Colombia’s gross domestic product rose 2.3% year on year in the fourth quarter. This was below the 3.1% increase expected. Because Colombia’s economy is growing much more slowly than expected, the Colombian peso may weaken against the US dollar. The 2.3% result is a clear miss versus the 3.1% forecast and points to a softer economy. That could push USD/COP, now near 4,150, toward 4,300, a level last seen in late 2025. This weak growth number also increases pressure on the Banco de la República to cut interest rates sooner than planned. Inflation is still high at 5.9% in January, but the central bank may need to respond to a slowdown of this size. Traders may want to look at interest rate swaps that benefit if short-term rates fall by mid-year. For currency traders, buying USD/COP call options is a direct way to express this view. Options with strikes around 4,250 and 4,300, expiring in April or May, could gain if the peso drops. A similar move happened in Q3 2023, when a growth scare led to a fast 4% peso devaluation over the next six weeks. On the equity side, the MSCI COLCAP index looks exposed because slower growth can reduce earnings expectations. Put options may help hedge against a decline toward the 1,300 support level. Consumer discretionary and industrial stocks are likely to be hit hardest. Because this miss was unexpected, implied volatility may rise across Colombian assets. The COLCAP’s volatility gauge has already moved up from 18% to 21% in early trading. In this setting, strategies that benefit from bigger price swings—not only a one-way bet—may work best.

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US consumers make up nearly 30% of global consumption, even though the US has only 4.2% of the world’s population. Consumption growth was strong in 2025, but 4Q25 data suggests it is slowing. Retail sales lost momentum in 4Q25. Real-time GDP estimates were also revised lower, pointing to weaker near-term demand.

Us Consumption Showing Signs Of Cooling

Household fundamentals are still described as solid. In that context, the current consumption trend is not seen as alarming. The outlook calls for two 25bp Federal Reserve rate cuts in 2H26—one in 3Q and one in 4Q. Inflation is still expected to run above target during this period. This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. There are early signs that the US consumption engine is cooling after a very strong 2025. The weaker retail sales trend from late 2025 appears to be continuing. January 2026 retail sales rose a modest 0.2%, slightly below consensus forecasts. That means traders may want to watch consumer-focused assets more closely.

Positioning For Rates Volatility And Fed Timing

With spending slowing, one approach is to consider put options on consumer discretionary ETFs, which tend to fall when households cut back. At the same time, call options on consumer staples could benefit, since people still buy essentials even when they reduce non-essential spending. Together, this could form a pair trade for the months ahead as the slowdown story develops. The key issue for rates markets is the expectation of two Federal Reserve rate cuts in the second half of the year. Even with inflation still above target, this points to a more dovish shift ahead. In late 2018, bond prices rallied well before the Fed began cutting rates in 2019. Because of that, it may make sense to look at derivatives that benefit from lower rates later this year. One way to do this is with long-dated call options on Treasury bond ETFs, which can gain as yields fall. SOFR futures for the third and fourth quarters may also offer a more direct way to trade the timing of the expected rate cuts. Uncertainty—between slower growth and a patient Fed—could lead to more market swings. With the VIX near a relatively low 16, volatility hedges may be cheaper than usual. Tools like VIX call options or S&P 500 index straddles can help position for a potential volatility jump as the market approaches mid-year Fed meetings. Create your live VT Markets account and start trading now.

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Gold fell on Monday as economic signals were mixed and the US Dollar strengthened. XAU/USD traded near $4,987 after reaching an intraday high around $5,054. That was down about 0.90%, with prices still moving inside a consolidation range. US inflation cooled, while job data stayed solid. Headline CPI rose 0.2% month-on-month in January, down from 0.3% in December. CPI also eased to 2.4% year-on-year from 2.7%.

Macro Data Keeps Fed Cut Pricing In Focus

Nonfarm Payrolls rose by 130K, up from December’s revised 48K. The Unemployment Rate dipped to 4.3% from 4.4%. Futures markets still price in more than 50 bps of rate cuts this year, with the first cut expected in June, based on the CME FedWatch tool. Geopolitical news also mattered. The BBC reported that Iran may consider compromises on a nuclear agreement if sanctions relief is on the table. Iran’s Foreign Minister Abbas Araghchi arrived in Geneva, with talks set to resume on Tuesday. This week’s calendar includes FOMC minutes on Wednesday. Friday brings the Personal Income and Spending report (including core PCE) and the advance estimate of Q4 GDP. Thin liquidity from the US Presidents’ Day holiday could lead to choppy trading. On the technical side, an ascending triangle points to $5,100 as the breakout level. Near-term support sits around $4,900–$4,880. RSI was 54.94 and ATR 192.20. The 50-day SMA is at $4,645, and the 100-day SMA is near $4,361. With the pullback to about $4,987, the move looks like consolidation after a strong rally. Traders are balancing the case for Fed cuts later this year against a resilient US economy. That push-and-pull is keeping prices in a holding pattern and creating specific setups for derivatives.

Derivatives Strategies For A Range Bound Market

The data points to a slow cooldown, not a sharp slowdown. That supports a patient Fed. Core PCE, the Fed’s preferred inflation gauge, recently ran at 2.6% year-on-year for the 12 months ending January 2026. This supports the view that cuts may come, but not right away. With inflation falling only gradually, the US Dollar could stay firm in the near term, which may limit gold’s upside. Gold previously surged from below $4,400 in Q3 2025 to above $5,000 by year-end as markets priced in a Fed pivot. After such a big move, a pause is normal. Supportive longer-term drivers still remain, including the prospect of easier policy and strong central bank buying, which topped 800 tonnes in 2025. If you expect the uptrend to continue, the $5,100 level is key. One approach is a bull call spread, such as buying the April $5,100 call and selling the April $5,200 call. This targets a move higher with defined risk. It can profit if gold breaks out, while limiting losses if prices stay range-bound or fall. If this week’s FOMC minutes or PCE report points to a more hawkish Fed, $4,900 support may come under pressure. A break below that level could be traded with a bear put spread, either as a hedge or a directional bet. For example, buying a March $4,900 put and selling a March $4,800 put can offer a lower-cost way to position for short-term weakness. With price stuck between support and resistance, premium selling may work best over the next couple of weeks. An iron condor for March expiration, with short strikes around $4,850 and $5,150, could benefit from time decay if gold stays inside the range. The main risk is a surprise, high-volatility move before the upcoming data releases. Create your live VT Markets account and start trading now.

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USD/CAD rose for a fourth day and traded near 1.3628 as the US Dollar stayed strong. Trading was quiet and range-bound because of thin holiday liquidity from US President’s Day and Canada’s Family Day. Markets are focused on Canada’s January CPI on Tuesday. Forecasts are 0.1% month-on-month after -0.2% in December, and 2.4% year-on-year, unchanged.

Bank Of Canada Policy Outlook

In January, the Bank of Canada said its policy aims to keep inflation near 2%. It also said the current policy rate “remains appropriate”. However, it noted risks from trade uncertainty linked to US tariffs. Oil prices gave the Canadian Dollar some support. WTI traded near $63.25, up almost 1.0% on the day. In the US, expectations for rate cuts eased after labour data pointed to steadier conditions. Nonfarm Payrolls rose by 130K after 48K, and unemployment fell to 4.3% from 4.4%. US inflation data was softer. CPI was 0.2% MoM in January versus 0.3% in December, and 2.4% YoY versus 2.7%. Traders still price more than 50 bps of cuts in 2026, while DXY held near 97.00.

Upcoming Risk Events

Next up are the FOMC minutes on Wednesday, then core PCE and Q4 GDP on Friday. USD/CAD is still edging higher, holding near 1.3550 in quiet trading. With holidays in both the US and Canada, low volume is keeping the pair in a tight range. This lull may not last, with key data due later this week. The main focus is Canada’s inflation report on Tuesday. Recent data showed Canada added a stronger-than-expected 37,000 jobs in January 2026. But wage growth has been cooling, which leaves the outlook mixed for the Bank of Canada. If CPI comes in above the current 2.8% annual rate, the BoC may delay any rate cuts. That would likely support the loonie. The US Dollar is also finding support as markets scale back expectations for deep Federal Reserve rate cuts. The January 2026 jobs report showed a solid 190,000 payroll gain, and last week’s CPI was slightly firm at 3.2%. That is a reminder that inflation may take time to return to 2%, and it gives the Fed room to stay patient. This is different from early 2025. Back then, markets priced in more than 50 basis points of Fed cuts for the year, while inflation cooled to 2.4%. The dollar also faced pressure from trade policy uncertainty, which has since eased. Higher oil prices are helping to limit losses in the Canadian dollar. With WTI holding above $85 a barrel, supported by OPEC+ supply discipline and steady global demand, oil remains a key tailwind for Canada’s currency. This helps offset the underlying strength in the greenback. With volatility possible around the upcoming data, buying options may help protect against sharp moves. A USD/CAD straddle ahead of Tuesday’s CPI release could be a way to position for a breakout in either direction. For now, resistance looks near 1.3600. But a stronger-than-expected inflation print could pull the pair back toward support around 1.3450. Create your live VT Markets account and start trading now.

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NZD/USD traded near 0.6040 on Monday and was little changed on the day, as markets waited for the Reserve Bank of New Zealand (RBNZ) decision on Wednesday. The pair has steadied after recent gains. The RBNZ is expected to keep the Official Cash Rate at 2.25%. The main focus is on its guidance. Inflation data show annual inflation was 3.1% in the fourth quarter.

RBNZ Guidance In Focus

Survey data show one-year and two-year inflation expectations have risen. The two-year measure is watched closely because it can signal where inflation is heading and how policy may respond. Markets are also pricing in a chance of tighter policy later in the year if price pressures stay high. The fourth-quarter Wage Price Index is also in focus as a key domestic inflation signal. A 0.8% quarterly rise is expected. In the United States, the US Dollar has been broadly steady after inflation cooled in January. CPI rose 2.4% year on year, down from 2.7%, and 0.2% month on month. These figures support expectations that the Federal Reserve could cut rates later this year. For now, near-term moves in NZD/USD are likely to depend on how the RBNZ communicates its outlook.

Options Strategies Around The Decision

NZD/USD is holding near 0.6150 as the market prepares for the RBNZ’s first interest rate decision of 2026 on Wednesday. No change is expected from the current 5.50% Official Cash Rate, so the key is the wording the RBNZ uses about what comes next. This kind of quiet, tense stretch before a central bank announcement is common. This setup is similar to early 2025, when the rate was 2.25%. At that time, annual inflation was about 3.1%, and markets looked for a hawkish tone because of inflation pressure. Today, with New Zealand inflation higher at 4.7%, markets are again looking for signs the RBNZ will keep a tough stance on inflation. The US outlook adds another factor. US annual inflation in January was 3.1%. With the Federal Reserve’s policy rate still high at 5.25%–5.50%, investors are increasingly discussing whether the Fed may be able to cut rates sooner than New Zealand. If one central bank stays firm while the other turns softer, that gap can become a major driver for currency moves. With that in mind, if we expect the RBNZ to sound more hawkish than the market expects to address the sticky 4.7% inflation rate, buying NZD call options can be a straightforward way to position for a jump in NZD/USD. The key benefit is that the downside is limited to the option premium, which helps if the statement ends up being softer than expected. At the same time, New Zealand’s unemployment rate has risen to 4.0%, which could push the RBNZ to take a more cautious tone. If we expect a more balanced message, buying NZD put options can help protect against a drop in the pair. If we expect a large move but are unsure of direction, buying both a call and a put can be a way to trade higher volatility. Create your live VT Markets account and start trading now.

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US dollar moves are still tied to US economic data and expectations for Federal Reserve rate cuts. This remains true despite new de-dollarisation headlines and swings in AI-related stocks. Softer US inflation and concerns in the AI sector have also weighed on the dollar. A long-term shift in reserves has been underway for two decades. Global FX reserves have slowly moved away from the USD toward gold and smaller reserve currencies such as AUD, CAD, and CHF. Even so, the dollar’s near-term direction is still driven by US growth and what it means for the Fed’s easing cycle.

Usd Weakness And Global Crosscurrents

In early 2026, US equities and the USD have underperformed. At the same time, stronger non‑US equity markets and better global growth expectations have supported a softer USD. This weakness has been most clear against commodity currencies such as AUD and NZD, as well as higher-yielding emerging market currencies. Resilient US growth could limit how far the USD falls. If wage growth and inflation pressures keep easing, long-end Treasuries may again act as a hedge against growth risks. That could support the USD’s safe-haven role. The article says it was created using an AI tool and reviewed by an editor. It also describes the FXStreet Insights Team as journalists who curate market observations, with input from both internal and external analysts. The USD is falling mainly because of economic data, not only because of de-dollarisation headlines. The latest January CPI report showed inflation at 2.8%, below expectations. That increased bets on earlier Fed rate cuts and reinforced the dollar weakness seen since late 2025.

Positioning For Data Driven Volatility

This points to strategies that may benefit from a weaker USD, especially against commodity currencies. The Australian and New Zealand dollars look firm, helped by recent Chinese industrial data that showed a rebound and supported commodity prices. Buying call options on AUD/USD could be one way to position for more upside. However, we expect the USD’s decline to be limited, so large bearish bets may be risky. The US economy still looks resilient. Final Q4 2025 GDP growth was a solid 2.5%. That strength could slow the pace of Fed cuts and help put a floor under the USD. Because markets are focused on data releases, volatility may rise around key events like the next payrolls report. Traders could use straddles on major pairs such as EUR/USD to trade potential swings. We are also watching long-term Treasuries. If inflation keeps falling, they may become an attractive hedge again, which could indirectly support the USD’s safe-haven status. Create your live VT Markets account and start trading now.

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Visteon shares rose 6.8% in the last trading session and closed at $104.94 on higher-than-usual volume. Over the past four weeks, the stock is up 0.8%. The move followed news about Visteon’s software-defined tuner technology and its integration of Inntot. The company said this is designed to support multiple digital radio standards on one platform. It could also lower hardware costs and make software updates easier. Visteon is expected to report quarterly earnings of $2.08 per share, down 53.2% year over year. Revenue is projected at $930.62 million, down 0.9% from the same quarter last year. The consensus EPS estimate for the quarter has been revised 1.9% higher over the past 30 days. The article also notes that research links estimate revisions to near-term stock price moves. In the same industry, Innoviz Technologies closed 0.1% lower at $0.95 and is down 14.8% over the past month. Its consensus EPS estimate is -$0.07, unchanged over the past month. That would be a 22.2% improvement versus a year ago, and the stock has a Zacks Rank of #3 (Hold). We saw a similar setup around this time last year, in February 2025. Visteon (VC) was trading near $105, supported by optimism about its software-defined technology, even as the market expected a weak quarter. As of today, February 16, 2026, the stock is much higher at about $118. That supports the long-term positive trend. The software-defined vehicle theme that began gaining traction last year is now a major market driver. The in-car software market is now expected to grow by more than 15% per year, well above earlier forecasts. This makes Visteon’s technology more central for major automakers and shifts how investors value the company, away from a basic parts-supplier view. With the next earnings report coming up, implied volatility is around 40%. That suggests the market expects a 5–7% move in either direction. This is calmer than last year, when uncertainty was higher after major post-pandemic supply chain problems. Expectations today are for continued solid results, unlike early 2025 when investors were focused on a sharp year-over-year decline. For traders looking for a positive earnings surprise or more upside momentum, March or April call options offer a direct way to express that view. A strike price near $120 can provide leverage if the stock breaks above its current resistance. The maximum loss is limited to the premium paid, which helps manage risk if volatility rises. Another approach, for investors who are cautiously bullish or want to benefit from higher volatility, is selling cash-secured puts. For example, selling a March $110 put lets a trader collect premium. If the stock falls, they may be assigned shares at an effective price below today’s level, which can be a good entry point for a long-term position. It’s also worth noting how the sector has split since last year. VC has done well, while Innoviz Technologies (INVZ) has had trouble building momentum and now trades around $1.25, up from below $1 in 2025. This suggests investors currently favor companies that combine software and hardware in an integrated offering, rather than more speculative component-only suppliers.

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ING’s commodities team says a partial rollback of US aluminium tariffs is unlikely to change the market. The 50% tariff on primary aluminium remains in place. The US still has limited smelting capacity and continues to rely heavily on Canadian supply. The proposed changes are expected to focus on derivative products, not primary aluminium. ING says that would keep the Midwest premium high after last year’s tariff increase.

Tariff Scope And Market Impact

ING says tariffs have already reshaped US trade flows. Primary metal has been pushed away from the US, while scrap inflows have increased. It also notes that some Canadian aluminium has been redirected to Europe. ING adds that exchange inventories are effectively near zero. Destocking continues, and there have been reports of large spot enquiries in Q2. It says the physical market is still tight. ING says a rollback limited to derivatives would not meaningfully affect LME pricing and would only slightly reduce the Midwest premium. It also says global aluminium supply remains tight, inventories are low, speculative positioning is elevated, and policy risk is splitting regional markets.

Trading Implications And Regional Spreads

Based on the 2025 analysis, little has changed. The 50% tariff on primary aluminium is still the key driver in the US market. Small tariff tweaks on other products last year had little impact, as expected. This ongoing tariff continues to support a high Midwest premium, holding around 19 cents per pound. That structural tightness keeps US physical prices above LME levels, raising the real cost of metal for US buyers. For traders, this supports long exposure to CME Midwest Premium futures, either as a hedge or as a way to position for continued domestic tightness. Global exchange inventories also point to tight supply. LME stocks are now below 400,000 tonnes, near multi-decade lows. With inventories this low, the market can react sharply to any disruption, making price spikes more likely. One way to express upside exposure while limiting risk is to use call options on LME aluminium. US production has not closed the gap. Annual primary smelting output is still struggling to rise above 900,000 metric tons, while demand is over 5 million tons. That leaves the US structurally dependent on imports, especially from Canada. This deficit supports a bullish view on North American aluminium prices relative to other regions. The main trading theme remains regional price fragmentation. Strategies that target regional spreads—such as going long the Midwest premium while hedging with a short LME futures position—still look attractive. The drivers behind these trades in 2025 are still in place today. Create your live VT Markets account and start trading now.

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The Reserve Bank of New Zealand (RBNZ) is expected to keep the Official Cash Rate unchanged at its first 2026 meeting on 18 February. The RBNZ previously signalled that the rate cut in November was the final move in the easing cycle. The RBNZ has said rates are likely to stay unchanged through 2026. Even so, markets are now pricing in the chance of a rate rise as early as Q3 2026.

Focus On Policy Guidance

Because of this, the main focus is whether the RBNZ shifts its guidance in a more hawkish direction. Any change in language or forecasts could reshape expectations for future rates. With the Reserve Bank of New Zealand meeting this Wednesday, 18 February, the bank is widely expected to hold the cash rate steady. The November 2025 rate cut was flagged as the last cut in that easing cycle. The key issue now is what the bank says about the outlook. Markets are starting to question the RBNZ’s view that rates will stay unchanged throughout 2026. Traders are now pricing in a possible hike by the third quarter. This change follows last month’s data showing quarterly inflation unexpectedly rose to 3.2%, moving above the RBNZ’s 1–3% target band. The market view is that the bank cannot ignore that pressure. The argument for a more hawkish tone is also supported by a stronger-than-expected labour market. Unemployment recently fell to a six-month low of 3.8%. A modest recovery in the housing market adds to inflation concerns. The 2021–2023 tightening cycle is a reminder of how quickly the RBNZ can move when inflation risks build.

Trading Positioning And Volatility

For derivatives traders, this sets up an opportunity to position for a hawkish surprise in the RBNZ’s messaging. NZD call option buying has increased, as it offers a way to back a stronger currency with defined risk. Any sign from the Governor that inflation is a bigger concern could trigger a sharp rise in the New Zealand dollar. The main theme is volatility and the pricing of future rates. Traders are using Overnight Index Swaps to bet the Official Cash Rate will be higher by September than the RBNZ currently forecasts. If the RBNZ even acknowledges the recent strength in the data, it could support those positions. Create your live VT Markets account and start trading now.

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National Bank of Canada analysts expect Canada’s January CPI to be flat month over month. That could pull headline inflation down to 2.3%, with CPI-trim edging lower and CPI-median holding at 2.5%. They tie the flat CPI print to only a small rise in petrol prices. They also expect headline goods spending to drop by 0.5%.

Inflation Outlook And Policy Implications

Beyond inflation, they expect December retail sales to fall and manufacturing to post small gains. They also see housing starts improving, while existing home sales weaken in major cities. On trade, they expect gold exports to lift total exports. They estimate the trade deficit could narrow from C$2.2 billion to C$1.4 billion, as higher imports only partly offset the export increase. January CPI data supports the trend we expected, with headline inflation cooling to 2.4%. Statistics Canada reported this last week. It was close to our 2.3% forecast and extends the clear decline from the highs seen through 2025. This supports the view that the Bank of Canada’s policy is working as intended. With inflation moving closer to the BoC’s 2% target, markets are now pricing in more than a 60% chance of a rate cut by the July meeting. This is also showing up in derivatives, with more buying of call options on Government of Canada bond futures. Positioning like this points to a growing view that the peak in interest rates is behind us.

Market Positioning And Canadian Dollar

This backdrop may put more downward pressure on the Canadian dollar in the coming weeks. We should consider strategies that benefit from a weaker CAD, especially versus the US dollar, where rate-cut expectations are less settled. In 2025, the currency weakened whenever softer-than-expected inflation data hit the market. That pattern could return. The outlook is mixed. The case for weaker consumer demand was also confirmed. Statistics Canada’s latest release showed retail sales for December 2025 fell 0.2%, which fits the view of a cautious consumer going into the new year. A “soft landing”—cooling inflation without a deep recession—could support Canadian equities. That could make income strategies, such as selling put options on the S&P/TSX 60 index, appealing for collecting premium. Create your live VT Markets account and start trading now.

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