Since December 2021, SPY and QQQ have shown a repeating weekly pattern: strong uptrend “expansion” legs followed by “reset” pullbacks. Many of these moves have traveled similar distances. That has created a fairly symmetrical framework around prior measured-move levels. Both ETFs are again near the top of this long-running structure. This area often becomes a decision zone. Price may either hold above prior highs, or fail and rotate back into the earlier range.

How SPY And QQQ Differ In This Structure

SPY and QQQ share the same overall structure, but they often act differently. SPY usually moves in a steadier way with the broader market. QQQ often rallies farther, but it can also show weakness sooner when the structure starts to break. Near the top of a measured move, markets often compress instead of reversing right away. This can look like several tests of the highs followed by pullbacks. Because of that, weekly closes and follow-through matter more than intraday moves. Two outcomes matter most: Acceptance would look like strong weekly closes near the highs, shallow pullbacks, and more time trading above the prior ceiling. Rejection would look like weak weekly closes after pushes higher, a lower high on the weekly chart, and more time back inside the prior range. In the past, “reset” phases in this structure have pulled back in the high-teens to low-twenties percent range.

Risk Management At A Long Running Ceiling

With price pressing against a ceiling that has held since late 2021, the priority shifts from chasing momentum to managing risk at a key decision point. We have seen this pattern before. After the large reset that dominated 2022, the expansion through 2024 and 2025 has brought price back to the upper boundary. The next few weeks are about watching for confirmation of the next major move, not predicting it. QQQ is the best early warning signal. Both ETFs are stretched, but QQQ’s higher beta means it may show stress first if this structure begins to fail. Recent earnings from major tech names have been strong, but guidance has been more cautious. If QQQ cannot hold new highs on the weekly chart, that could be an important warning sign. Options markets are also starting to show more caution. The CBOE put/call ratio has climbed to 0.95. That is a meaningful rise from late 2025, when it stayed below 0.80 and signaled extreme complacency. This change suggests traders are starting to buy more downside protection. For derivative traders, this is a time to stay patient and flexible. If weekly closes cannot hold the highs and candles show long upper wicks, it may make sense to start building positions that benefit from a rotation lower. One defined-risk approach is longer-dated put debit spreads on QQQ, which can target a potential reset back into the established range. If the market instead shows acceptance with strong weekly closes above prior highs, that would support the start of a new leg higher. In that case, call debit spreads on SPY can be a prudent way to participate. This keeps upside exposure while limiting risk if the breakout fails. Time is the key variable. The market could spend weeks compressing at this level before choosing direction. That makes short-dated options riskier because time decay accelerates. Options with at least 60 to 90 days to expiration are often better suited to handle sideways movement before the trend resumes or reverses. Create your live VT Markets account and start trading now.

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AUD/USD traded near 0.7050 on Tuesday, down 0.40%, after the Reserve Bank of Australia (RBA) released minutes from its February meeting. The Australian Dollar fell because the minutes did not set a clear path for interest rates. The minutes said policymakers would raise rates if needed to prevent inflation from staying above target for too long. They added that price pressures could remain high for an extended period without tighter policy.

Rba Minutes Leave Markets Unsure

The minutes did not signal where rates might go next and said decisions will depend on incoming data. This offered limited support for the Australian Dollar and kept markets cautious about further tightening. Focus has now shifted to Australia’s employment data due later this week. BBH said labour market trends will shape rate expectations. Strong job creation could point to further increases over the next twelve months, while weaker results could add pressure on the currency. In the United States, the US Dollar traded without a clear direction, with thin volumes after a long weekend. Markets are waiting for the FOMC minutes and the preliminary fourth-quarter GDP estimate, which could influence expectations for future Federal Reserve policy. At this time last year, in February 2025, the RBA was raising rates but gave little clarity about its next move. This uncertainty kept AUD/USD hovering around 0.7050. Today, the picture looks different, with the pair trading closer to 0.6550 as the RBA appears to be leaning toward easing policy later this year.

Outlook Shifts As Policy Diverges

The RBA’s shift makes sense as inflation has cooled to 3.1% year over year, well below the peaks seen through 2025. The labour market is also showing signs of easing, with the national unemployment rate recently rising to 4.2%. This suggests earlier rate hikes are flowing through the economy, reducing the need for tight policy. On the other side, the US Dollar is supported by a Federal Reserve that has kept rates steady, unlike early 2025 when the path forward was also unclear. While US inflation has eased to 2.8%, slower GDP growth of 1.5% in the final quarter of 2025 creates a more mixed outlook for the Fed. Even so, the relative firmness in US rate policy continues to support the dollar against the Aussie. In the weeks ahead, this policy gap suggests the Aussie could weaken further against the greenback. Traders may prefer strategies that benefit from a decline, such as buying put options on AUD/USD. This offers exposure to downside moves while limiting risk to the premium paid. Markets will be watching upcoming CPI data from both countries, as surprises could change the outlook. A stronger-than-expected inflation print in Australia could force the RBA to dial back its dovish tone, creating short-term volatility. Traders should stay flexible and monitor key data releases closely. Create your live VT Markets account and start trading now.

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TD Securities expects US PCE inflation to strengthen in December. It forecasts core PCE at 0.25% month on month and headline PCE at 0.27%. That would put core PCE at 2.9% year on year and headline PCE at 2.8%. The firm expects supercore PCE at 0.26% month on month. It says food prices should help lift the headline reading. It also notes that January CPI was softer than expected, especially in services. It adds that some CPI strength is unlikely to show up in its PCE forecast.

Tariffs And Near Term Inflation

TD Securities expects higher tariffs to lift consumer prices in the near term. It forecasts core CPI inflation to peak near 2.8% year on year in Q2 2026, with core PCE reaching similar levels. It expects inflation to stay stubborn in the first half of 2026, then cool in the second half as disinflation resumes. This article was produced using an AI tool and reviewed by an editor, and it was published by the FXStreet Insights Team. The inflation outlook for the first half of the year looks more persistent than many expected. We saw this in the firm December 2025 Personal Consumption Expenditures (PCE) report and in January CPI. January CPI was not as hot as feared, but it still suggests ongoing price pressure. That makes it harder to argue that the Federal Reserve can start cutting rates soon. Much higher tariffs, driven by new trade policies taking effect this quarter, are now a key reason prices could rise. As a result, we expect core inflation measures to move higher and peak in the second quarter. We now project core CPI to reach a cycle high near 2.8% year over year by late spring.

Market Implications For Rates

This argues for interest-rate positions that reflect a more patient Fed. The market is starting to remove the chance of a rate cut in the first half of 2026, which is a big change from a few weeks ago. Based on the CME FedWatch Tool, the odds of a rate cut by June are now below 25%, down from over 50% at the start of the year. This gap between a hawkish Fed and hopes for falling inflation could increase volatility. With uncertainty around the real impact of tariffs and whether services inflation will stay sticky, options may help as a hedge. We are considering positions such as VIX call options or straddles on major indices to protect against a potential market drop. This setup is similar to 2022, when early signs of cooling inflation were followed by repeated upside surprises. That period showed that the last stage of disinflation can be the hardest. The Fed had to stay aggressive then, and we see a similar risk today if the market moves too far ahead of the data. Create your live VT Markets account and start trading now.

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Canada’s CPI rose 2.3% year on year in January. That was down from 2.4% in December and below the 2.4% forecast. Prices were flat month on month. The Bank of Canada core CPI rose 2.6% year on year and 0.2% month on month. Other BoC measures were 2.7% for Common (from 2.8%), 2.4% for Trimmed (from 2.7%), and 2.5% for Median (from 2.6%). Statistics Canada said gasoline was the main reason the headline rate slowed. It also said the temporary GST/HST break in January 2025 continued to affect year-on-year comparisons in January 2026. Restaurant meals were hit most. Alcoholic drinks, toys, and children’s clothing were also affected. After the release, USD/CAD traded around 1.3650–1.3660. Earlier preview material pointed to a 13:30 GMT release time and a March 18 BoC meeting. Rates were expected to stay at 2.25%. The preview also listed technical levels: 1.3724, 1.3760, 1.3820, 1.3870, and 1.3928. Support was at 1.3481 and 1.3418. It also put RSI near 45 and ADX near 28. With inflation at 2.3% in January, a bit cooler than the 2.4% expected, near-term pressure on the Bank of Canada has eased. That gives the Bank more room going into the March 18 meeting and supports the view that it will hold rates at 2.25%. For traders, this lowers the risk of a hawkish surprise and leans toward a weaker Canadian Dollar. The data favors selling short-term CAD strength, or buying dips in USD/CAD. Headline inflation is lower, but core inflation is still sticky and well above the 2% target. That makes it hard for the Bank to hint at near-term rate cuts. This mix supports a slow move higher in USD/CAD rather than a fast breakout. It can also support strategies like selling out-of-the-money CAD call options. Recent data shows a clearer gap between the Canadian and U.S. economies. Last week’s U.S. jobs report stayed strong, with more than 200,000 jobs added. Canada’s early-February jobs data showed unemployment edging up to 6.2%. This policy gap matters: the U.S. Federal Reserve looks set to stay on hold, while the Bank of Canada could tilt more dovish. That can support USD/CAD in the weeks ahead. In the past—especially during the 2022 commodity surge—oil spikes gave the CAD a big lift. But Western Canadian Select is now steady around $65–$70 per barrel, so that tailwind is missing. Without strong support from oil, the CAD is more sensitive to rate differentials, which currently favor the U.S. Dollar. With USD/CAD still biased higher, traders may want strategies that benefit from a controlled rise. One approach is buying USD/CAD call spreads, for example targeting the 1.3724 February high. This keeps risk defined while positioning for further upside. It also fits a market that is continuing to price out the chance of a BoC rate hike, while still allowing for sudden pullbacks. The mix of cooler headline inflation and firm core inflation will likely keep volatility elevated around key data. That also raises the chance that options implied volatility is too low ahead of the next BoC meeting. If traders think the market is underpricing the risk of a bigger move, they could consider buying straddles or strangles, even without a strong view on direction.

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ING said the Reserve Bank of New Zealand’s November 2025 projections underestimated inflation after new CPI data came in above its forecasts. Fourth‑quarter CPI was 3.1% year on year versus the RBNZ’s 2.7% estimate, while non‑tradable CPI was 3.5% versus 3.2%. ING expects the RBNZ to leave rates unchanged at its February meeting. The focus will be on the bank’s guidance and updated projections. The November track pointed to a first rate rise in 2Q27, based on headline inflation falling to 2.2% in the second half of 2026.

Inflation Proving More Persistent

ING estimates inflation will not drop below 2.4% at any point this year. It expects a first‑quarter reading of about 2.7% to 2.8%. That compares with the RBNZ’s 2.3% estimate for 1Q. ING forecasts two rate rises in 2026, taking the policy rate to 2.75%, starting in September or October. It also expects one more rise in 2027 to bring the rate back to a neutral level of 3.0%. The Reserve Bank of New Zealand’s November 2025 projections now look too optimistic about how fast inflation would cool. Fourth‑quarter inflation was stronger than expected. This raises doubts about whether last year’s sharp rate cuts went too far. Sticky inflation also weakens the view that the easing cycle was timed perfectly. Recent data also points to a stronger economy than expected. The January jobs report showed unemployment falling to 3.8%. The latest Quarterly Employment Survey showed private‑sector wage growth is still solid. Together, these figures suggest price pressures are easing more slowly than the RBNZ expected in 2025.

Market Pricing And Policy Outlook

We do not expect a rate change at this month’s meeting. Instead, markets will focus on the RBNZ’s new projections and what they imply for future policy. With inflation staying high, the old plan for a first rate hike in mid‑2027 looks too late. Investors will look for signs the RBNZ may move this timeline forward. We expect inflation to remain sticky and stay above 2.4% all year. That is well above the RBNZ’s earlier forecasts. If inflation stays this firm, the central bank may need to respond. We expect two hikes in 2026, lifting the policy rate to 2.75%, likely starting in September or October. That would mean part of the 2025 easing cycle gets reversed. For derivative traders, the market may still be pricing in too little tightening from the RBNZ. Overnight index swaps are not fully pricing two hikes in 2026. That could create opportunities to position for higher short‑term rates. A sharp repricing may happen once the RBNZ updates its guidance in the coming weeks. Further out, we think the tightening cycle may continue. We expect another hike in 2027, bringing the policy rate back to a neutral 3.0%. The return to price stability may take longer, and it may require higher rates, than markets expected only a few months ago. Create your live VT Markets account and start trading now.

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Canada’s core Consumer Price Index (CPI) rose 0.2% month over month in January. This was unchanged from the previous 0.2% reading. This shows core consumer prices are rising at the same monthly pace as before. Core CPI tracks price changes while excluding some of the most volatile items.

Core Inflation Stays Sticky

Core inflation remains persistent. The latest 0.2% monthly increase in January keeps the annualized pace near 2.4%. That is still above the Bank of Canada’s 2% target. As a result, hopes for a first-quarter rate cut are fading. This inflation update follows a stronger-than-expected labour report. Canada added 45,000 jobs last month, beating forecasts and lifting wage growth to 4.5%. Strong job growth can support consumer spending, which makes it harder for inflation to cool. The Bank of Canada is likely to view this mix as a reason to stay cautious. Because of this, we are focusing on options strategies that benefit from a “hawkish hold” by the central bank. Markets are now reducing the odds of a rate cut before summer—a big change from expectations in late 2025. Traders may consider selling call options on bond futures or using payer swaps to position for rates staying firm. The Canadian dollar may also find support from these steady inflation readings. As rate cuts get pushed further out, the yield gap versus other currencies, such as the US dollar, may stay narrow. This can support low-cost call option structures on the CAD/USD pair, aiming for strength in the coming weeks.

Equity Volatility Hedging Approaches

For equity derivatives, higher-for-longer rates can weigh on the broader S&P/TSX 60 index, especially rate-sensitive sectors like real estate. We expect more market swings as traders adjust to the idea that rates may stay elevated longer than they expected last year. This favors using options to hedge long exposure or strategies designed to benefit from rising volatility. Create your live VT Markets account and start trading now.

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Canada’s Consumer Price Index (CPI) was 0% month on month in January. This was below the forecast of 0.1%. This means consumer prices did not rise or fall in January. The result was 0.1 percentage points below expectations. A flat January inflation print is a clear dovish signal for the Bank of Canada. The surprise slowdown in price pressure gives the central bank more room to cut interest rates sooner than expected. We are now pricing in a much higher chance of a rate cut at the April meeting. This puts immediate downward pressure on the Canadian dollar. USD/CAD jumped to 1.3650 this morning as markets price in lower yields in Canada versus the United States. This pattern is familiar: the loonie fell for months in the second half of 2025 after inflation repeatedly came in below forecasts. For equities, the news is supportive, especially for the S&P/TSX Composite Index. Lower borrowing costs and a more accommodative central bank are generally positive for earnings and valuations. We are looking at call options on the index, targeting a break above the 22,500 resistance level in the coming weeks. In fixed income, the reaction was quick. Bond prices rallied as traders moved to price in rate cuts. The Canada 2-year government bond yield—a key signal for the Bank of Canada’s policy path—fell 10 basis points to 3.85% after the release. This supports long positions in Canadian government bond futures. We should also watch rate-sensitive sectors that tend to benefit most when rates fall. Call options on real estate (REIT) and utility sector ETFs could offer strong upside. In 2025, these sectors often led when markets started to seriously price in monetary easing.

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Canada’s Consumer Price Index (CPI) rose 2.3% year over year in January. This was below the 2.4% forecast. This CPI print suggests inflation was a bit lower than expected. No other details were provided. At 2.3%, inflation gives the Bank of Canada more room to think about cutting interest rates sooner. Markets have quickly adjusted. Overnight swaps now price in almost a 70% chance of a cut by the July meeting, up from about 45% last week. This shift should pressure the Canadian dollar. That means we should consider trades that benefit if USD/CAD rises. In 2025, the Canadian dollar fell by more than three cents versus the U.S. dollar in the quarter after the Bank first signaled a pause in rate hikes. Buying USD/CAD call options, or call spreads, could be a good way to position for a similar move in the coming weeks. In rates, this data makes Government of Canada bonds more appealing. With the benchmark rate at 4.25%, yields now have more room to fall than to rise. Traders can look at buying CORRA futures, which should gain value if the Bank cuts rates as the market expects. Lower rates can also support Canadian equities, especially sectors that are sensitive to borrowing costs, such as REITs and utilities. The S&P/TSX 60 Index has struggled to move above recent highs, but the chance of lower rates could be the catalyst it needs. Call options on broad-market ETFs can provide exposure to this potential upside. Still, we need to watch the strong labor market. The latest report showed wage growth holding at 4.5%. Stubborn wage pressure could make the Bank of Canada more cautious than this CPI reading alone suggests. Any hawkish comments from Bank officials could quickly reverse the initial market reaction.

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Canada’s Bank of Canada core consumer price index rose 0.2% month over month in January. This follows a -0.4% reading the month before. This shift marks a move from a monthly decline to a monthly increase. The latest figure is 0.6 percentage points higher than the prior value.

Inflation Reversal And Rate Cut Odds

The latest inflation data shows a clear reversal. Core prices rose 0.2% in January after falling 0.4% in December 2025. This unexpected increase suggests that underlying inflation is not cooling as fast as expected. As a result, a near-term interest rate cut from the Bank of Canada now looks less likely. Other data supports this view. Canada’s economy added 45,000 jobs last month, far above forecasts for a 15,000 gain. With year-over-year core inflation still steady at 2.6%, the central bank has little pressure to ease policy. Strong growth also gives it room to wait and see whether inflation moves back to the 2% target. For derivatives traders, this means trades based on large, rapid rate cuts may need to be reduced or closed. The Overnight Index Swaps market is already adjusting, with only a 20% chance of a cut priced in for the April meeting. That is a big drop from the 60% probability priced in just a few weeks ago. This also differs from late 2025, when markets expected several rate cuts this year. The December drop now looks more like a one-off than the start of a new trend. Expectations may need to shift toward a “higher for longer” outlook from the Bank of Canada.

Positioning For A Higher For Longer BoC

We are therefore looking at options strategies that could benefit from a steady or stronger Canadian dollar, especially versus currencies where central banks are still expected to cut rates. One approach is buying call options on the CAD/USD pair or selling out-of-the-money puts. Implied volatility in interest rate futures may also rise ahead of the next Bank of Canada meeting in March. Create your live VT Markets account and start trading now.

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Canada’s foreign portfolio investment in Canadian securities was **-$5.57bn** in December. This was below the expected **$14.27bn**. This means foreign investors pulled money out of Canadian securities during the month. The difference versus the forecast was **$19.84bn**.

Shift In Foreign Investor Sentiment

Foreign sentiment toward Canadian assets has turned weaker. December 2025 showed a **$5.57bn** net outflow, even though markets expected a **$14.27bn** inflow. That is a sharp reversal and the biggest outflow in more than 18 months. It suggests foreign investors are becoming less confident. This is also a bearish sign for the Canadian dollar. With less foreign demand for CAD to buy Canadian securities, the currency may weaken further against the US dollar. USD/CAD has already climbed to **1.3850** in early February 2026 trading, and it could test **1.40** in the coming weeks. Traders may look at buying US dollar call options or shorting Canadian dollar futures. Implied volatility on CAD options has risen to **8.9%**, showing higher uncertainty. These trades can help investors profit from, or hedge against, a weaker loonie. Outflows can also add selling pressure to Canadian stocks. The **S&P/TSX Composite Index** benefited from foreign buying through much of 2025, but it now looks more exposed to a pullback. The index is already down **2.5%** since the start of February, with financial and resource stocks dropping the most. Put options on TSX-tracking ETFs offer a direct way to position for a potential decline. Watch for institutional selling in major Canadian banks and energy producers, which often reflects foreign demand. A move below **21,000** on the TSX would support a more bearish trend.

Historical Parallels And Oil Link

This move is similar to 2014–2015, when falling oil prices led to sustained capital outflows from Canada. That period brought a long stretch of weakness in both the Canadian dollar and Canadian stocks. Today, WTI crude prices sitting just below **$70** a barrel are adding to these concerns. Create your live VT Markets account and start trading now.

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