On the eve, November data on personal consumption expenditures were published — indicators closely monitored by US Federal Reserve officials. The core price index remained at 0.2% month-on-month and rose from 2.7% to 2.8% year-on-year. Thus, price pressure is intensifying, which, together with the significant 4.4% increase in gross domestic product (GDP) in the third quarter, creates conditions for maintaining the current monetary policy for an extended period. Experts now suggest that policymakers may refrain from adjusting interest rates until the end of Federal Reserve Chair Jerome Powell’s term in May. Meanwhile, President Donald Trump acknowledged the redeployment of a significant number of military forces to the Middle East and stated that he is closely monitoring Iranian authorities. Analysts interpreted these remarks as a hint of a possible escalation of geopolitical tensions in the region in the medium term.

Eurozone

The euro is weakening against the yen, the pound, and the US dollar.

Investors and forex traders are assessing preliminary January business activity data: the manufacturing PMI for the euro area rose from 48.8 to 49.4 points, exceeding the forecast of 49.1, while the services PMI declined from 52.4 to 51.9 versus expectations of 52.6. The composite index remained at 51.5 points, slightly below the projected 51.6. For Germany, the largest economy in the bloc, the manufacturing PMI climbed from 47.0 to 48.7 versus the forecast of 47.8, the services PMI increased from 52.7 to 53.3 against expectations of 52.6, and the composite index rose from 51.3 to 52.5 compared to the projected 51.8. Overall, growth remains stable, and the contraction in the dominant services sector was offset by a less pronounced decline in manufacturing output. Meanwhile, Austrian National Bank Governor Martin Kocher stated that European Central Bank (ECB) officials should exercise caution when adjusting monetary policy amid ongoing economic uncertainty.

United Kingdom

The pound is strengthening against the euro and the US dollar, while showing mixed dynamics versus the yen.

The currency’s performance is driven by incoming macroeconomic data: the preliminary services PMI rose from 51.4 to 54.3 points, significantly above the forecast of 51.7, the manufacturing PMI increased from 50.6 to 51.6, and the composite index climbed from 51.4 to 53.9. This confirms continued economic recovery, supporting the national currency. In addition, December retail sales rose from –0.1% to 0.4% month-on-month and reached 2.5% year-on-year, exceeding preliminary estimates of 1.0%. Meanwhile, Bank of England policymaker Megan Greene stated today that she remains concerned about signs of accelerating wage growth and inflation expectations. Persistent price pressures justify a slower pace of monetary easing by the regulator.

Japan

The yen is strengthening against the euro and showing mixed dynamics versus the pound and the US dollar.

Investors and forex traders are focused on the outcomes of today’s Bank of Japan monetary policy meeting: as expected, policymakers kept the interest rate unchanged at 0.75% and hinted at the continuation of a “hawkish” stance. The central bank also raised its growth forecasts for fiscal years 2025 and 2026, reaffirmed expectations of a moderate economic recovery, and revised its core CPI forecast for fiscal 2026 upward from 1.8% to 1.9%. Speaking to journalists, Governor Kazuo Ueda noted that amid steady wage increases, more companies are passing labor costs on to consumers, emphasizing the need for timely monetary decisions based on high-frequency data, such as recent business surveys. Meanwhile, according to incoming statistics, inflation in the country declined from 0.3% to –0.1% month-on-month and from 3.0% to 2.4% year-on-year, remaining above the 2.0% target.

Australia

The Australian dollar is strengthening against the US currency and the euro, while showing mixed dynamics versus the yen and the pound.

Preliminary January business activity data published today showed that the manufacturing PMI rose from 51.6 to 52.4 points, the services PMI surged from 51.1 to 56.0, and the composite index climbed from 51.0 to 55.5. This indicates that the national economy continues to recover confidently, increasing the likelihood that the Reserve Bank of Australia (RBA) will maintain current interest rates for an extended period or even tighten monetary policy in the medium term.

Oil

Oil prices surged today, supported by comments from US President Donald Trump regarding military forces positioned around Iran, which he hopes will not need to be deployed. However, the president warned Tehran against harsh crackdowns on protests, which investors interpreted as a signal of potential escalation that could lead to disruptions in supplies from the region and possible blockages of the Strait of Hormuz.

In addition, the latest weekly report from the US Energy Information Administration (EIA) showed that commercial crude oil inventories increased by 3.602 million barrels versus expectations of a 1.000 million-barrel draw. Gasoline inventories rose by 5.977 million barrels, while distillate stocks climbed by 3.348 million barrels.