a combination of higher real yields and a return of capital into US assets.
This framework also aligns with the two-phase outlook seen in major institutions: early in 2026, dollar weakness may persist, but later the divergence between the US and the euro area should become more pronounced in favor of the USD. If the ECB has to cut rates for longer (due to weaker growth), the euro can gradually turn into a funding currency, while the dollar remains more attractive from a yield perspective. Once investors start focusing on relative returns between US and European assets, even a modest shift in interest-rate differentials can be enough to redirect capital flows back toward the dollar.
From a technical and positioning standpoint, the CFTC picture matters as well: the euro is heavily owned, and if investor thinking shifts, that can trigger a rapid unwind and sell-off.
Part of the market also assumes that the current dollar weakness is largely event-driven and could fade similarly to previous episodes of trade-related tension. If a familiar pattern reappears—hardline negotiating that ultimately ends in concessions and a smaller real impact from tariffs than initially feared—the dollar could strengthen quickly simply as uncertainty recedes. On top of that, dollar bulls argue that the market may be underestimating the resilience of the US economy and the possibility of a less dovish Fed than is currently priced in. The resulting picture for 2026 is therefore not necessarily one of sustained USD weakness, but rather a temporary dip followed by a return to strengthening in the second half of the year.
13. 1. 2026 - Josef Brynda
USD
CAD
EUR
GBP
AUD
NZD
EURUSD
While the Fed is holding rates at 3.75% and is unlikely to cut them due to inflationary pressures from new tariffs and a desire to demonstrate its independence, the ECB has rates much lower at 2.15%. This differential (carry trade) clearly incentivizes investors to hold Dollars. Although European data shows signs of stabilization, the U.S. economy remains more robust. At the same time, however, interference with the Fed and its independence adds a risk premium to U.S. Treasuries, putting downward pressure on the U.S. Dollar. If the relationship between the U.S. government and the Fed is successfully reconciled, the USD could regain its strength.
USDCAD
The Canadian Dollar remains under pressure due to ongoing trade uncertainty and relatively low oil prices. It is further weighed down by rising unemployment and slower job growth; although the Bank of Canada is expected to hold rates steady at its next meeting, a future rate hike is far from certain, especially when compared to the Reserve Bank of Australia. Instead, a neutral to slightly dovish rhetoric is anticipated, which continues to exert downward pressure on the Canadian Dollar.
AUDUSD
Although Australian households continue to spend, President Trump’s imposition of 25% tariffs on Iran’s trading partners represents a direct threat to China, and consequently, to Australian commodity exports. In an environment of global trade war and geopolitical tension, investors typically exit "high-beta" risk currencies, such as the AUD, and move capital into the safety of U.S. Treasuries. The Dollar is thus set to benefit from risk aversion, while the "Aussie" will suffer from fears of a Chinese slowdown.
AUDNZD
If tariffs were to be imposed on China, the Australian Dollar could face steeper losses than the New Zealand Dollar. At the same time, business confidence in New Zealand has surged to a 10-year high, signaling a recovery of the New Zealand economy. It must be noted, however, that any stimulus measures in China could drive up the price of iron ore; similarly, if the Reserve Bank of Australia were to surprisingly hike rates at its next meeting, the Australian Dollar would regain strength.
EURGBP
Due to the Euro's weakness and market expectations regarding a more stable policy from the Bank of England, the pair faces the risk of further decline. A common argument is that the BoE's dovish rhetoric is already priced in; therefore, any shift in rhetoric or a drop in UK unemployment would likely extend the pair's downtrend.
AUDCAD
Under otherwise equal conditions, the Australian Dollar should be the favorite here, as the interest rate differential, combined with speculation of a rate hike in Australia plays in its favor. However, as previously mentioned, in the event of an escalated dispute between the U.S. and China, the AUD could face significant losses.
NZDCAD
New Zealand is likewise speculating that the next interest rate adjustment will be a hike; at the same time, the surge in business confidence on the New Zealand side is raising the stakes for this decision. As a result, the New Zealand Dollar could maintain its ground and hold higher against the Canadian Dollar.