Investors and forex traders are assessing labor market data: over the past week, initial jobless claims rose from 209.0K to 231.0K, exceeding the forecast of 212.0K. Continuing claims increased from 1.819M to 1.844M, falling short of expectations of 1.850M, while the four-week moving average climbed from 206.25K to 212.25K. Overall, the sector is showing signs of cooling, which could prompt the U.S. Federal Reserve to return to a more dovish tone. However, the regulator’s next steps remain uncertain, as do questions surrounding a potential leadership change. President Donald Trump has said he is confident that a new Fed chair, Kevin Warsh, would continue monetary easing—a statement that has drawn sharp opposition in the Senate from both Democrats and some Republicans, who fear it could significantly undermine the Fed’s independence and market confidence. Asked whether the government would sue Warsh if he refused to cut rates—as previously occurred with current Fed Chair Jerome Powell—Treasury Secretary Scott Bessent replied that the decision would be up to the president. Investors viewed the comment as another signal of continued White House pressure on financial authorities. Meanwhile, reports of a likely $80.0 billion purchase of Boeing aircraft by India could support a recovery in the U.S. economy.
Eurozone
The euro is strengthening against the yen and the U.S. dollar, but weakening against the pound.
Investors are focused on the outcome of yesterday’s European Central Bank (ECB) meeting, at which officials kept the key interest rate at 2.15%, the marginal lending rate at 2.40%, and the deposit rate at 2.00%. They reiterated expectations that inflationary pressures will stabilize around the 2.0% target over the medium term. At the subsequent press conference, ECB President Christine Lagarde described the current monetary policy as balanced, and most experts expect borrowing costs to remain unchanged at least until early next year. Today, data from Germany showed that imports accelerated from 0.7% to 1.4% in December, versus forecasts of –0.2%, while exports rose by 4.0% against expectations of 1.0%. As a result, the trade surplus of the EU’s largest economy reached €17.1 billion, allowing traders to anticipate further recovery.
United Kingdom
The pound is strengthening against the euro, the yen, and the U.S. dollar.
January housing market data from Halifax Bank Plc. showed the average home price exceeding £300,000, while the house price index accelerated by 0.7% month-on-month, beating forecasts of 0.1%, and rose from 0.4% to 1.0% year-on-year. Bank analysts said they still expect prices to increase by 1.0–3.0% this year. Experts note that since late 2022, wage growth has outpaced inflation, improving housing affordability and supporting a long-term recovery in the sector.
Japan
The yen is weakening against the euro and the pound, but shows mixed dynamics against the U.S. dollar.
December household spending data showed a decline of –2.9% month-on-month, worse than expectations of –1.3%, and a year-on-year drop of –2.6% versus –0.5%. Overall, consumers are cutting spending amid uncertainty driven by a weak national currency, which is contributing to slower inflation growth. Meanwhile, Bank of Japan board member Kazuyuki Masu said the regulator must tighten monetary policy in a timely manner to prevent the core consumer price index from exceeding the 2.0% target. He added that while the indicator remains below that level, it is approaching it as companies and households move away from their traditional deflationary behavior.
Australia
The Australian dollar is strengthening against the euro, the U.S. dollar, the pound, and the yen.
Investors are focusing on recent comments by Reserve Bank of Australia (RBA) Governor Michele Bullock, who after Tuesday’s policy meeting signaled the possibility of further monetary tightening. Today, she clarified her stance, saying the regulator needs to restrain demand-driven inflation if supply cannot keep pace. In her view, the current rise in consumer prices is largely driven by temporary factors, but part of it is becoming more persistent. Investors interpreted these remarks as a hint at a 35-basis-point rate hike in May.
Oil
An initial rise in oil prices has given way to negative momentum, leaving the market in a state of uncertainty.
Investors are monitoring U.S.–Iran talks taking place in Oman, where the sides are mainly exchanging demands. Tehran wants to discuss its nuclear program while seeking the right to enrich uranium for peaceful purposes, while the White House insists on limiting Iran’s missile arsenal. Analysts fear that failure to reach a consensus could escalate tensions between the U.S. and Iran and spread across the region. In the event of a blockade of the Strait of Hormuz—through which Middle Eastern hydrocarbons are transported—global supply could fall by about 20.0 million barrels per day, significantly pushing up oil prices.
