The focus of investors and forex traders remains on the minutes of the January Federal Reserve meeting published yesterday, at which the key interest rate was held in the 3.50–3.75% range amid a stable economy and declining risks to both inflation and employment. The document confirmed the lack of consensus within the Committee regarding the current outlook. Some members expect higher productivity growth driven by technological innovation to exert downward pressure on consumer prices, while the majority still fear that progress toward the 2.0% inflation target could be slower and more uneven than anticipated, with the risk of inflation remaining above target for a prolonged period still seen as realistic. Policymakers also emphasized that, amid the rapid development of artificial intelligence, pausing monetary easing appears appropriate and should be used to assess the economy following previously implemented measures. Only two officials—Christopher Waller and Stephen Miran—supported cutting borrowing costs, citing concerns about a potential weakening of the labor market. Meanwhile, December data from the construction sector were broadly positive: building permits rose to 1.448 million versus expectations of 1.400 million, while housing starts increased to 1.404 million from 1.310 million.
Eurozone
The euro is strengthening against the pound and the U.S. dollar, while showing mixed dynamics against the yen.
Investor attention is focused on a Financial Times report suggesting a possible early departure of European Central Bank (ECB) President Christine Lagarde. However, Reuters later reported that Lagarde sent private letters to colleagues stating she remains fully committed to her role, effectively denying the resignation rumors. Nevertheless, markets are already speculating about potential successors. Among the leading candidates are former Dutch central bank governor Klaas Knot and BIS General Manager Pablo Hernández de Cos. Both are viewed as experienced strategists capable of shielding the ECB from political pressure, which has intensified amid the hawkish rhetoric of the Republican administration in the White House toward the Federal Reserve. Klaas Knot is traditionally seen as a hawk who has recently softened his stance, while Pablo Hernández de Cos is considered more dovish.
United Kingdom
The pound is weakening against the euro, strengthening against the U.S. dollar, and showing mixed movement versus the yen.
Today, industrial order data from the Confederation of British Industry (CBI) were released, showing an improvement in February from –30.0 points to –28.0 points. Analysts note that the manufacturing sector, which accounts for around 9.0% of GDP, continues to face pressure from high energy prices, the impact of increased trade tariffs imposed by the White House, and peak interest rates. Businesses report further price increases despite consumers remaining cautious amid economic uncertainty and elevated inflation. In addition, a survey by the British Retail Consortium (BRC) showed that 84.0% of CFOs at major retailers see rising wage costs as one of their main challenges. Meanwhile, 61.0% plan to reduce working hours and overtime, and 45.0% may freeze new hiring altogether.
Japan
The yen shows mixed performance against major counterparts—the euro, the pound, and the U.S. dollar.
December data on core machinery orders were released today and proved strong: on a monthly basis, orders surged by 19.1% versus forecasts of 5.1%, while annual growth reached 16.8% compared with expectations of 3.9%, confirming the sector’s resilience. In addition, a Reuters survey of leading economists showed that most respondents expect the Bank of Japan to raise its key interest rate to 1.00% by the end of June, with some anticipating action as early as April. At the same time, many experts expressed concern about the proposed two-year suspension of the 8.0% consumption tax on food, initiated by Prime Minister Sanae Takaichi, warning it could reduce national budget revenues by around ¥5.0 trillion.
Australia
The Australian dollar is strengthening against the pound and showing mixed dynamics versus the euro, the yen, and the U.S. dollar.
Market participants are analyzing January labor market data: the unemployment rate held steady at 4.1% versus expectations of 4.2%, total employment growth slowed from 56.9 thousand to 50.5 thousand, while part-time employment fell sharply from 68.5 thousand to 17.8 thousand. Meanwhile, the labor force participation rate declined from 68.5% to 66.7%, slightly below expectations of 66.8%. These figures are likely to strengthen the case for another rate hike by the Reserve Bank of Australia (RBA). Currently, markets price the probability of a May tightening at more than 60.0%.
Oil
Oil prices are rising during the current trading session amid escalating geopolitical tensions in the Middle East.
Although some progress has been made in U.S.–Iran nuclear negotiations, reaching a final agreement may take considerably longer than initially expected. Moreover, the U.S. and its allies are actively increasing their military presence in the region, raising the risk of a direct confrontation. Iranian forces recently blocked the Strait of Hormuz during military drills, and if such measures were to become permanent, the global oil market could lose up to 20.0% of total supply. Additional support for prices came from the latest report by the American Petroleum Institute (API), which showed a decline in U.S. crude inventories of 0.609 million barrels. Today at 17:30 (GMT+2), similar data will be released by the Energy Information Administration (EIA), with a drawdown of around 1.700 million barrels expected.
