APFX Research

The Asymmetric Gold Trade

AP Research — Tue, 16 Jun 2026 12:06:00 GMT

Year-to-date, the weakness in XAU/USD can broadly be attributed to elevated energy prices, which have led to inflationary concerns and ultimately translated into higher yields, raising the opportunity cost of holding gold.

Yet with gold now down 20% from the January highs, and the higher-for-longer rates narrative well established, we think now could be the time to start re-adding long exposure to the precious metal.

Given the World Gold Council survey released today, it seems like we’re not the only ones taking this side of the trade.

Won Way Traffic

AP Research — Tue, 09 Jun 2026 11:02:27 GMT

The South Korean Won (KRW) has experienced sharp weakness year-to-date, recently hitting the lowest level against the greenback since 2009. With the Kospi breaking records almost daily, thanks to the likes of SK Hynix and other equity names catching bids, the conventional EM correlation between the currency and the stock market has evaporated.

Even though there are reasons for this below the surface, the emerging dynamic, coupled with incorporating an equity view into our FX&Rates world, means we now look to step in as KRW buyers as we anticipate the next leg of this macro trade playing out.

Three Curves, One Message

AP Research — Tue, 02 Jun 2026 10:02:15 GMT

The key message from US, EU, and UK curves is not dovishness. Markets have taken some heat out of near-term policy pricing over the past week, but they are still refusing to underwrite a clean return to a hold-or-ease regime.

Across all three regions, front-end implied rates have shifted lower versus a week ago. But the shape of the curves still points to policy staying restrictive, and in some cases becoming more restrictive, for longer. Markets are marking down the immediacy of the inflation shock rather than declaring victory over inflation. That distinction matters because it changes how we should read the next move in rates.

What we are seeing is a selective repricing of hawkish tail risk, not a wholesale duration rally. Curves still carry the imprint of inflation credibility risk, fiscal supply pressure and term premium rebuilding. The country split matters.

United States: Less Hike Insurance, Not a Clean Duration Rally

The Insurance Hike Arrives

AP Research — Tue, 26 May 2026 18:09:22 GMT

A month ago, we noted in ‘The ECB’s Insurance Hike’ that “an insurance hike, likely in June or July, helps the ECB to retain credibility with the market without committing to a sustained hiking cycle.”

Today, we got a coordinated media hit from ECB members Schnabel and Lane that shifted a June hike from being probable to (what we believe) a done deal.

However, before everyone rushes to be a seller of ERZ6, the notion that a June hike leads to three or more hikes this year is still not something we believe should start to be considered in the conversation.

Knocking on 160’s Door Again

AP Research — Thu, 21 May 2026 15:15:35 GMT

USD/JPY continues to climb and retrace the losses from the FX intervention from the end of April. The 160.00 level is now firmly back in sight, setting us up for a compelling next couple of weeks of price action.

As we argued a few weeks ago in Between a Yen and a Hard Place , the trend for further Yen weakness is clear, given the unclear BoJ meeting, elevated inflation forecasts and general lack of conviction from the central bank that risks getting behind the curve.

Therefore, even though intervention risks above 160.00 rise again, the fundamental picture for the coming months does point to USD/JPY trading higher.

The Real Votes Early

AP Research — Thu, 14 May 2026 15:04:07 GMT

A sharp move lower in BRL/JPY yesterday can be put down to concerns around presidential hopeful Flávio Bolsonaro being linked to Daniel Vorcaro, the jailed former Banco Master CEO at the centre of a major fraud investigation.

Clearly, this isn’t just about political fraud, but rather the knock it provides for Bolsonaro in terms of credibility in his bid to oust President Lula come October.

The severity of the move surprised us, as we hadn’t anticipated such strong favouritism this early in the campaign towards Bolsonaro over Lula. This causes us to rethink our BRL/JPY long, even with the continued constructive macro backdrop, and take partial profit.

Policy Friction Down Under

AP Research — Tue, 05 May 2026 13:43:25 GMT

After profiting from being long AUD earlier this year, we have been waiting for better entry levels over the past month to initiate fresh longs.

However, the RBA meeting today has led us to shift our AUD conviction from bullish to neutral, given rising tensions between the central bank and the government over policy actions.

With the government budget coming next Tuesday, an increasingly uncertain economic outlook is emerging, with the net result for consumers unclear.

Add in the inflationary pressure spilling over from the Middle East conflict, and we think the scope for further gains in being long Aussie has now all but evaporated.

Between a Yen and a Hard Place

AP Research — Tue, 28 Apr 2026 15:54:24 GMT

The Bank of Japan (BoJ) meeting earlier today was the first major G10 central bank meeting, with many looking for clues on how the respective bankers will position policy amid reflationary pressures.

Not for the first time, the BoJ made a bit of a hash of its meeting, issuing a mismatch of comments that saw the Yen initially appreciate before giving back all gains and then some.

When we dig into the details of the meeting and subsequent press conference, the desire to continue holding our short Yen position (expressed via a long BRL/JPY) remains firmly intact.

The ECB's Insurance Hike

AP Research — Tue, 21 Apr 2026 07:01:14 GMT

Speaking late last week, ECB President Lagarde said “we are between the baseline and the adverse” when referring to scenarios for the Iran war.

Euribor futures reflect this view, with the extreme lows having been bought in ERZ6 in recent weeks, but with no meaningful move back to pre-conflict February levels.

After revising our view in UnSTIRtain Times exactly a month ago, we continue to hold that the ECB will hike once this year, with the emerging dynamics increasingly supportive of this view.

Yet based on current ERZ6 pricing, there’s still a trade to be exploited.

Entering Dollar Doldrums

AP Research — Thu, 09 Apr 2026 13:53:20 GMT

Most on the Street currently sit at opposite ends of the spectrum regarding the US Dollar outlook. Binary forecasts for EUR/USD reflect this, with evolving Iran war implications seemingly pointing to a clear direction one way or the other for the coming months.

However, we sit in the middle, and expect the greenback to enter a consolidation phase in the coming months, with competing forces largely netting out most of the tail risks of a sharp move either way.

Granted, there’s a large disclaimer when discussing price action right now, given the ongoing conflict/ceasefire/agreement/lack of… but let’s spell things out as we see it.

Energy Over Politics for Now

AP Research — Tue, 31 Mar 2026 15:25:50 GMT

A BTG Pactual/Nexus poll published yesterday showed Brazil's President Lula da Silva and Senator ‌Flavio Bolsonaro tied at 46% in a potential run-off in the October elections.

Even though the election is far off, the sharp ground being made up by the junior Bolsonaro is notable and worthy of attention, especially given our most recent trade implementation of long BRL/JPY from Energy Is Repricing Carry last week.

We believe it is wise to map out the currency implications for the polling shift based on political movements to see if the risk is worth carrying.

Energy Is Repricing Carry

AP Research — Wed, 25 Mar 2026 13:13:34 GMT

The conflict in the Middle East has generated significant two-way price action, causing headaches for macro desks.

In the FX space, one theme isn’t providing anywhere near as much uncertainty, and is starting to gain more attention. We’re talking about a hybrid of the carry trade, with a bias toward net energy beneficiaries over pure interest-rate differentials.

Even with our view of de-escalation in the coming months, the underlying dynamics behind the theme could continue to offer gains from a total return perspective.

UnSTIRtain Times

AP Research — Fri, 20 Mar 2026 10:56:01 GMT

A week ago, we went long ERZ6 at 97.71 in what we called “a punchy call” on the idea that the short-end had moved too far too quickly in response to the conflict in the Middle East.

We were stopped out at 97.60 swiftly afterwards, with the contract now trading at 97.16. Although we don’t like to engage in hyperbole, it has truly been a historic move not only in the European contract but also in other G10 equivalents.

With us having already gotten over the frustration of such a swift trade exit, the uncertain lay of the land makes clear thinking all the more important as we set out our chessboard from here.

The ECB Won't Hike In 2026

AP Research — Tue, 10 Mar 2026 15:42:52 GMT

Last week, we addressed the sharp move at the short end of the curve for several G10 nations, triggered by inflationary concerns stemming from the spike in energy prices.

With prices still elevated and the promise from President Trump of a quick win not yet materialising, more chatter is out there that the nations most sensitive to an inflationary shock will be forced to look towards interest rate hikes.

One of the most spoken of is the European Central Bank (ECB), where GC member Muller said today the chances of the next change in policy rate is more towards an increase than a decrease.

Yet does it really make sense to price for an ECB hike as we currently stand?

Misallocated Inflation Risk Premium

AP Research — Tue, 03 Mar 2026 11:53:53 GMT

STIR markets have rapidly repriced expectations for G10 central bank moves over the past few trading sessions, amid cost-push inflation concerns in energy markets, driven by the conflict in the Middle East.

The broad correlated move is an understandable knee-jerk reaction by participants, but it feels ill-thought-out from a country-level vantage point. The extent of energy exposure, the timings of pass-through impact, and the existing central bank stance should also be taken into account.

As a result, we believe there’s already an asymmetry in the G10 rates space that could offer some attractive opportunities in the coming weeks.

Takaichi Just Blinked

AP Research — Tue, 24 Feb 2026 14:24:41 GMT

A month ago, we outlined the next path for the Japanese Yen in The Yen's Second Act, noting that even though short-term strength could be seen, the policy push from PM Takaichi would act to weaken the Yen in the medium term.

This is already playing out, with USD/JPY moving back higher in recent days and a sharp bid seen on Tuesday following Takaichi's comments on domestic interest rates. This represents the next clear sign validating our view that she will pursue not only expansionary fiscal policy (and refuse to have it watered down), but also lend her voice to monetary policy.

We therefore take today's news in our stride and outline the steps that should push USD/JPY to fresh highs and cause a repricing in the December ‘26 TONA contract, in the coming months.

Canada's Cycle Downshifts

AP Research — Tue, 17 Feb 2026 17:01:13 GMT

Canada’s January CPI print came in today softer than expected, with headline inflation easing to 2.3%, down from 2.4% in December and showing a loss of near-term price momentum after the stronger prints seen late last year.

CAD was already on our radar in recent weeks after the dismal employment report from earlier in February. When you add other factors into the mix, including our bias for lower oil prices from here and zero interest rate cuts priced for 2026, it’s starting to make a compelling case for a medium-term short.

Portfolio Trading Update

AP Research — Tue, 10 Feb 2026 16:47:20 GMT

We’re almost halfway through Q1, which makes it an appropriate time to review the FX&Rates portfolio performance so far this year. Even though it has been a volatile start to 2026 in the cross-asset space (Crypto, Nat Gas, precious metals), G10 FX and rates markets have arguably been more orderly.

That doesn’t mean there haven’t been key events to capitalise on, including the situation in Japan with Yen dynamics, fiscal and monetary policy issues in the UK, outperformance in Australia and more.

Below, we run through how trades from our recent notes have performed and how we’re positioned right now.

Performance as of 09/02

False Comfort in SONIA

AP Research — Wed, 04 Feb 2026 10:01:24 GMT

Thursday sees the Bank of England (BoE) convene for the first time in 2026. The message from the December meeting was one of a central bank nearing the end of its easing cycle. Indeed, Governor Bailey said, “With each reduction, the question of the extent of future cuts becomes more delicate.”

His comments, with other factors such as the 5-4 vote split and more, have lulled rate markets into a false sense of security. Pricing in 38bps worth of cuts for 2026 might be following the narrative, but we believe the narrative is wrong.

There are several factors that could emerge in the coming months, leading the BoE to cut well in excess of 38bps this year. As such, trade ideas become apparent.

The Yen's Second Act

AP Research — Tue, 27 Jan 2026 17:15:56 GMT

Two weeks ago, we addressed the pickup in chatter about Japan's political and fiscal situation via “Yentervention”. In it, we outlined why we felt an election would be called, that a majority would be won by PM Takaichi, and that a fiscally loose approach would be taken.

More specifically for the Yen, we said:

“Japanese officials have escalated their warnings, with Finance Minister Satsuki Katayama publicly stating that she and U.S. Treas Sec Scott Bessent share concerns about the yen’s one-way weakness. So we’ve had a tick in the box for verbal interventions, with these comments implicitly broadening the possibility of joint or at least coordinated action should disorderly conditions deepen.”

Since then, we have indeed seen a snap election called, with Takaichi laying out plans to cut taxes. We’ve noted the rumours of the Fed rate-checking NY spot traders last week, with USD/JPY down almost six big figures since our last note.

In such a fast-moving environment, we turn our focus now to the second act, laying out the likely direction for USD/JPY from here.