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Canada’s annual new housing prices fell 2.1% in February, easing from the previous 2.3% decline

Canada’s New Housing Price Index fell by 2.1% year on year in February. This compared with a 2.3% year-on-year fall in the previous reading.

Housing Market Finding A Floor

The February new housing price data shows the year-over-year decline slowing to -2.1%, an improvement from the previous reading. This is the clearest signal yet that the housing market correction we experienced through 2025 is finding a bottom. We should now position for a shift in Bank of Canada sentiment, as the pressure for further deep interest rate cuts will likely decrease. This housing stabilization suggests that interest rate volatility may decline, with the central bank potentially holding its policy rate steady through the next quarter. We have seen futures markets already pull back on the odds of a May rate cut, a trend this data will reinforce. Therefore, we should consider strategies that benefit from a stable or slightly rising short-term yield environment. For foreign exchange traders, a less dovish Bank of Canada strengthens the Canadian dollar, particularly against the US dollar. We can expect the CAD/USD pair to find renewed support, especially since it has been holding steady despite recent oil price weakness. Buying call options on the CAD for the second quarter appears to be a favorable risk-reward trade. This data is a clear positive for Canadian financial and real estate equities, which have been under pressure. We should look at buying call options on the major Canadian banks and select residential REITs, as a stable housing market directly improves their earnings outlook. Implied volatility on these names has been relatively compressed, offering attractive entry points for bullish positions. The fundamental support for a housing floor has been building, with Q4 2025 immigration figures from Statistics Canada showing population growth continuing to significantly outpace housing supply. We saw a similar pattern in the 2023 market, where slowing price declines were a leading indicator for a rally in housing-sensitive assets. This historical precedent suggests the current market is following a familiar recovery script.

Positioning For The Next Quarter

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Written on March 20, 2026 at 7:51 pm, by

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Canada’s monthly New Housing Price Index rose 0.3%, beating forecasts of a 0.3% fall in February

Canada’s New Housing Price Index rose by 0.3% month on month in February. The forecast was a fall of 0.3%. This is a 0.6 percentage point difference from expectations. The data point is reported as month-on-month. This surprisingly strong housing number fundamentally challenges the view that the Bank of Canada will cut rates soon. We are seeing an immediate repricing in derivatives that track interest rate expectations, like the Canadian Overnight Repo Rate Average futures. Traders should anticipate that bets on a rate cut before the summer of 2026 will quickly be unwound. This data should provide a strong tailwind for the Canadian dollar, especially against the US dollar. Looking back at 2025, we saw the CAD weaken as our economy showed signs of slowing faster than the U.S. Now, with swaps markets likely pricing out at least one full rate cut for this year, we should consider buying CAD call options or selling USD/CAD futures to position for a stronger loonie. For the S&P/TSX 60 index, the path is less clear and warrants a more cautious options strategy. While a resilient economy is good for our banks and resource companies, the prospect of higher-for-longer interest rates will be a headwind for growth and real estate sectors. This is especially true given that Canadian household debt-to-income levels were already elevated above 175% at the end of 2025, making the economy very sensitive to borrowing costs.

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Written on March 20, 2026 at 7:51 pm, by

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In January, Canada’s monthly retail sales rose 1.1%, missing the 1.5% forecast by 0.4%

Canada’s month-on-month retail sales rose by 1.1% in January. The forecast was 1.5%. The result was 0.4 percentage points below expectations. It indicates retail sales growth was weaker than predicted for the month. The January retail sales figure of 1.1% is a significant miss, showing that the Canadian consumer is tightening their spending more than we anticipated. This follows the weaker-than-expected housing start numbers we saw last month, painting a picture of a cooling economy. We should therefore adjust our strategies to account for a more sluggish economic environment in the coming months. This data directly pressures the Canadian dollar, and we’ve already seen the loonie slip below 0.7200 against the US dollar this morning. A slowing domestic economy reduces the likelihood of any hawkish stance from the Bank of Canada. We should consider buying USD/CAD call options or CAD put options to position for further currency weakness. The Bank of Canada’s path is now clearer, with the market pricing in a 50% chance of a rate cut by September, up from just 25% a month ago. This makes long positions in Canadian bond futures, such as the three-month BAX contracts, more appealing. We are essentially betting that the central bank will have to act to stimulate the economy sooner rather than later. On the equity side, this consumer weakness is a direct threat to retailers and related sectors on the S&P/TSX Composite Index. The S&P/TSX Capped Consumer Discretionary Index is already lagging the broader market by 3% this quarter. Purchasing put options on this index or specific retail-focused ETFs provides a good hedge against potential earnings misses. We saw a similar slowdown develop in the second half of 2025, where weakening consumer data preceded a period of increased market volatility. That experience suggests that even if the market doesn’t fall immediately, we can expect wider price swings. This makes it a good time to review our positions on implied volatility, perhaps by buying straddles on key indices.

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Written on March 20, 2026 at 7:50 pm, by

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January Canada retail sales excluding autos rose 0.8%, undershooting the 1.2% forecasted monthly increase

Canada’s retail sales excluding motor vehicles rose by 0.8% month on month in January. The forecast was 1.2%. The outcome was 0.4 percentage points below expectations. The report refers to the month-on-month change for January. We see that the January retail sales miss was an early signal of a cooling consumer. This trend appears to be continuing, as February’s inflation data released last week also came in softer than expected at 2.6%. The most recent jobs report also showed the unemployment rate ticking up slightly to 6.2%, reinforcing this view of a slowing economy. This data stream shifts our focus toward the Bank of Canada’s next move. The probability of an interest rate cut before the summer is now increasing, a change from the sentiment we held at the start of the year. Traders are looking at derivatives tied to the Bank of Canada’s overnight rate to position for a more dovish policy stance in the coming months. Consequently, the Canadian dollar is facing headwinds. The prospect of lower interest rates relative to the U.S. has helped push the USD/CAD exchange rate above the 1.3700 level. We are considering buying call options on USD/CAD as a way to capitalize on potential further weakness in our currency. This consumer slowdown is also a concern for Canadian stocks. We are cautious on the S&P/TSX 60, especially in consumer discretionary sectors. Buying protective put options on broad market index ETFs could be a prudent way to hedge against a potential downturn. Looking back, we saw a similar pattern in the fall of 2025 when early signs of slowing growth emerged. Back then, implied volatility on currency options remained low before reacting sharply to central bank comments. This suggests that positioning for higher volatility in the Canadian dollar may be a worthwhile strategy now.

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Written on March 20, 2026 at 7:50 pm, by

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In February, Canada’s monthly industrial product prices rose 0.4%, missing the 1.1% forecasted increase

Canada’s Industrial Product Price Index rose 0.4% month on month in February. The forecast was for a 1.1% increase. The outcome was 0.7 percentage points lower than expected. The figures compare the February reading with the previous month.

Implications For Inflation And Policy

This weaker-than-expected producer price number suggests inflationary pressures are cooling faster than anticipated. For us, this increases the probability that the Bank of Canada will cut interest rates sooner rather than later. This follows the latest Statistics Canada report showing annual Consumer Price Index (CPI) inflation eased to 2.8% last month, moving closer to the central bank’s target. We should consider positioning for lower interest rates through derivatives like Bankers’ Acceptance futures (BAX). The market is currently pricing in a 50% chance of a rate cut by the June meeting, but this data could shift expectations toward the April meeting. Looking back at the slowdown in late 2025, we saw bond futures rally significantly as the market began to price in the end of the hiking cycle that began years earlier. This outlook also implies weakness for the Canadian dollar, as lower interest rate expectations make the currency less attractive. We can express this view by buying put options on the CAD or call options on the USD/CAD pair. The US economy has shown more resilience, with its latest jobs report showing 190,000 new jobs, giving the Federal Reserve less reason to cut rates as aggressively as the Bank of Canada might. For equity markets, the prospect of earlier rate cuts is a positive signal, potentially boosting indices like the S&P/TSX 60. Buying call options on the index or related ETFs could be a capital-efficient way to gain exposure to a potential rally. This scenario mirrors the market recovery we saw after the 2023-2024 tightening cycle, where sectors sensitive to interest rates led the rebound once a pivot was confirmed. Given this single data point, we should also anticipate increased volatility around upcoming economic releases, particularly the next CPI report and the Bank of Canada’s meeting announcement. Using option spreads can be a prudent way to define our risk while speculating on these expected market moves. This is especially important as the last GDP report for the fourth quarter of 2025 showed growth of only 0.2%, indicating the economy is fragile.

Risk Management And Event Volatility

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Written on March 20, 2026 at 6:56 pm, by

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February saw Canada’s Raw Material Price Index at 0.6%, below the expected 2.4% forecast

Canada’s Raw Material Price Index rose by 0.6% in February. This was below the forecast of 2.4%. This morning’s Raw Material Price Index data was a significant miss, coming in far below what we and the market expected. This figure suggests that inflationary pressures at the start of the supply chain are cooling much faster than anticipated. We should view this as a leading indicator that the Bank of Canada’s tight monetary policy is having a strong effect. This weak input price data follows January’s headline inflation rate, which was still stubbornly high at 2.8%. The new RMPI number is the first clear signal that a downturn in the Consumer Price Index could be coming in the months ahead. This fundamentally alters the outlook for the Bank of Canada’s next interest rate decision. We believe the market will now begin pricing in a higher probability of a rate cut by mid-year, shifting expectations forward. Looking back at how markets behaved in 2025, we saw Canadian bond yields fall significantly in the weeks leading up to the Bank’s first policy pivot. Traders should consider positioning for lower yields through instruments like BAX futures or options on bond ETFs. The implications for the Canadian dollar are directly negative, as interest rate differentials with the United States are set to widen. The U.S. Federal Reserve is dealing with more robust growth, with their latest jobs report showing over 215,000 positions added. This policy divergence should put downward pressure on the CAD, making bearish positions on the currency, perhaps through USD/CAD call options, an attractive strategy. This economic signal is compounded by Canada’s slowing growth, with the last quarter of 2025 showing GDP grew at only a 0.9% annualized rate. A combination of weak growth and falling inflation gives the Bank of Canada a clear runway to begin easing its policy. Historically, the RMPI has led the CPI by two to three quarters, so this soft February number points toward a much cooler second half of the year.

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Written on March 20, 2026 at 6:56 pm, by

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OCBC’s Sim Moh Siong says crude neared USD120/bbl on Iran tensions, then eased amid supply assurances

Crude prices briefly rose towards USD120/bbl after Iranian attacks on regional energy infrastructure. Prices then eased after US officials signalled supply support and Israel suggested faster de-escalation. OCBC raised its Brent forecast, with prices expected to hold near USD100/bbl through mid-year. The outlook then points to a gradual decline towards USD70/bbl by early 2027.

Supply Disruption Risks

The report notes that prolonged shipping disruption could lead Gulf producers to shut in output. It adds that this could turn short-term disruption into longer-lasting supply losses. It also states that, even with mitigation measures, up to 10mb/d of available offsets would not cover a sustained closure of the Strait. Given the recent spike in crude toward $120 a barrel, we have seen the CBOE Crude Oil Volatility Index (OVX) surge to over 55, its highest level since the initial escalations in late 2025. This sharp rise in implied volatility makes outright buying of options expensive. Traders should therefore consider strategies like call or put spreads to manage premium costs while still positioning for sharp price movements. The market is currently balanced between supply fears and potential intervention. The US Department of Energy signalling a potential coordinated release from strategic reserves, possibly up to 30 million barrels, is placing a temporary ceiling on prices. We believe selling front-month futures contracts on spikes above $105 while monitoring de-escalation signals presents a short-term opportunity.

Positioning And Hedging

The major upside risk remains the potential for prolonged shipping disruptions in the Strait of Hormuz, a chokepoint for roughly 21 million barrels of oil per day. The available global spare capacity of around 10 million barrels per day is not enough to cover a sustained closure. Therefore, holding some long-dated call options is a prudent hedge against a scenario where temporary disruptions become persistent supply losses. Our forecast is for Brent to remain elevated around the $100 per barrel mark through the middle of the year. This contrasts sharply with the relative stability we saw for much of 2025, when prices averaged closer to $82 per barrel. This new, higher floor suggests that selling cash-secured puts with strike prices in the low $90s could be an effective strategy to collect premium in this elevated range. While immediate risks are to the upside, we anticipate prices will ease toward $70 by early 2027 as global supply rebalances. This long-term bearish view suggests traders could begin to gradually build positions that profit from a decline. This could involve selling futures contracts for delivery in late 2026 or early 2027. Create your live VT Markets account and start trading now.

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Written on March 20, 2026 at 6:55 pm, by

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OCBC’s Christopher Wong says gold faces near-term strain; higher yields, inflation fears spur outflows, liquidations

Gold has fallen as global bond yields have risen and inflation risks have increased. Higher energy prices have reduced expectations for near-term interest rate cuts. Gold-backed ETF holdings have been cut, which has added to the downward move. Gold has also faced bouts of liquidation during periods of market stress, even while geopolitical uncertainty remains high.

Near Term Trading Conditions

Near-term trading conditions are expected to be choppy, with prices struggling to build sustained momentum. The longer-term backdrop is described as supportive, with an expectation of a return to a medium-term uptrend. We are seeing gold prices fall as rising global yields and renewed inflation concerns take hold. The recent February 2026 CPI report showed inflation is still stubborn at 3.1%, pushing the 10-year Treasury yield back above 4.75%. This environment is reducing expectations for any immediate rate cuts from the Federal Reserve. In response, investors continue to pull money from gold-backed ETFs, with net outflows exceeding $2 billion for the first quarter of 2026. This trend adds to the downside pressure on the metal. We have also observed bouts of liquidation during periods of market stress, a pattern reminiscent of what we witnessed during the market jitters in the third quarter of 2025. For the coming weeks, this choppiness suggests traders could consider selling out-of-the-money call options to collect premium on the view that a major price breakout is unlikely. Alternatively, buying near-term put options could serve as a hedge or a direct bet on further downside pressure. These strategies align with the expectation that gold will struggle for sustained momentum.

Longer Term Positioning

Despite this near-term pressure, the broader structural backdrop of persistent geopolitical uncertainties and central bank demand remains supportive. We saw how central banks, particularly in emerging markets, were heavy buyers throughout 2025, a trend that continues to provide a floor for prices. This underlying support justifies a more constructive medium-term outlook. Therefore, traders with a longer horizon might look at establishing bullish positions using options with expirations in late 2026. Buying call options or selling put options at lower strike prices could be an effective way to position for the expected resumption of the medium-term uptrend. This allows traders to look past the current choppiness while defining their risk. Create your live VT Markets account and start trading now.

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Written on March 20, 2026 at 6:55 pm, by

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In the fourth quarter, Mexico’s private spending rose 4% year-on-year, compared with 1.6% previously

Mexico’s private spending rose by 4% year on year in the fourth quarter. This compared with 1.6% in the previous reading. The latest figure shows faster growth in private spending than before. It indicates an increase of 2.4 percentage points from 1.6% to 4%. Given today is March 20, 2026, the unexpected strength in Mexico’s private spending is a significant bullish indicator. The 4% year-over-year jump, smashing the 1.6% figure, suggests the Mexican consumer is far more resilient than we anticipated. This forces a re-evaluation of economic growth forecasts for the first half of 2026, especially after Banxico’s cautious tone in last month’s meeting. We should now consider positioning for a stronger Mexican peso, as this robust domestic demand could lead the central bank to delay any potential rate cuts. The USD/MXN pair, which has been hovering near 17.40, now has a catalyst to break lower toward the 17.00 support level last seen in late 2025. Traders can look at buying May expiration puts on the USD/MXN or selling out-of-the-money call spreads to capitalize on this view with defined risk. This data also signals a positive outlook for the Mexican equity market, particularly consumer-focused stocks. The iShares MSCI Mexico ETF (EWW) is likely to see upward momentum, breaking out of the range it has been in since January 2026. We believe buying near-term call options on EWW is a direct way to play this renewed confidence in the domestic economy. Specifically, sectors like retail and banking stand to benefit, mirroring the trend we saw in the third quarter of 2025 when initial signs of consumer strength emerged. Options on companies like Fomento Económico Mexicano (FEMSA) could see increased bullish activity. Recent data from Mexico’s national retail association, ANTAD, showed same-store sales grew by 5.2% in February 2026, which adds further credibility to this spending surge. However, the primary risk is that this strong data prompts a more aggressive inflation-fighting stance from Banxico than the market is pricing in. Watch for rising implied volatility in Mexican assets, which could make buying options more expensive. We view this as an opportunity to sell put spreads on key Mexican equities, collecting premium while maintaining a bullish-to-neutral stance.

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Written on March 20, 2026 at 6:54 pm, by

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Mexico’s private spending growth eased to 1% quarterly, down from 1.1% previously in the fourth quarter

Mexico’s private spending rose by 1% quarter-on-quarter in the fourth quarter. This was down from 1.1% in the previous quarter. The slight dip in private spending growth for the final quarter of 2025, from 1.1% to 1%, signals a cooling of Mexico’s domestic engine. While this is not a sharp downturn, it is a clear signal of deceleration that we are watching closely. This data point adds to the case for potential weakness in the Mexican peso. This slowdown gives Banxico more reason to consider an interest rate cut in the coming months, especially as we saw inflation ease toward the end of last year. We recall that core inflation in Mexico fell to 4.3% in early 2026, its lowest level in over two years. A rate cut would reduce the appeal of the peso for the profitable carry trades that have kept it strong. The peso has been resilient, trading near 17.05 against the dollar, largely due to Banxico’s benchmark rate holding at a high 11.25% through all of 2025. With this new spending data, we see increased potential for a move toward 17.40 or higher if rate cut expectations build. This contrasts with the U.S. Federal Reserve, which appears to be on a slower easing path, amplifying the potential currency move. In response, we are looking at buying call options on the USD/MXN pair with expirations in the second quarter. This provides a defined-risk way to profit if the peso weakens following future economic data or a dovish shift from the central bank. The uncertainty could also increase implied volatility, making now an opportune time to position before a potential move. For equities, this consumer slowdown suggests caution for the Mexican IPC index, which recently hit all-time highs above 59,000 points. Companies in the retail and consumer discretionary sectors could face headwinds after a strong 2025. We are therefore considering put options on consumer-focused ETFs to hedge against a potential pullback driven by the domestic economy.

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Written on March 20, 2026 at 6:54 pm, by

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Categories: Live Updates

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