Relative Strength & Strategy Insights | Updated: Feb 20, 2026 at 12:02:17
Dollar Index slipped due to softening CPI renewing Fed easing expectations; U.S. trade deficit unexpectedly widened; jobless claims decreased more than expected but retail sales were flat (0.0% vs 0.4% forecast), suggesting mixed economic signals with dovish Fed bias.
European shares mixed with geopolitical concerns (war clouds dragging CAC 40 from peak, DAX cautious), but German wholesale prices rose (0.9% MoM vs 0.3% forecast) and Eurozone GDP growth stable at 0.3% QoQ; trade balance improved to 12.6B.
Yen rose on BoJ rate hike speculation; Japan manufacturing PMI jumped to 52.8 (expansion); core machinery orders surged 19.1% MoM; though trade deficit exists, positive economic data supports yen strength.
Pound rose despite weak UK inflation (lowest in 10 months at 3.0%), suggesting market sees BoE rate cut priced in; GDP growth weak (0.1% QoQ vs 0.2% forecast), industrial production fell -0.9% MoM, but trade deficit narrowed slightly.
Australian market volatile (significantly higher then modestly lower); unemployment held steady at 4.1%, wage growth stable at 0.8% QoQ, but Westpac consumer confidence declined (-2.6% vs -2.0% forecast) and building permits fell sharply (-14.9% MoM).
Limited direct news; building permits rose 6.8% MoM (better than previous -13.1%), but new motor vehicle sales dropped to 127.25k; oil inventory builds (EIA crude stocks +8.53M) may pressure commodity-linked CAD.
Business NZ PMI at 55.2 (expansion), business inflation expectations rose to 2.37% (vs 1.7% forecast), but visitor arrivals slowed to 7.0% YoY; no strong directional cues.
Consumer confidence improved slightly (-30.0 vs -31.0 forecast); inflation stable at 0.1% YoY; safe-haven demand may be muted with easing geopolitical tensions.
| Strategy Pair | Action | Target | Strategy Rationale |
|---|---|---|---|
| EUR/JPY & GBP/JPY | SHORT BASKET | Dist: -150 pips | Isolating JPY strength by shorting two European currencies against JPY; JPY boosted by strong PMI, machinery orders, and BoJ hike expectations, while EUR and GBP face mixed/weak economic data. |
| AUD/USD & NZD/USD | LONG BASKET | Dist: +100 pips | Isolating USD weakness by longing two commodity currencies; USD weakening on dovish Fed expectations, while AUD and NZD have stable employment (AUD) and positive PMI (NZD), though both face mixed domestic signals. |
| EUR/USD & GBP/USD | LONG BASKET | Dist: +80 pips | Isolating USD weakness against two major European currencies; USD soft on CPI and trade deficit, while EUR and GBP have some supportive elements (EUR trade balance, GBP inflation drop potentially limiting further BoE dovishness). |
| CAD/JPY & AUD/JPY | SHORT BASKET | Dist: -120 pips | Isolating JPY strength against two commodity currencies; JPY strong on economic data and BoJ speculation, while CAD and AUD face mixed domestic indicators (CAD oil inventory builds, AUD weak consumer confidence). |
| GBP/AUD & GBP/NZD | LONG BASKET | Dist: +90 pips | Isolating relative GBP resilience vs. underperforming commodity currencies; GBP showed strength despite weak data, while AUD and NZD have softer consumer/business sentiment; neutralizes single-currency GBP risks. |
| EUR/CHF & GBP/CHF | LONG BASKET | Dist: +70 pips | Isolating CHF weakness against European majors; CHF lacks strong catalysts with stable inflation and muted safe-haven demand, while EUR and GBP have some supportive factors (EUR GDP, GBP inflation drop potentially priced in). |