Relative Strength & Strategy Insights | Updated: Feb 05, 2026 at 12:02:35
Mixed data with strong durable goods orders (5.3% vs 1.1% forecast) but weaker consumer confidence (84.5 vs 88.0 forecast) and trade deficit widening (-56.8B vs -37.0B forecast). PPI inflation at 0.5% MoM suggests persistent price pressures.
Eurozone retail sales fell more than expected (-0.5% vs -0.2% forecast), German market declines, and mixed European stock performance ahead of ECB announcement. German GDP growth at 0.3% QoQ shows modest expansion but retail weakness concerning.
Yen weakened due to political unpredictability and fiscal concerns. Japanese services PMI improved (53.7) but monetary base slumped 9.5%, industrial production declined (-0.1% MoM), and retail sales fell (-2.0% MoM vs 0.3% forecast).
UK construction PMI improved significantly (46.4 vs 42.2 forecast), house price growth accelerated (1.0% YoY vs 0.7% forecast), and mortgage lending remained steady. Construction sector downturn slowing suggests economic resilience.
RBA hiked rates 25bps, Australian dollar strengthened against majors, inflation rose (3.8% YoY vs 3.6% forecast), and NAB business confidence improved (3.0 vs 2.0 forecast). Strong commodity currency performance.
BoC held rates at 2.25%, wholesale sales improved (2.1% vs 0.4% forecast), but trade deficit widened (-2.2B vs -0.6B forecast) and GDP growth stagnant (0.0% MoM vs 0.2% forecast). Energy exposure provides some support.
Trade balance improved (0.05B vs -0.18B forecast) and ANZ consumer confidence rose (107.2 vs 102.4 forecast), but credit card spending declined (-0.3% YoY). Mixed signals with positive trade but weak domestic spending.
Economic sentiment declined (-4.7 vs 5.5 forecast), KOF leading indicators fell (102.5 vs 103.2 forecast), though trade balance remained positive (3.0B vs 3.8B forecast). Overall weakening economic momentum.
| Strategy Pair | Action | Target | Strategy Rationale |
|---|---|---|---|
| GBP/USD & AUD/USD | LONG BASKET | Dist: +150 pips | Isolating USD mixed/weak sentiment by longing two strong currencies (GBP with improving construction/housing and AUD with RBA hikes) to neutralize specific UK or Australia risks while benefiting from USD weakness. |
| EUR/JPY & GBP/JPY | LONG BASKET | Dist: +180 pips | Capitalizing on JPY weakness due to political/fiscal concerns by longing European currencies against JPY. Basket approach reduces exposure to specific Eurozone retail weakness while maintaining JPY short exposure. |
| AUD/CAD & NZD/CAD | LONG BASKET | Dist: +100 pips | Isolating CAD mixed sentiment by longing commodity peers with stronger fundamentals. AUD benefits from RBA hikes, NZD from improved trade balance, while CAD faces stagnant GDP and BoC dovish hold. |
| EUR/CHF & GBP/CHF | LONG BASKET | Dist: +90 pips | Targeting CHF weakness from declining economic sentiment by longing European currencies. Basket approach mitigates Eurozone retail weakness exposure while maintaining CHF short position. |
| AUD/JPY & NZD/JPY | LONG BASKET | Dist: +200 pips | Combining JPY weakness with strong commodity currency fundamentals. AUD benefits from RBA tightening, NZD from trade improvement, while JPY faces political uncertainty and weak economic data. |
| GBP/AUD & GBP/NZD | SHORT BASKET | Dist: -80 pips | Relative value trade isolating GBP strength against commodity peers. UK construction/housing improvement vs AUD/NZD mixed signals creates convergence opportunity while reducing single-currency GBP exposure. |