On the eve, US President Donald Trump delivered a two-hour “State of the Union” address to Congress, stating that the national economy is recovering at a rapid pace. He also noted that the Republican administration has managed to curb inflation, which has slowed to a five-year low over the past 12 months.
The president also urged members of the House of Representatives to pass legislation banning large institutional investors from purchasing single-family homes, arguing that such activity fuels housing price growth. In addition, he proposed launching a support program for employees whose employers do not co-finance retirement savings: Trump said the government would match such citizens’ contributions up to $1,000 per year. Also worth noting were comments from Chicago Fed President Austan Goolsbee, who pointed out that the Federal Reserve could resume interest rate cuts by the end of the year if inflation continues to move steadily toward the 2.0% target. However, he cautioned that the regulator should not rely on productivity gains to offset adverse price pressures—an argument previously put forward by Kevin Warsh, a candidate for the position of Fed Chair, as a justification for launching a sustained dovish cycle.
Similar views were expressed by Boston and Richmond Fed Presidents Susan Collins and Thomas Barkin. Speaking at a recent discussion on the development of new technologies, they agreed that interest rate adjustments require clear signals from macroeconomic data. Attention should also be paid to remarks by Federal Reserve Board member Lisa Cook, who echoed Atlanta Fed President Raphael Bostic’s view, noting that artificial intelligence has already triggered structural shifts in the US labor market, which could lead to higher unemployment—something financial authorities may not be able to counter solely through monetary policy adjustments.
Eurozone
The euro is gaining against the yen, weakening against the pound, and showing mixed dynamics versus the US dollar.
The focus of investors and forex traders is on Germany’s fourth-quarter GDP data: the economy expanded by 0.3% quarter-on-quarter and 0.4% year-on-year, in line with market expectations. Overall, business activity continues to recover moderately, although the industrial sector remains under significant pressure amid the White House’s increase in trade tariffs from 10.0% to 15.0%. In addition, March data from the GfK Group consumer climate index—an indicator measuring confidence in the economy and serving as a leading signal for household spending—pointed to a further deterioration, with the index falling from −24.2 to −24.7 points. Commenting on the data, Rolf Buerkl, an analyst at the Nuremberg Institute for Market Decisions, noted that consumers remain pessimistic and are more likely to channel funds into savings rather than purchases amid rising geopolitical uncertainty. Moreover, January inflation data for the euro area were released today: headline CPI slowed from 1.9% to 1.7% year-on-year, while core inflation eased from 2.3% to 2.2%. Overall, the figures align with European Central Bank (ECB) projections, which suggest inflation will fall below the 2.0% target and return to it only next year, meaning no near-term adjustment to monetary policy is expected.
United Kingdom
The pound is strengthening against its major counterparts—the euro, the yen, and the US dollar.
Market participants are assessing comments from Bank of England Governor Andrew Bailey, made during his appearance before the Parliamentary Treasury Committee. Speaking to lawmakers, he said that a rate cut at the March meeting is possible, although services prices, according to the latest data, have not slowed as much as the Bank had expected. He also reaffirmed that inflation is likely to decelerate sharply in the near term and return to the 2.0% target as early as April. However, January data still show inflation hovering around 3.0%, while services inflation remains elevated at 4.4%.
Japan
The yen is weakening against its major counterparts—the pound, the euro, and the US dollar.
Today, December data on the corporate services price index were published, showing the indicator holding at 2.6% year-on-year, as expected, above the Bank of Japan’s target. This confirms that wage growth amid a tight labor market continues to exert inflationary pressure on the economy. Nevertheless, the yen came under pressure after the Japanese government appointed new members to the financial regulator who believe that fiscal, rather than monetary, measures are key to sustainable economic growth. Among them are Professor Emeritus Toichiro Asada of Chuo University and Professor Ayano Sato of Aoyama Gakuin University. According to experts, these appointments could complicate the implementation of a hawkish policy stance.
Australia
The Australian currency is strengthening today against the pound, the euro, the US dollar, and the yen.
The Australian dollar is receiving support after the release of January inflation data, which confirmed persistently strong consumer price growth. Headline CPI held at 3.8% year-on-year, defying expectations for a slowdown to 3.7%, while the trimmed mean measure rose to 3.4% from 3.3%. The weighted average index increased from 3.2% to 3.6%, the highest level in 16 months, remaining well above the Reserve Bank of Australia’s (RBA) 2.0–3.0% target range. The fastest-rising costs were housing, healthcare services, and clothing. The data significantly increase the likelihood of further monetary tightening in the near term, especially as RBA Governor Michele Bullock has previously indicated a possible return to hawkish rhetoric under such conditions. Most analysts expect policymakers to proceed cautiously in March while assessing the impact of earlier measures, but to raise the benchmark rate by 25 basis points to 4.00% at the May meeting, with an estimated probability of 80.0%.
Oil
Oil prices are showing mixed dynamics as the market remains in a state of uncertainty ahead of the outcome of a new round of talks between the United States and Iran, scheduled to take place tomorrow in Geneva.
On the eve, President Donald Trump confirmed that consultations are ongoing and that the Islamic Republic is indeed seeking to reach a “deal,” while reiterating that the United States will never allow Iran to obtain nuclear weapons. No further details on the negotiations have been disclosed, prompting investors to remain cautious when opening new positions. It should also be noted that significant upside in crude prices is being constrained by data from the American Petroleum Institute (API), which confirmed an increase in inventories from −0.609 million barrels to 11.400 million barrels. A similar report from the US Energy Information Administration (EIA) is due at 17:30 (GMT+2) today, with a projected build of 1.800 million barrels. If confirmed, prices could come under additional pressure.
