Relative Strength & Strategy Insights | Updated: Feb 22, 2026 at 12:02:16
Strong labor data (jobless claims beat, unemployment rate at 4.3% vs 4.5% forecast) supports Fed pause narrative, but geopolitical tensions (U.S.-Iran conflict concerns) and widening trade deficit create headwinds. CPI data shows inflation moderating (2.4% YoY vs 2.7% previous).
Positive GDP growth (0.3% QoQ), employment gains (0.7% YoY), and strong trade surplus (12.6B vs 9.9B previous). German wholesale prices rising (1.2% YoY) indicate economic resilience despite geopolitical concerns affecting European markets.
Market volatility with Nikkei swinging significantly. Strong current account surplus (7,288.0B vs 1,400.0B forecast) and machine tool orders (25.3% YoY) positive, but PPI steady at 2.3% and foreign bond outflows (-365.7B) create uncertainty.
Poor GDP data (0.1% MoM vs 0.3% previous, 1.0% YoY vs 1.3% previous), manufacturing contraction (-0.5% MoM), and business investment decline (-2.7% QoQ). Only slight improvement in trade balance (-4.34B vs -6.12B previous) provides limited support.
Unemployment steady at 4.1% and strong stock market performance earlier, but weakening consumer confidence (-2.6% vs -2.0% forecast), falling building permits (-14.9% MoM), and declining household spending (-0.4% MoM) indicate domestic challenges.
Building permits rebound (6.8% MoM) positive but new vehicle sales drop sharply (127.25k vs 150.8k previous). Lacks strong catalysts while facing broader commodity currency pressures from geopolitical risks.
Business PMI remains expansionary (55.2) and business inflation expectations elevated (2.37%), but visitor arrivals slowing (7.0% YoY vs 8.2% previous). Bill auction yields stable, showing neutral monetary policy expectations.
Consumer confidence improves (-30.0 vs -31.0 forecast), inflation stable (0.1% YoY), and traditional safe-haven appeal amid geopolitical tensions (U.S.-Iran, Ukraine-Russia). Swiss franc benefits from risk-off sentiment in Asian and European markets.
| Strategy Pair | Action | Target | Strategy Rationale |
|---|---|---|---|
| EUR/USD & GBP/USD | LONG BASKET | Dist: +150 pips | Isolating USD mixed sentiment by longing EUR (strong fundamentals) and shorting GBP (weak fundamentals) against USD. EUR strength vs GBP weakness creates complementary exposure to USD direction while reducing single-currency European risk. |
| USD/JPY & AUD/JPY | SHORT BASKET | Dist: -100 pips | Hedged JPY exposure: short USD/JPY captures USD mixed sentiment and geopolitical risk premium, while short AUD/JPY adds commodity currency weakness exposure. Both pairs likely to move lower on risk-off flows benefiting JPY safe-haven status. |
| EUR/CHF & GBP/CHF | SHORT BASKET | Dist: -80 pips | Isolating CHF strength amid geopolitical tensions. Short EUR/CHF captures CHF safe-haven appeal vs Europe, while short GBP/CHF adds exposure to UK economic weakness. Basket approach reduces single European currency volatility risk. |
| AUD/USD & NZD/USD | SHORT BASKET | Dist: -120 pips | Commodity currency pair against mixed USD. Both AUD and NZD face domestic headwinds (weak Australian data, slowing NZ tourism) while USD has stronger labor market. Basket reduces idiosyncratic risk of either AUD or NZD specific news. |
| EUR/GBP & AUD/GBP | LONG BASKET | Dist: +90 pips | Isolating GBP weakness by longing EUR and AUD against GBP. EUR benefits from stronger Eurozone data, AUD provides commodity exposure, both likely to outperform struggling UK economy. Basket diversifies away from single currency appreciation risk. |
| USD/CAD & USD/CHF | MIXED BASKET | Net: +60 pips | Long USD/CAD (CAD weakness vs mixed USD) and short USD/CHF (CHF strength vs mixed USD). Creates USD-neutral exposure that profits from CAD underperformance and CHF outperformance. Captures relative strength divergence between commodity and safe-haven currencies. |