In particular, the eurozone will publish fourth-quarter gross domestic product (GDP) data, which may show a slowdown in annual growth from 1.4% to 1.3%, while quarterly growth is expected to remain unchanged at 0.3%. Weaker figures would strengthen the case for further monetary easing by officials at the European Central Bank (ECB) aimed at stimulating economic growth.
At the same time, the regulator has previously not ruled out a return to a “hawkish” cycle, although at the February 5 meeting it left key parameters unchanged for the fifth time in a row: the main refinancing rate at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. In its official statement, the ECB emphasized that the updated assessment points to inflation stabilizing near the 2.0% target over the medium term, while the economy is showing moderate resilience amid low unemployment (7.1% in January) and a gradual increase in government spending. However, the statement also highlighted persistent uncertainty stemming from geopolitical and trade risks, which could eventually disrupt supply chains, reduce exports, and weaken consumption.
Meanwhile, according to Reuters, ECB President Christine Lagarde on Wednesday urged eurozone leaders to accelerate the implementation of key reforms, including the potentially controversial joint issuance of debt, in order to strengthen the bloc’s resilience amid an unstable global environment — particularly unpredictable White House policies and growing competition from China in the EU’s traditional export markets.
U.S. investors and forex traders will focus at 15:30 (GMT+2) on January inflation data, which is expected to influence official rhetoric regarding the future path of monetary policy. Current forecasts suggest annual inflation will slow from 2.7% to 2.5%, while the monthly reading is seen holding steady at around 0.3%. Core inflation, which excludes food and energy prices, may ease from 2.6% to 2.5% year-on-year and rise from 0.2% to 0.3% month-on-month. Data released earlier showed initial jobless claims for the week ending February 6 declined from 232,000 to 227,000, beating expectations of 222,000, while continuing claims increased from 1.841 million to 1.862 million versus a forecast of 1.85 million. Meanwhile, the report on existing home sales showed a sharp decline of 8.4% after a 4.4% increase the previous month, with volumes falling from 4.27 million to 3.91 million, confirming subdued consumer activity as households face rising living costs and postpone major purchases in anticipation of lower interest rates in the future.
GBP/USD
The pound is consolidating near the 1.3610 level and is set to end the trading week with very modest gains, most of which were recorded on Monday, February 9. The focus of UK investors is on preliminary GDP data for the fourth quarter, which showed the economy grew by 0.1% quarter-on-quarter versus an initial estimate of 0.2%, while annual growth slowed to 1.0% from 1.2%. At the same time, investment fell by nearly 3.0%, marking the weakest result since early 2021. In addition, December industrial production data released earlier showed a sharp deterioration: monthly output fell from 1.3% to –0.9%, annual growth slowed from 2.3% to 0.5%, and manufacturing output eased from 1.3% to 0.5%. These figures point to signs of economic weakening and increase the likelihood of interest rate cuts by the Bank of England in March and June. More relevant for future rate expectations will be next week’s inflation and labor market reports.
Meanwhile, the U.S. dollar is strengthening following robust labor market data: nonfarm payrolls were revised up to 130,000, nearly double the forecast of 70,000, unemployment fell from 4.4% to 4.3%, and average hourly earnings held at around 3.7% year-on-year, indicating continued moderate wage dynamics. Initial jobless claims declined from 232,000 to 227,000, while continuing claims increased from 1.841 million to 1.862 million. Overall, the data largely neutralized arguments for a return to a consistently dovish Federal Reserve cycle and reduced expectations of a near-term rate cut from the current 3.50–3.75% range.
AUD/USD
The Australian dollar is showing moderate losses, testing the 0.7080 level for a downside breakout during the Asian session, although the AUD/USD pair is still on track to finish the trading week in positive territory amid hawkish rhetoric from officials at the Reserve Bank of Australia (RBA). On February 3, the RBA raised its key interest rate by 25 basis points to 3.85%, becoming one of the first major central banks to sharply shift its policy stance. According to aggregated market data, the probability of a second consecutive hike at the May meeting is estimated at 75.0%, while total tightening this year could amount to 38–40 basis points.
These expectations have been reinforced by a series of signals from policymakers. RBA Deputy Governor Andrew Hauser emphasized that inflationary pressure remains significant and that the central bank is prepared to take all necessary measures to contain it. He highlighted that domestic capacity constraints have shifted from a risk factor to a structural driver of price dynamics and noted that policies aimed at keeping economic activity close to equilibrium increase sensitivity to changes in domestic demand, contributing to heightened volatility in the Australian dollar on global markets and influencing hedging and positioning strategies in commodity-linked assets. According to the February 6 monetary policy statement, core inflation excluding food and energy reached 3.4% year-on-year in the fourth quarter, significantly exceeding forecasts from the November report and affecting services, retail goods, and construction sectors, where stronger price dynamics accompanied a recovery in housing demand and the removal of earlier developer discounts. Authorities concluded that the economy is moving away from equilibrium and that price pressures are largely supply-driven and more pronounced than expected. Against this backdrop, updated data from the Melbourne Institute showed inflation expectations rising from 4.6% to 5.0% in February, further supporting the case for maintaining a hawkish stance at upcoming meetings.
USD/JPY
The U.S. dollar is recovering against the yen, correcting after a sustained downward impulse formed over the week that pushed the pair to its January 28 lows. Currently, USD/JPY is testing the 153.50 level, although trading activity remains subdued ahead of the release of U.S. January inflation data at 15:30 (GMT+2). Forecasts suggest annual inflation will slow from 2.7% to 2.5%, while the monthly figure is expected to remain unchanged at around 0.3%. Core inflation may ease from 2.6% to 2.5% year-on-year and rise from 0.2% to 0.3% month-on-month.
Meanwhile, the decisive victory of the ruling coalition led by Prime Minister Sanae Takaichi in Japan’s snap parliamentary elections secured a constitutional majority, allowing it to pass legislation without opposition support. Initially, markets interpreted the strong mandate as paving the way for significant fiscal expansion, including a suspension of consumption tax hikes and expanded household transfers. However, sentiment later shifted as investors concluded that a stable parliamentary majority could instead enable more disciplined fiscal policy and better control of public debt. Crucially, authorities stated that proposed tax adjustments costing the national budget about ¥5.0 trillion annually would not be financed through additional borrowing. At the same time, market participants are revising expectations for the Bank of Japan’s policy path: consensus still points to two rate hikes this year, with March–April seen as the most likely window for the first move toward a hawkish stance. Reduced fiscal risks combined with rising Japanese bond yields have increased the yen’s appeal, limiting upside potential for USD/JPY despite the short-term dollar correction.
XAU/USD
Gold prices are rebounding, with XAU/USD approaching $4,985 per troy ounce as market participants partially cover short positions ahead of U.S. inflation data. Earlier in the week, labor market statistics showed initial jobless claims declining to 227,000 from 232,000, while continuing claims rose to 1.862 million from 1.841 million, signaling a gradual cooling of the labor market.
The key driver for the dollar remains the January employment report: nonfarm payrolls increased by 130,000 versus expectations of 70,000, unemployment fell to 4.3%, and average hourly earnings rose by 0.4% month-on-month. These figures strengthened the U.S. currency and prompted a reassessment of expectations for future Federal Reserve policy. Markets have shifted the likely timing of the first rate cut from June to July, while the total size of rate reductions expected in 2026 has been trimmed to 30 basis points. As a result, short-term gold dynamics are shaped by a balance between resilient U.S. macroeconomic data supporting the dollar and bond yields, and expectations of gradually easing inflationary pressure that could revive demand for safe-haven assets.
