Relative Strength & Strategy Insights | Updated: Feb 25, 2026 at 12:02:26
Mixed data: Factory orders down, housing starts mixed, but GDP growth weak (1.4% vs 3.5% forecast) and PCE inflation steady. Trade deficit widened. Overall, growth concerns but inflation not collapsing.
Negative signals: European car sales fell for first time in 7 months, German ZEW sentiment declined (58.3 vs 61.0 forecast), industrial production missed (-1.4% vs -1.2%), and construction output negative. Consumer confidence remains weak.
Clear weakness: Yen falling due to political uncertainty and fiscal concerns. GDP growth disappointing (0.2% annualized vs 2.0% forecast). Trade balance deteriorated sharply (-1,152.7B vs -2,500.0B forecast).
Mixed signals: Unemployment rose (5.2% vs 5.1%), employment change positive but retail sales strong (1.8% MoM vs 0.2%). Inflation cooled (3.0% vs 3.0% forecast). Overall labor market softening but consumer spending resilient.
Positive signals: Market significantly higher, inflation steady at 3.8% (revised up), employment data solid (17.8k jobs added). Construction work slightly negative but overall economic momentum positive.
Mixed data: Inflation cooled (2.3% YoY vs 2.5% forecast), housing starts weak (238.0k vs 275.0k), but manufacturing sales improved (0.6% MoM). Trade deficit narrowed slightly. Overall neutral with inflation control.
Mixed signals: Retail sales improved (0.9% QoQ), but electronic card sales weak (-1.1%), trade balance negative (-0.52B), and RBNZ held rates steady. Food prices rising (4.6%).
Limited data: GDP growth steady (0.2% QoQ), trade balance improved (3.6B vs 3.3B forecast), but industrial production weak (-0.7% YoY vs 2.1% forecast). Overall neutral with slight positive trade.
| Strategy Pair | Action | Target | Strategy Rationale |
|---|---|---|---|
| AUD/JPY & NZD/JPY | LONG BASKET | Dist: +180 pips | Isolating JPY weakness by longing two commodity currencies with positive momentum (AUD strong, NZD mixed) against the clearly weakening yen due to political and economic concerns. |
| EUR/JPY & GBP/JPY | LONG BASKET | Dist: +150 pips | Hedged JPY short: Both EUR and GBP show mixed/weak signals but are less weak than JPY. Basket reduces single-currency risk while capitalizing on yen depreciation. |
| AUD/USD & NZD/USD | LONG BASKET | Dist: +100 pips | Isolating USD mixed/weak sentiment against commodity currencies. AUD shows strength, NZD mixed but both benefit from risk-on sentiment and higher yields vs USD growth concerns. |
| EUR/USD & GBP/USD | SHORT BASKET | Dist: -90 pips | Relative USD strength play: Both EUR and GBP show weakening/mixed signals while USD has growth concerns but steady inflation. Basket shorts two weak European currencies against less-weak USD. |
| CAD/JPY & CHF/JPY | LONG BASKET | Dist: +130 pips | JPY weakness isolation with defensive hedges: CAD and CHF show mixed/neutral signals but are fundamentally stronger than JPY. Basket provides JPY short exposure with reduced commodity/risk bias. |
| GBP/AUD & EUR/AUD | SHORT BASKET | Dist: -110 pips | AUD strength isolation: Both GBP and EUR show mixed/weak signals while AUD shows clear strength. Basket shorts two weaker currencies against the strong Australian dollar. |