As traders watch the FOMC minutes, EUR/USD weakens as mixed US data supports the dollar
EUR/USD fell on Wednesday. It traded near 1.1817, down almost 0.25%. The Euro weakened after a Financial Times report said ECB President Christine Lagarde may leave before her term ends in October 2027. There is no official confirmation.
US data also supported the Dollar. Industrial Production rose 0.7% in January, above the 0.4% forecast, after a revised 0.2% increase in December. Durable Goods Orders fell 1.4% in December versus a 2% forecast, after a 5.4% jump in November. Orders excluding Defence dropped 2.5% after a 6.6% gain. Core orders excluding Transportation rose 0.9%, above the 0.3% forecast.
Savage notes Australia’s leading index slowed sharply, stalling momentum, while commodities support the AUD and the RBA remains hawkish
Australia’s Westpac–Melbourne Institute Leading Index slowed to 0.02% in January 2026. Six-month annualised growth also eased to +0.02%, down from +0.44% in December. This suggests the economy has lost momentum, even though commodity prices have supported the Australian Dollar.
The slowdown came mainly from weaker consumer sentiment and fewer housing approvals. Over six months, these cut the index by 0.16 percentage points and 0.23 percentage points. Commodity prices added 0.36 percentage points, but that boost was partly offset by a 4% rise in the AUD.
RBA Policy And Growth Tension
The Reserve Bank of Australia still has a hawkish bias. If upcoming data allows, it may raise rates again, which could slow growth further. The Reserve Bank of New Zealand is described as neutral, with inflation risks viewed as balanced. AUD/USD is trading near a longer-term value of 0.75. At this level, the exchange rate’s impact on inflation and trade is said to be weaker. Australia’s wage price index rose 0.8% quarter-on-quarter in Q4 2025, matching Q3 2025 and up from 0.7% in Q4 2024. Annual wage growth was 3.4% year-on-year, up from 3.3% in Q3 2025 and 3.2% in Q4 2024. The article notes it was produced using an AI tool and reviewed by an editor. We are seeing a clear conflict: the central bank may want to keep raising rates, but the economy is losing speed. The Leading Index has flattened, showing that the growth seen in late 2025 has stalled. This tug-of-war adds uncertainty to the Australian dollar’s outlook.Implications For Traders And Volatility
The RBA is staying hawkish because inflation is still high. Q4 2025 CPI was 4.3%, well above the target band. Wage growth of 3.4% year-on-year may also worry the RBA, because it can keep price pressures alive. As a result, another rate hike at an upcoming meeting remains possible, which would normally support the Aussie. But the domestic economy is sending warning signs. The biggest drags are falling consumer sentiment and weaker new dwelling approvals, both of which tend to be hit hard by higher interest rates. Meanwhile, the US Federal Reserve has signaled a pause. Markets are now pricing in possible rate cuts later in 2026, which could limit US dollar strength. Commodity prices, especially iron ore holding above $125 per tonne, are helping to support the currency. This reduces the risk of a sharp fall in the Aussie, even as the growth outlook worsens. The exchange rate near 0.75 looks like a middle ground where these forces are balancing out. For derivative traders, this points to a range-bound market with bursts of volatility rather than a clean trend. With signals pulling in opposite directions, implied volatility in AUD/USD options has risen. Strategies like straddles or strangles may appeal to traders expecting a breakout. Traders who expect the pair to stay trapped between a hawkish RBA and a slowing economy may prefer selling options to collect premium within a defined range, such as 0.7350 to 0.7650. This setup is similar to parts of Europe in 2023, where central banks kept tightening even as leading indicators weakened. That period produced choppy, two-way trading before a clearer trend appeared months later. A similar phase of indecision for the Aussie dollar may follow in the weeks ahead. Create your live VT Markets account and start trading now.In January, US industrial production rose 0.7% month on month, well above the 0.4% forecast
US industrial production rose 0.7% month over month in January. The forecast was 0.4%.
The release was published on 18/02/2026 at 14:15:17 GMT. The source was FXStreet.
Implications For Growth And Fed Policy
This stronger-than-expected industrial production reading suggests the US economy has more momentum than we had priced in. It challenges the slowdown story that built through 2025. The Federal Reserve is likely to see this resilience as a reason to keep a cautious, restrictive approach to policy. Markets are already repricing rate expectations. The chance of a mid-year rate cut was above 60% a month ago, but it has now dropped below 40%, based on CME FedWatch data. Core inflation also remained sticky near 3.2% in the last quarter of 2025. With activity still strong, the case for rates staying higher for longer looks stronger. In this setup, selling near-term interest rate futures may fit a “higher for longer” view. For equity derivatives, this may pressure the broader market, but it can still create opportunities in specific sectors. A more hawkish Fed could limit gains in the Nasdaq 100. However, industrial and manufacturing stocks may benefit more directly from stronger output. One approach is to consider call options on industrial sector ETFs, especially those that lagged during the slowdown fears in late 2025. This report is also supportive for the US dollar, which had been trending lower since the Dollar Index (DXY) peaked near 106 last autumn. A more hawkish Fed outlook often draws foreign capital, which can lift the dollar versus other currencies. Long USD positions through futures may look more attractive, especially against currencies where central banks are signaling a more dovish path. Higher factory output also points to stronger demand for industrial commodities. Copper futures, for example, look more interesting after prices fell in late 2025 on recession concerns that now look less convincing. This data suggests demand for raw materials could beat the market’s recent bearish supply-and-demand assumptions.Commodity Demand And Trading Considerations
Create your live VT Markets account and start trading now.In January, US capacity utilisation was 76.2%, below the 76.5% estimate
US capacity utilisation was 76.2% in January. This was below the forecast of 76.5%.
This means capacity use was 0.3 percentage points under expectations. The figure shows how much of the nation’s industrial capacity was in use during the month.
Industrial Activity Shows More Slack
January capacity utilisation came in at 76.2%, below our 76.5% forecast. This points to a softer industrial sector than expected. In simple terms, factories are running with more spare capacity. That can signal weaker economic momentum going into the first quarter. Alongside the January CPI report, which showed inflation easing to a 2.8% annual rate, this supports a more dovish Fed outlook. Interest rate futures have moved, with markets now pricing about a 70% chance of a rate cut by the June meeting. Taken together, these data suggest the Fed’s tightening cycle is likely doing what it was meant to do. For equity traders, a more cautious stance may make sense. Consider put options on broad indices like the S&P 500 to hedge against a pullback tied to weaker growth. If implied volatility rises, long positions in VIX futures or VIX options could also benefit over the coming weeks. In context, 76.2% is the lowest reading in more than a year. It also extends the cooling trend seen through the second half of 2025, when utilisation slipped from around 78%. This looks more like a sustained trend than a one-off dip.FX Markets Price In Lower Rates
In commodities, lower utilisation can point to softer demand for industrial inputs. That argues for caution in materials and energy. Copper futures have already reflected this, dipping below $3.70 per pound. Short positions in industrial metals, or put options on related sector ETFs, may be worth considering. The growing case for earlier Fed cuts is also pressuring the US dollar. The Dollar Index (DXY) has broken below 103 on this news. Further weakness is possible, which could support long positions in currencies such as the euro or yen through futures or call options. Create your live VT Markets account and start trading now.Nomura says the euro should outperform sterling as UK data shift rate expectations and politics raise underpriced risks
Nomura analysts said UK wage and inflation data still point to further monetary policy convergence with the euro area. They linked this to a weakening labour market, especially slower private-sector wage growth. They also noted the UK unemployment rate has risen more than in most other developed markets.
They said some labour indicators have cooled less, such as PAYE jobs. Even so, they said the broader picture still supports easier policy. On inflation, they said headline inflation was in line with forecasts, but slightly above the Bank of England’s projection.
Services Inflation And Rate Cut Timing
They said services inflation remains more stubborn, coming in 0.25 percentage points above the Bank of England’s expectation. They said this lowers the odds of a March rate cut and could shape near-term decisions by Monetary Policy Committee members. They said the services inflation trend still supports policy convergence with the euro area. They also said a narrowing in EUR-GBP front-end rate spreads would support EUR/GBP. They said the next market focus is next week’s UK by-election, following Friday’s PMI data. They said a loss for the incumbent Labour Party would increase pressure on Prime Minister Starmer and raise the odds of a leadership contest. We saw this convergence story play out during 2025, as both central banks started cutting rates. Since then, the Bank of England has lowered rates to 4.50%, while the ECB’s key rate is now 3.25%. This has reduced the gap that once supported the pound. The same trend still argues for a long EUR/GBP bias in the weeks ahead.Sticky Services Inflation And Policy Divergence
Concerns about sticky services inflation from early 2025 still matter today. The latest UK data puts services inflation at 3.5%, well above headline CPI at 2.1%. This could slow the pace of future BoE cuts versus the ECB, where core inflation is now comfortably below 2.5%. Traders may want to consider buying medium-term EUR/GBP call options if they expect this divergence theme to strengthen. The UK labour market has continued to soften, as we flagged last year, though only gradually. Unemployment has edged up to 4.5%. Wage growth is still solid at 4.0%, but it has clearly fallen from the highs seen in 2024. This supports the view that the BoE has room to cut further later this year, which could weigh on the pound. Political risks highlighted in early 2025 did trigger short bursts of volatility, especially around fiscal updates. While the government has since looked more stable, trade talks with the EU are now a fresh source of uncertainty for sterling. In this setting, traders may prefer structures like bull call spreads on EUR/GBP, which limit downside while keeping exposure to upside. Create your live VT Markets account and start trading now.Nasdaq-listed Xcel Energy completes wave (II) near $43.64 and turns higher as a strong wave (III) begins
Xcel Energy Inc (XEL) is reviewed with Elliott Wave analysis on a long-term chart. From the early 2000s, price formed a five-wave advance at a higher degree. That was followed by a wave IV correction and then wave V. A major top then formed, and a larger correction began.
The drop is shown as a three-wave a-b-c corrective move at cycle degree. Wave c is described as ending near **$43.64**. This level is treated as the key invalidation point and as the end of wave **(II)**.
After hitting **$43.64**, the stock moved higher. This suggests the early stage of wave **I of (III)**. On a lower degree, five waves are said to be complete in wave **((1))**, followed by a pullback in wave **((2))**. The next rise is viewed as the start of wave **((3))**.
The outlook stays bullish as long as price holds above **$43.64**. The technical summary is:
– **Invalidation level:** $43.64
– **Trend bias:** Bullish
– **Wave position:** Early stage of wave I of (III)
– **Structure:** Impulsive action after a completed lower-degree five-wave move
Because XEL appears to have finished its correction and is starting a new push higher, this creates an options opportunity. The wave structure points to a strong, sustained rally. That favors strategies that benefit from a rising stock price and possibly rising volatility.
This shift is also supported by fundamentals from late 2025. After an economic slowdown last year, Xcel’s **Q4 2025 earnings** (reported in **January 2026**) showed a **5% revenue beat**. Higher-than-expected industrial demand drove the result and may signal an economic recovery.
The broader backdrop helps as well. The latest **EIA** report forecasts a **2.5% increase** in U.S. electricity consumption for 2026, a clear change from the flat growth seen in 2025. With interest rates stabilizing, capital-heavy sectors like utilities can look more attractive again.
Because of this, buying call options is the most direct way to express the view. Since wave **(III)** is expected to be a longer-term move, expirations **six to nine months out (or longer)** may better capture the move and reduce short-term time decay.
For more conservative risk profiles, **cash-secured puts** or **bull put spreads** offer an alternative. The short strike can be set below **$43.64**, which the technical case treats as the key line in the sand. This approach collects premium while keeping risk defined around a technically important level.
Implied volatility in XEL has been fairly muted during the 2025 correction. If a new impulsive wave gains speed, volatility may expand. That would support being a net buyer of options and could add value to long call positions.
This setup resembles the recovery phase in 2021, after markets stabilized following the 2020 downturn. Utility stocks then climbed in a steady, strong advance as the economy reopened. XEL may now be in the early stages of a similar multi-quarter rally.
TD Securities says softer Canadian core inflation makes it easier for the Bank of Canada to respond to growth headwinds
Canada’s CPI rose 2.3% year over year in January, down 0.1 percentage points. Prices were flat on the month. Markets expected 2.4%, and TD Securities forecast 2.5%.
Food prices rose due to base effects from last year’s HST pause. That was partly offset by lower energy prices and slower shelter inflation.
Core Inflation Momentum Slows
Core CPI-trim and CPI-median both fell 0.2 percentage points to 2.45% year over year. Three-month core inflation dropped to 1.2%. TD Securities said the Bank of Canada is unlikely to react sharply to the softer core trend. It added that weaker core momentum makes it easier for the Bank to respond if new growth headwinds appear in 2026. Canadian fixed income outperformed after the CPI came in below expectations. The Canada–US 10-year spread narrowed by about 2 basis points. TD Securities said further downside rate risks are already fully priced. The softer January CPI print (2.3%) shifts our focus. It suggests disinflation is building. The Bank of Canada may not cut rates right away, but this report lowers the bar for action if the economy weakens further. For traders, the bias in Canadian rates is now more clearly to the downside.Market Implications For Rates
This CPI report adds to other signs that the economy is cooling. GDP growth in Q4 2025 was a weak 0.6% annualized. The latest labour force survey also shows unemployment edging up to 6.2%. Together, these trends strengthen the case for the BoC to begin an easing cycle. Markets are now pricing in at least 75 basis points of cuts by the end of the year. This setup echoes past BoC pivots, such as the 2015 cuts after the oil-price collapse. After aggressive rate hikes in 2023 and 2024, the Bank has room to lower borrowing costs. The next GDP and jobs reports will be key for confirming whether growth is slowing further. In the weeks ahead, derivatives traders may consider trades that benefit from falling Canadian rates. Examples include buying call options on BAX futures or using interest rate swaps to receive fixed, based on the view that rates will fall more than the market expects. These trades assume that incoming data will push the BoC to act sooner rather than later. This view also points to potential weakness in the Canadian dollar, especially if the US Federal Reserve stays on hold. Positioning for a higher USD/CAD—via futures or call options—fits this outlook. A gap in economic momentum between Canada and the U.S. would support that trade. Create your live VT Markets account and start trading now.America’s Redbook Index year-on-year growth rose to 7.2% in February, up from 6.5% previously.
The United States Redbook Index (year-on-year) rose to 7.2% on 13 February. It was 6.5% in the previous reading.
This jump to 7.2% suggests consumer spending is still running hot. That is not helpful if we expect inflation to cool. It also means the economy has more strength than many expected.
Consumer Demand Remains Strong
This figure is not happening in isolation, which makes it more useful for trading decisions. The official retail sales report released on February 15 also beat expectations. It showed sales rising 0.9% in January, versus forecasts of 0.4%. Last week’s January inflation report also surprised to the upside, coming in at 3.3%. Together, these reports point to the same message: demand is still strong. Because the data has been strong, markets are quickly cutting back expectations for Federal Reserve rate cuts. In derivatives markets, the odds of a rate cut at the Fed’s March meeting have fallen to under 15%, down from over 50% just a few weeks ago. We should now assume rates may stay higher for longer. We saw something similar in the second half of 2025. A run of strong data pushed the Fed to signal later cuts, which drove bond yields up and weighed on stocks. That history suggests we should be ready for a similar market reaction now. Over the next few weeks, it may make sense to position for fewer rate cuts than the market previously priced in. One approach is to use options on SOFR futures that benefit if rates stay elevated into the summer. Another is to consider put options on 10-year Treasury Note futures (ZN), which could gain if strong data keeps pushing bond prices down.Strategies For Higher Longer Rates
A strong consumer alongside high rates creates uncertainty. That often leads to choppier markets. In that environment, buying call options on the VIX index can be attractive. This trade can benefit if volatility rises as the market tries to price the Fed’s next move. Create your live VT Markets account and start trading now.Gold holds steadier after declines as easing geopolitical tensions and a stronger US dollar curb gains
Gold rose on Wednesday after dropping to a near two-week low of $4,842 on Tuesday. It traded near $4,952, up almost 1.50% on the day, as buyers stepped in after the dip.
Gains were limited because geopolitical tensions eased and the US Dollar stayed strong. US-Iran talks in Geneva reported a “general agreement on a set of guiding principles”. Iranian negotiators are expected to return in two weeks with proposals.
Dollar Support And Fed Outlook
The US Dollar held firm after strong US labour market data, which lowered hopes for an early Federal Reserve rate cut. Fed Governor Michael Barr said rates should stay unchanged for a while, until inflation moves toward the 2% target. Chicago Fed President Austan Goolsbee said cuts could still happen this year if inflation keeps easing. US Durable Goods Orders fell 1.4% in December versus 2.0% expected, after a 5.4% rise in November. Excluding Transportation, orders rose 0.9% after 0.5% previously. Markets now focus on January Industrial Production and the FOMC minutes, followed by US Q4 GDP and the Core PCE Price Index. On the 4-hour chart, price is below the 100-period SMA at $5,011.07 and above the 200 SMA at $4,838.85, with RSI (14) at 43 and ATR (14) at 52.01. As of February 18, 2026, gold is stuck in a tight range, which makes range-based strategies attractive in the near term. Buyers showed strong support near $4,842, while resistance is limiting gains around $5,000. In this setup, selling cash-secured puts below support or selling covered calls near resistance may help generate income. This fits the current indecision as traders wait for clearer signals.Positioning For Near Term Volatility
The strong US Dollar is slowing gold’s upside, so a cautious or hedged approach may be sensible. The US Dollar Index has held above 104 for several weeks. This strength is supported by a resilient labour market, with more than 200,000 jobs added last month. If traders expect further dollar strength, short-dated put options on gold could help hedge the risk of a drop below $4,800. Over the longer term, the outlook still supports a move higher, helped by expectations that the Fed may pivot later this year. Central banks added a net 800 metric tonnes to official gold reserves in 2025, and that demand helps create a strong price floor. Because of that, any sharp dips toward the $4,800 support zone could be viewed as chances to buy call options dated for the second half of the year. Volatility will be crucial over the next two weeks, especially with the FOMC minutes and PCE inflation data coming up. With gold’s implied volatility near a three-month low, option premiums are relatively cheap. That can make strategies like a long straddle or strangle more attractive. These trades aim to benefit from a large move in either direction after key data, without needing to predict the direction. The most important levels to watch are the moving averages, which may act as triggers for the next move. A clear break and close above $5,011 would signal adding to bullish positions. A sustained move below $4,838 would suggest a deeper correction. Until gold breaks one of these levels, the focus stays on trading the range and preparing for higher volatility. Create your live VT Markets account and start trading now.US durable goods fell 1.4% to $319.6bn, beating forecasts after prior gains, Census Bureau says
US durable goods orders fell 1.4% in December to $319.6 billion, the US Census Bureau said. This came after a 5.4% rise in November and was a smaller drop than the 2.0% decline economists expected.
Excluding transportation, new orders rose 0.9%. Excluding defence, new orders fell 2.5%.
