Relative Strength & Strategy Insights | Updated: Feb 07, 2026 at 12:02:34
Mixed data: Strong durable goods orders (5.3% vs 1.1% forecast) and factory orders (2.7% vs 1.4% forecast) suggest economic resilience, but higher-than-expected jobless claims (209k vs 205k forecast) and widening trade deficit (-56.8B vs -37.0B forecast) indicate potential headwinds. Fed holding rates steady at 3.75%.
Negative economic data: Retail sales fell more than expected (-0.5% vs -0.2% forecast), private sector growth weakest in 4 months (PMI 51.3), and Eurozone stock markets cautious ahead of ECB decision. German inflation at 2.1% YoY is below expectations, suggesting easing price pressures.
Yen weakening due to political unpredictability and fiscal concerns. Economic data mixed: Services PMI improved (53.7), but retail sales declined (-2.0% MoM vs 0.3% forecast), industrial production weak (-0.1% MoM), and Tokyo CPI (1.5% YoY) below expectations (1.8%).
UK stocks weak ahead of BoE announcement, suggesting caution. Some positive data: Car production strong (17.7% YoY vs 6.7% forecast), but mortgage approvals (61.01k) below expectations (64.4k). Market awaiting BoE policy decision for clearer direction.
strengthening
BoC held rates steady at 2.25% as expected. Trade balance worsened (-2.2B vs -0.6B forecast), but wholesale sales strong (2.1% MoM vs 0.4% forecast). GDP growth modest (0.1% MoPrel vs 0.2% forecast).
Trade balance turned positive (0.05B vs -0.18B forecast), exports strong (7.65B). ANZ business confidence solid (64.1 vs 73.9 forecast but still positive). Consumer confidence improved (107.2 vs 102.4 forecast).
Economic sentiment declined (-4.7 vs 5.5 forecast), but trade balance remained strong (3.0B vs 3.8B forecast). KOF leading indicators slightly below expectations (102.5 vs 103.2 forecast).
| Strategy Pair | Action | Target | Strategy Rationale |
|---|---|---|---|
| AUD/USD & NZD/USD | LONG BASKET | Dist: +150 pips | Isolating USD mixed sentiment by longing two commodity currencies with strong fundamentals (AUD inflation beat, NZD trade surplus) to hedge against specific antipodean risks while benefiting from USD uncertainty. |
| EUR/JPY & GBP/JPY | SHORT BASKET | Dist: -180 pips | Targeting JPY weakness against two European currencies. EUR and GBP both face central bank uncertainty (ECB/BoE decisions), but JPY's political/fiscal concerns and weak retail data create stronger downside pressure. |
| EUR/AUD & EUR/NZD | SHORT BASKET | Dist: -140 pips | Isolating EUR weakness against two strengthening commodity currencies. EUR faces deteriorating economic data while AUD and NZD show inflation strength and trade improvements, creating favorable divergence. |
| GBP/CAD & AUD/CAD | LONG BASKET | Dist: +130 pips | Targeting CAD mixed sentiment against currencies with clearer directional bias. GBP ahead of BoE decision and AUD with strong inflation data provide better fundamentals than CAD's steady but unspectacular performance. |
| USD/CHF & USD/JPY | SHORT BASKET | Dist: -160 pips | Hedged USD short position: CHF provides safe-haven characteristics amid market uncertainty, while JPY offers carry trade appeal due to weakness. Both pairs reduce single-currency USD exposure while maintaining bearish USD view. |
| NZD/JPY & CAD/JPY | LONG BASKET | Dist: +200 pips | Maximum JPY weakness play: NZD strongest fundamental performer combined with CAD's steady policy. Both commodity currencies benefit from JPY's political/fiscal concerns and weak economic data, creating high-conviction carry opportunity. |