Daily Market Outlook, February 18, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

US stock futures edged higher alongside gains in Asian markets, suggesting a cooling off after recent declines fuelled by concerns over artificial intelligence. Precious metals also saw a rebound. Futures tied to the S&P 500 rose 0.2%, following a session on Tuesday where the index fluctuated between gains and losses before closing up 0.1%. Nasdaq 100 futures gained 0.3%, while European markets appeared set for a stronger opening. In Asia, stocks broke a three-day losing streak, though markets in China, Hong Kong, and other regions remained closed for the Lunar New Year celebrations. The US dollar strengthened against other major currencies, with the New Zealand dollar experiencing the sharpest drop. This drop came after the country’s central bank decided to hold interest rates steady, prompting investors to lower their expectations for further hikes. After months of AI-driven stock market rallies, volatility has increased as investors weigh the risks of disruption against doubts about whether massive investments in AI will deliver quick returns. This debate is particularly significant in Asia, a key hub for semiconductor design and electronics manufacturing, where markets have outperformed their US and European counterparts so far this year. Meanwhile, attention is turning to the Federal Reserve as investors seek clues about future interest rate policies. Later today, the Fed will release the minutes from its Jan. 27–28 meeting, where policymakers decided to hold rates steady. This comes on the heels of solid employment data and moderate inflation figures that have shaped expectations for upcoming monetary policy decisions. Federal Reserve Governor Michael Barr commented on Tuesday that interest rates should remain unchanged "for some time" until there’s clearer evidence that inflation is moving closer to the Fed’s 2% target. Chicago Fed President Austan Goolsbee added that further rate cuts might be possible later this year if inflationary pressures continue to ease toward that benchmark.

Domestically, UK CPI inflation slowed to 3.0% y/y in January, matching market expectations but 0.1ppt above the BoE forecast. The decline was driven by volatile goods prices, such as food inflation easing to 3.6% y/y (0.1ppt below BoE expectations) and a 2.2% y/y drop in fuel costs. However, services inflation, which tends to be stickier, remained high at 4.4% y/y, only slightly lower than December and 0.3ppt above expectations. With airfares showing limited volatility, the overshoot in services inflation raises concerns for dovish policymakers. The data complicates the March MPC rate decision. While rising unemployment supports a rate cut, persistent services inflation makes the case less clear. Hawks like Pill, Greene, and Lombardelli are unlikely to support a cut, and Mann may hold a similar stance. Governor Bailey must make a difficult decision, as the next crucial data point will be the February PMIs on Friday. Markets currently price an 80% chance of a March rate cut.

The Bank of England’s analysis of wage persistence overlooks the impact of taxation on disposable incomes. While gross PAYE income shows a 4.3% y/y growth, adjusting for taxes reduces it to 2.8%, and in real terms, net aggregate wage growth drops to -0.5% y/y. Fiscal drag has absorbed most headline wage increases, weakening demand and increasing household savings. Combined with falling employment, the economic outlook appears austere. Recent inflationary pressures stem from fiscal policies, notably the expansionary 2024 budget, but with reduced government spending in 2025 and weakening private incomes, inflation risks should ease, creating room for the MPC to consider policy relaxation.

Overnight Headlines

  • Christine Lagarde To Leave ECB Before End Of 8-Year Term

  • Fed’s Barr Wants Proof Of Goods Inflation Retreat Before More Cuts

  • RBNZ Keeps OCR At 2.25% Unchanged; Inflation Seen Easing

  • New Zealand To Increase Monetary Policy Meetings To Eight A Year

  • Japan Plans $36B In US Investments Under Trump Administration Deal

  • Japan’s Exports Rise 16.8% Y/Y, Fastest In Three Years

  • IMF Urges Japan To Avoid Fanning Fiscal Risks With Sales Tax Cut

  • Iran Offers Nuclear Concessions As US Talks Make Progress

  • Oil Holds Drop As US And Iran Signal Progress In Nuclear Talks

  • Meta Deepens Nvidia Ties With Pact To Use ‘Millions’ Of Chips

  • Global Chip Tool Makers Set For Double-Digit Revenue Growth

  • National Australia Bank Profit Rises On Business, Home Lending

  • Bayer Proposes New $7B Plan To Settle Roundup Litigation

  • Blackstone, EQT And CVC Make Offers For VW Unit

  • Gilt Investors Warn Over ‘Ruse’ To Fund Higher UK Defence Spending

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

  • EUR/USD: 1.1800 (651M), 1.1755-65 (776M), 1.1775-85 (266M)

  • 1.1800 (1.4BLN), 1.1815-20 (450M), 1.1825-35 (1.3BLN), 1.1845-55 (1.34BLN)

  • USD/JPY: 152.10 (293M), 152.75 (435M), 153.00-10 (292M)

  • 153.40-60 (846M), 154.00-10 (306M), 154.15-25 (446M), 155.00 (837M)

  • EUR/JPY: 181.00 (520M)

  • EUR/CHF: 0.9165-70 (633M). USD/CHF 0.7775-85 (633M)

  • GBP/USD: 1.3570-75 (302M), 1.3600 (257M)

  • EUR/GBP: 0.8680-85 (216M), 0.8720 (234M), 0.8795-00 (325M)

  • AUD/USD: 0.6950 (525M), 0.6980-90 (910M), 0.6995-00 (800M)

  • USD/CAD: 1.3600 (1.7BLN), 1.3700-10 (560M)

CFTC Positions as of February 13th:  

  • Equity fund speculators have reduced their net short position in the S&P 500 CME by 23,298 contracts, bringing it down to 414,655. Equity fund managers have also decreased their net long position in the S&P 500 CME by 6,498 contracts, resulting in a total of 921,012. 

  • Speculators have cut their net short position in CBOT US 5-year Treasury futures by 44,216 contracts to 2,114,764. Meanwhile, they have increased their net short position in CBOT US 10-year Treasury futures by 83,613 contracts, now totaling 813,027. The net short position in CBOT US 2-year Treasury futures has been reduced by 57,915 contracts, now at 1,289,687. Speculators have raised their net short position in CBOT US UltraBond Treasury futures by 1,457 contracts to reach 270,546. The net short position in CBOT US Treasury bonds futures has been trimmed by 13,512 contracts, leaving it at 92. 

  • Bitcoin's net long position stands at 1,017 contracts, while the Swiss franc shows a net short position of -42,259 contracts. The British pound has a net short position of -25,810 contracts, the euro has a net long position of 180,305 contracts, and the Japanese yen presents a net short position of -19,106 contracts..

Technical & Trade Views

SP500

  • Daily VWAP Bearsih

  • Weekly VWAP Bearsih

  • Above 6900 Target 7040

  • Below 6900 Target 6750

EURUSD 

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 1.1860 Target 1.1960

  • Below 1.1730 Target 1.1570

GBPUSD 

  • Daily VWAP Bearish

  • Weekly VWAP Bearish

  • Above 1.3635 Target 1.3760

  • Below 1.3570 Target 1.3490

USDJPY 

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 154.35 Target 157.50

  • Below 153.50 Target 151

XAUUSD

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 4900 Target 5325

  • Below 4880 Target 4700

BTCUSD 

  • Daily VWAP Bearish

  • Weekly VWAP Bearish

  • Above 71k Target 75k

  • Below 70k Target 53k

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