Key Upcoming Data Releases
The Personal Consumption Expenditures (PCE) inflation measure for January is also scheduled for release. The January JOLTs report is due after a delay linked to the government shutdown. Looking back at early 2025, we saw a brief improvement in the US trade deficit. The consensus at the time was that this was temporary. The expectation was for the deficit to widen again as imports recovered. That old view is now being challenged by current data. The latest release from the Census Bureau for January 2026 showed the goods deficit unexpectedly shrank to $75.4 billion, driven by a surge in high-tech and energy exports. This trend has been building over the last quarter, bucking the earlier predictions. This sustained improvement in the trade balance suggests underlying strength for the US dollar. Traders should consider positions that benefit from a stronger dollar, such as buying call options on USD/JPY or put options on EUR/USD. These strategies could pay off if export strength continues to surprise the market.Inflation And Rates Outlook
The focus on inflation has also shifted dramatically since we were watching those early 2025 reports. While geopolitical tensions and high fuel prices were the primary concern then, today the narrative is about disinflation. Core PCE inflation, the Fed’s preferred gauge, came in at 2.3% last month, fueling market expectations for rate cuts later this year. With the Federal Reserve now signaling a pivot towards easing, interest rate derivatives are key. Traders should look at futures options on the 2-year Treasury note to position for lower yields. The environment also suggests lower market volatility compared to the uncertainty we faced in 2025. Create your live VT Markets account and start trading now.
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