← Back to posts🧠Holiday calm as markets pivot from inflation to growth

🧠Holiday calm as markets pivot from inflation to growth

Published: 2/16/2026

Good morning traders from a grey, drizzle-soaked IntelliTrade desk, where the sky is heavy, the streets are wet, and the only thing clearer than the radar is the macro calendar ahead. Top up your coffee, because this is one of those deceptively quiet Mondays that set the tone for the rest of the week.



Overall Market Sentiment



It is a cautious, low-liquidity start to the week. China is shut for Lunar New Year, the United States and Canada are out for Presidents Day and Family Day, so a big chunk of global cash markets is offline, which naturally dampens volumes and can make intraday moves a bit erratic.


The US Dollar Index (DXY) is hovering just under 97, marginally firmer on the day but still about 2.5% weaker over the month and roughly 9% lower than a year ago, which is consistent with a market that has already repriced a gentler US rate path but is not ready to abandon the dollar entirely.Gold is circling the psychologically important 5,000 area after rebounding last week, while Brent crude is steady around 67.7 dollars per barrel and WTI near 62.8 dollars, a sign that energy markets are balancing supply worries with softer growth expectations.


Equities are trying to stabilise after last week’s tech-led shakeout. Euro area benchmarks are trading around 6,000 on the main index after a choppy fortnight, while futures on major US indices are modestly higher in holiday-thinned trade.In crypto, Bitcoin is hovering in the high 60,000s, down from recent peaks but still elevated versus late 2025, and it continues to behave like a high beta extension of broader risk appetite rather than a separate safe haven.





Geopolitics



Geopolitics is not the only story this week, but it remains an important background driver. Oil is broadly stable as markets watch renewed US - Iran nuclear talks, with Brent trading just below 68 dollars and investors weighing the possibility of a future supply increase against already comfortable inventories and talk of a medium-term surplus.


For FX, this matters mainly through the inflation and risk channels. A sudden breakdown in talks that pushed oil sharply higher would likely revive concerns about sticky headline inflation, which in turn would support the dollar and undercut high beta currencies. Conversely, signs of durable progress and lower risk premia in energy would support the soft-landing narrative that has been building since early January.





Policy and data: today and the rest of the week




Today (Monday)



  • Trading conditions are unusually thin with holidays in the US and Canada and multiple Asian markets still closed for Lunar New Year.
  • There are no major US data releases scheduled today. The focus is on how markets digest last week’s combination of cooler US inflation, softer but still solid jobs, and the equity selloff in tech and AI names.
  • In Europe, markets are watching euro area industrial production for December, which is expected to soften after a stronger previous print, as well as survey hints that manufacturing is slowly stabilising.




Rest of the week



The rest of the week brings a classic macro data wave, with the main themes being growth momentum, underlying inflation, and how quickly central banks can safely move toward easier policy:


United States

  • The big focus is Friday’s combo of Q4 GDP (consensus around 2.8% annualised) and December core PCE (consensus near 3.0% year on year), alongside other income and spending aggregates. Markets see this pair as a key input into the Fed’s March meeting and the timing of the first cut.
  • FOMC minutes and flash PMIs will give additional colour on the Fed’s reaction function and how the real economy is responding to tighter financial conditions.

Euro area

  • A dense run of German ZEW, euro area consumer confidence and flash PMIs will show whether the region’s tentative manufacturing recovery is continuing or stalling.

United Kingdom

  • It is a big UK week: labour market data, CPI, public finances and retail sales are all due in the coming days. These will either reinforce or challenge the idea that the Bank of England can move toward another cut as soon as March.

Japan

  • Fresh Q4 GDP data have already come in much weaker than expected, around 0.2% annualised versus forecasts near 1.6%, and later in the week markets will also see inflation and survey data. That mix will shape expectations for the timing and scale of Bank of Japan normalisation.

New Zealand

  • On Wednesday 18 February, the RBNZ issues its first Monetary Policy Statement of the year and is widely expected to hold the OCR at 2.25%, but with a more hawkish tone about the next move being up as inflation stays above target.




This combination means that while today might feel quiet, by Friday markets will have a much clearer picture of whether the soft-landing narrative remains intact or needs revising.





Currency outlooks




⚖️ USD – Dollar in consolidation as markets watch growth data



The dollar is in rebalancing mode. DXY trades around 96.9-97.0, slightly higher on the day but still meaningfully lower over the past month, so recent moves look more like a pause in a broader downtrend than the start of a new bull phase.


Positioning data show sizeable net USD shorts in futures, which means the currency is vulnerable to squeezes if data surprise on the strong side, but also that a lot of pessimism is already baked in.For this week, the key drivers are Friday’s GDP and core PCE plus the FOMC minutes: together they will tell markets whether the Fed can comfortably plan a first cut around mid-year or needs to keep a slightly tighter bias.


Short term, USD risks look broadly balanced. A clean soft-landing signal (solid growth, gently easing PCE) would keep DXY grinding lower toward the 96.3-96.5 support zone, while a combination of firmer PCE and resilient GDP would justify a bounce back toward 97.5-98.0.





🔺 EUR – Euro underpinned by surveys, but momentum is cooling



EURUSD starts the week near 1.186-1.187, essentially flat in early European trade, as thin liquidity and the US holiday suppress activity.The broader trend remains moderately bullish, with key support around 1.1750-1.1760 and resistance in the 1.20-1.21 zone, but momentum has cooled after a strong run since late 2025.


This week’s euro area industrial production and February survey data will be important for sustaining the story that the region has exited its long soft patch without sliding into recession. A gradual improvement in PMIs and confidence would support spreads and help EUR hold recent gains even if the dollar stabilises.


With markets already positioned long EUR against USD, fresh positive data could still nudge EURUSD toward 1.19-1.20, but weaker IP or PMIs would quickly see attention return to the 1.1750 area. On balance, risks for EUR tilt slightly to the upside this week, as long as US data do not significantly outperform.





🔻 GBP – Sterling facing a critical UK data gauntlet



GBPUSD is trading around 1.36-1.365, sitting just above its 20-day moving average but below recent highs, as traders wait for a dense run of UK data.Markets know that the Bank of England is split: rates are at 3.75%, cuts have already begun, but inflation is still above target and wage dynamics are uncomfortable.


This week’s labour, CPI, public finances and retail sales numbers will go a long way toward deciding whether the next move is a steady march toward more cuts or a longer pause to assess the impact of the easing already delivered.


Given that the bar for a hawkish surprise is relatively high and that UK growth is still quite mediocre, risks for GBP versus USD look skewed modestly to the downside in the near term. Market participants are watching the 1.36 area as first support, then the 1.34-1.35 band, while resistance sits around 1.38, where rallies have repeatedly stalled.





🔺 CAD – Firmer Canadian dollar, supported by oil and positioning



The Canadian dollar is quietly firm. USDCAD sits near 1.36, a touch lower on the day, and has drifted down from the high 1.38s since mid-January as oil stabilised and expectations for aggressive Fed easing faded.Over the past month CAD has strengthened about 1.8%, helped by relatively solid domestic fundamentals and a central bank that can afford to be patient.


Later in the week, Canadian CPI will help decide whether the Bank of Canada keeps emphasising patience or starts to open the door more explicitly to cuts. For now, inflation is close enough to target that policy divergence with the US is modest, so external factors such as oil and global risk appetite still dominate day-to-day moves.


Given this backdrop, risks for CAD versus USD lean mildly toward further strength. A benign global data mix and steady oil would favour USDCAD gravitating toward the 1.35-1.355 area, whereas a surprise spike in US PCE or a risk-off shock could send it back toward the 1.37 handle.





🔺 CHF – Franc stays firm as a quiet hedge in thin markets



The Swiss franc continues to trade on the strong side. USDCHF is near 0.77, only slightly above last week’s closing levels around 0.767-0.768, and remains much lower than in early January.With Swiss inflation low and domestic growth stable, policymakers are comfortable letting a firm franc help insulate the economy from imported price shocks.


In thin holiday markets, CHF often serves as a clean, low-drama hedge, especially with geopolitics still bubbling and many traders already heavily positioned in JPY earlier this year. The franc’s strength is therefore less about local data and more about global portfolio construction.


Short term, risks for CHF lean slightly toward further appreciation against USD, especially if Friday’s US data confirm slowing but still positive growth. Markets are watching 0.77 as a key reference level, with a move toward 0.76 plausible if DXY stays under pressure, while any upside surprise in US data could send USDCHF back toward 0.79-0.80.





🔻 JPY – Weak GDP keeps yen on the back foot despite earlier gains



The yen has given back some of its recent strength. USDJPY is trading around 153.3, up on the day, after Japan’s Q4 GDP miss reminded markets how fragile domestic growth still is.


Expectations for a gradual Bank of Japan normalisation remain in place, but the latest data make it harder for the BoJ to tighten aggressively, especially with global growth also slowing. At the same time, US yields have found a floor and the Fed is still some distance from cutting, so the rate differential backdrop remains yen-negative in the short run.


For this week, risks for JPY lean toward further weakness versus USD, particularly if US GDP and PCE hold up and yields tick higher from current levels. The market is focused on the 153-154 range as a near term zone, with talk that Japanese authorities would become more uncomfortable if the pair moved convincingly back toward the 156-158 area.





🔺 AUD – Aussie still a relative winner, driven by rates and risk



The Australian dollar remains a standout. AUDUSD trades around 0.708-0.709, not far from recent highs and up significantly from levels seen at the start of the year, helped by a hawkish RBA stance and the broader USD selloff over the past months.


With Australian cash rates clearly above those in several peers and commodity prices broadly stable, AUD still offers attractive carry in a world where many central banks are edging toward cuts. Some recent gains reflect positioning rather than new data, but there is no obvious catalyst for aggressive selling unless global risk sentiment sours.


Into Friday’s US data and global PMIs, risks for AUD versus USD remain tilted to the upside, with the 0.70 region as key support and the 0.71-0.715 band the area where some consolidation is likely if tested again.





⚖️ NZD – Kiwi balanced between RBNZ caution and global growth hopes



The New Zealand dollar begins the week in consolidation mode. NZDUSD is trading around 0.603, a touch softer than last week’s highs but still near the upper end of its recent range as markets look ahead to Wednesday’s RBNZ meeting.


The central bank is widely expected to hold the OCR at 2.25%, but with inflation still above target and inflation expectations mixed, the tone of the statement will be closely scrutinised for signals on when the next move higher might come. Current market pricing implies a decent chance of the first hike arriving late this year or early next year.


Given how much good news has already been priced into high beta FX and the proximity of Friday’s US data, NZD risks versus USD look broadly balanced in the very near term. A steady but mildly hawkish RBNZ plus benign US numbers would support a drift toward 0.61-0.62, while a cautious RBNZ message or firmer than expected US PCE could see a pullback toward 0.595-0.60.





Cross-asset wrap



  • 🪙 Gold:
    Gold has stabilised back above 5,000 dollars per ounce after last week’s sharp volatility. The metal is now trading around 5,040 in spot terms, with markets seeing that round number as a pivot between “inflation hedge” and “overextended” narratives. A calm PCE print on Friday would likely keep gold in a broad consolidation band, while any upside inflation surprise that lifts real yields could trigger another air pocket lower.
  • 🛢 Oil:
    Oil is quietly holding its ground. Brent sits near 67.7 dollars and WTI around 62.8 dollars, with the market digesting both the prospect of a record supply surplus and ongoing US - Iran talks. With several major markets closed today and OPEC+ still signalling caution, price action is likely to stay range-bound this week unless geopolitics or US data deliver a genuine surprise.
  • 📈 Stocks:
    Global equities are trying to recover from last week’s worst weekly drop of the year in some major indices, driven largely by renewed anxiety over AI disruption and stretched valuations in growth segments. This week, earnings from large retailers and Friday’s data combo (GDP plus PCE) will determine whether the narrative shifts back toward resilient consumption and margins or stays focused on margin pressure and higher-for-longer rates.
  • ₿ Crypto:
    Bitcoin is trading around 68,000-69,000 dollars, having backed off from the 70,000 area but still supported by earlier short covering and structural demand. In the near term, crypto continues to trade like a leveraged play on real yields and tech sentiment, so Friday’s US data and any shifts in equity volatility will likely matter more than crypto-specific headlines.






This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.


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