Relative Strength & Strategy Insights | Updated: Feb 25, 2026 at 18:02:20
U.S. dollar weakened in Asian session amid tariff uncertainty and mixed economic data (GDP growth missed forecasts at 1.4% vs 3.5%, though some housing data beat).
German ZEW sentiment improved (58.3 vs 59.6 prev) but French manufacturing weakened, industrial production missed (-1.4% vs -1.2% forecast), and DAX extended losses on tariff worries.
Yen fell amid political uncertainty and fiscal concerns despite GDP growth turning positive (0.2% annualized vs -2.3% prev). Trade balance deteriorated sharply (-1,152.7B vs 105.7B prev).
Retail sales beat expectations (1.8% MoM vs 0.2% forecast), unemployment held at 5.2%, and inflation cooled to 3.0% YoY (vs 3.4% prev), reducing BoE pressure.
Market slightly higher despite global headwinds, employment data mixed (17.8k jobs vs 25k forecast), wage growth steady at 0.8% QoQ.
Inflation cooled (2.3% YoY vs 2.5% forecast), housing starts missed (238k vs 275k forecast), trade deficit widened (-1.31B vs -2.2B prev).
RBNZ held rates at 2.25%, trade balance turned negative (-0.52B vs 0.05B prev), but dairy prices rose 3.6% and electronic card sales improved YoY.
GDP growth turned positive (0.2% QoQ vs -0.5% prev), trade surplus widened to 3.6B (vs 3.0B prev), showing relative stability amid European uncertainty.
| Strategy Pair | Action | Target | Strategy Rationale |
|---|---|---|---|
| GBP/USD & AUD/USD | LONG BASKET | Dist: +150 pips | Isolating USD weakness by longing two commodity-linked currencies with positive domestic catalysts (strong UK retail, steady Aussie employment) to hedge against individual country risks. |
| EUR/JPY & GBP/JPY | LONG BASKET | Dist: +180 pips | Capitalizing on JPY weakness due to political uncertainty and poor trade data, while diversifying across European currencies to mitigate specific Eurozone manufacturing weakness. |
| CHF/JPY & CAD/JPY | LONG BASKET | Dist: +140 pips | Pairing JPY weakness against two currencies with improving fundamentals (Swiss GDP recovery, Canadian manufacturing sales beat) to create balanced JPY short exposure. |
| GBP/CAD & AUD/CAD | LONG BASKET | Dist: +130 pips | Exploiting CAD weakness from cooling inflation and housing misses against two stronger commodity peers, diversifying to reduce reliance on single commodity correlation. |
| EUR/CHF & GBP/CHF | SHORT BASKET | Dist: -90 pips | Relative CHF strength play against European peers facing manufacturing weakness and tariff concerns, using two pairs to average out individual currency volatility. |
| NZD/USD & CAD/USD | LONG BASKET | Dist: +110 pips | USD short basket using two currencies with central bank divergence potential (RBNZ on hold vs Fed pause, both with improving trade components) to capture broad USD weakness. |