Relative Strength & Strategy Insights | Updated: Feb 03, 2026 at 12:02:32
Mixed signals: Strong durable goods orders (5.3% vs 1.1% forecast) and factory orders (2.7% vs 1.4%), but weak consumer confidence (84.5 vs 88.0), rising jobless claims (209k vs 205k), and widening trade deficit (-56.8B vs -37.0B). Fed holding rates steady suggests neutral stance.
Positive economic momentum: German GDP growth improved (0.3% QoQ vs 0.2% forecast), German inflation stable (2.1% YoY), Eurozone GDP growth at 0.3% QoQ, improving consumer confidence (-12.4 vs -13.1 previous), and stable unemployment at 6.2%. Manufacturing PMI data shows expansion across Europe.
Negative fundamentals: Monetary base slumped 9.5% YoY, retail sales declined (-0.9% YoY vs 0.9% forecast), industrial production weak (-0.1% MoM), Tokyo CPI cooling (1.5% vs 1.8% forecast). Stock market weakness suggests capital outflows despite foreign bond investment increase.
Positive housing data: House price growth accelerated (1.0% YoY vs 0.7% forecast), strong car production (17.7% YoY vs 6.7% forecast), and stable mortgage lending (4.6B). UK manufacturing PMI expansion supports economic resilience.
Strong inflation data: CPI at 3.8% YoY (vs 3.6% forecast), improving business confidence (3.0 vs 2.0 forecast), export prices up 3.2% QoQ (vs -0.5% forecast). RBA trimmed mean CPI at 3.4% YoY suggests persistent price pressures.
Mixed signals: BoC held rates steady at 2.25%, wholesale sales strong (2.1% vs 0.4% forecast), but trade deficit widened (-2.2B vs -0.6B forecast), GDP growth stagnant (0.0% MoM vs 0.2% forecast). Energy sector uncertainty weighs on outlook.
Positive trade balance: Surplus of 0.05B (vs -0.18B forecast), exports increased to 7.65B, improving consumer confidence (107.2 vs 102.4). Strong ANZ business confidence at 64.1 supports economic momentum.
Deteriorating sentiment: Economic sentiment index negative (-4.7 vs 5.5 forecast), KOF leading indicators declining (102.5 vs 103.2 forecast). Trade surplus stable but European economic improvement reduces CHF safe-haven appeal.
| Strategy Pair | Action | Target | Strategy Rationale |
|---|---|---|---|
| EUR/JPY & GBP/JPY | LONG BASKET | Dist: +180 pips | Isolating JPY weakness by longing two European currencies with strong fundamentals (EUR strengthening on GDP growth, GBP on housing recovery) against the weakening JPY (monetary contraction, weak retail sales). Diversifies European exposure. |
| AUD/USD & NZD/USD | LONG BASKET | Dist: +150 pips | Isolating commodity currency strength (AUD on inflation persistence, NZD on trade surplus) against mixed USD. Both antipodean currencies showing positive momentum while USD faces mixed data (weak consumer confidence, rising jobless claims). |
| EUR/CHF & GBP/CHF | LONG BASKET | Dist: +140 pips | Isolating CHF weakness (deteriorating economic sentiment) by longing two strengthening European currencies. EUR benefits from German growth, GBP from housing recovery, while CHF loses safe-haven appeal as European conditions improve. |
| AUD/JPY & CAD/JPY | LONG BASKET | Dist: +160 pips | Isolating JPY weakness with commodity currencies. AUD strong on inflation, CAD mixed but benefits from BoC rate stability. JPY faces monetary contraction and weak consumption data. Diversifies commodity exposure. |
| EUR/AUD & GBP/AUD | SHORT BASKET | Dist: -100 pips | Relative value play: Both EUR and GBP strengthening but AUD showing even stronger momentum with persistent inflation. Shorting EUR/AUD and GBP/AUD captures AUD outperformance while maintaining European exposure diversification. |
| USD/CHF & USD/JPY | SHORT BASKET | Dist: -130 pips | Isolating USD mixed sentiment against two weakening currencies. USD faces domestic headwinds while CHF weakens on sentiment and JPY on monetary policy. Provides USD short exposure with diversification across safe-haven and yield currencies. |