Today is a public holiday in the United States, leaving financial institutions closed, while investors and forex traders are reacting to Friday’s data releases. In January, the consumer price index slowed to 0.2% month-on-month versus expectations of 0.3%, and eased from 2.7% to 2.4% year-on-year compared with forecasts of 2.5%. Core inflation rose from 0.2% to 0.3% month-on-month and declined from 2.6% to 2.5% year-on-year, in line with expectations. The disinflationary trend was driven mainly by lower rents and fuel prices, while services inflation accelerated from 0.3% to 0.4%. In response to the data, White House officials said the U.S. economy is ready to accelerate thanks to long-overdue interest rate cuts. However, most analysts argue that inflation remains elevated, particularly in household-sensitive sectors such as food and pharmaceuticals, making it unlikely that the Federal Reserve will adjust policy more than twice this year, with the first move expected no earlier than June, following a change in the Fed’s leadership. Meanwhile, Treasury Secretary Scott Bessent said the U.S. Senate Banking Committee will continue hearings on the confirmation of Kevin Warsh, nominated by President Donald Trump to serve as Fed Chair.
Eurozone
The euro is strengthening against the yen but weakening versus the U.S. dollar and the pound.
Industrial production data for the euro area were released today. In December, output fell by 1.4% month-on-month, slightly better than the expected 1.5% decline, and grew by 1.2% year-on-year compared with 2.2% in November. The sector remains under pressure from U.S. trade tariffs and is forced to seek new export markets, a drag that is partly offset by the recovery in services. This allows the bloc’s economy to remain broadly stable and enables European Central Bank (ECB) officials to keep interest rates unchanged. Most experts believe no rate adjustment will take place at least until early next year.
United Kingdom
The pound is strengthening against the euro, the yen, and the U.S. dollar.
February house price data from research firm Rightmove Group Ltd. showed flat dynamics both month-on-month and year-on-year, compared with 2.8% (a peak since 2020) and 0.5% in January, respectively. The total number of homes listed for sale reached an 11-year high for this time of year, although the number of new listings fell by 1.0% year-on-year. Tomorrow at 09:00 (GMT+2), investors will focus on labor market data. Unemployment is expected to remain at 5.1% in December, but employment could decline by 40.0 thousand, increasing the likelihood of near-term monetary easing by the Bank of England, which could put pressure on the national currency.
Japan
The yen is weakening against the euro, the pound, and the U.S. dollar.
The negative trend followed the release of fourth-quarter GDP data, which showed growth of 0.1% quarter-on-quarter versus expectations of 0.4%, and 0.2% year-on-year compared with 1.6%. The slowdown was driven by weaker capital investment at 0.2% versus the expected 0.8%, and consumer spending at 0.1%. Economists believe the data are unlikely to influence the Bank of Japan’s monetary policy decisions but warn that Prime Minister Sanae Takaichi may again urge financial authorities to maintain current interest rates. Meanwhile, a meeting was held today between the prime minister and BoJ Governor Kazuo Ueda, who said it involved a general exchange of views on economic and financial issues, with no specific policy demands made.
Australia
The Australian dollar is strengthening against the euro, the yen, the pound, and the U.S. dollar.
Minutes from the latest Reserve Bank of Australia (RBA) meeting will be released on Tuesday at 02:30. Earlier this month, the central bank raised its key interest rate by 25 basis points to 3.85% as inflation remained above the 2.0–3.0% target range. In its accompanying statement, officials noted that it was still unclear whether the current policy stance was sufficiently restrictive to curb inflation. In the upcoming minutes, investors will look for hints of a possible rate hike in May, which is currently priced at a 75.0% probability.
Oil
After an initial decline, oil prices rebounded, although the market remains in a state of uncertainty amid ongoing U.S.–Iran negotiations in Oman.
Iranian diplomats say the country is seeking a mutually beneficial agreement, with discussions focusing on investments in energy and mining, as well as aircraft purchases. At the same time, White House officials told Reuters that the U.S. is factoring in the risk of a prolonged military campaign, while Iran’s Islamic Revolutionary Guard Corps warned that any attack on Iranian territory would be met with retaliation against U.S. bases in the region. According to analysts, an escalation of the conflict could push Brent crude prices to $80.00 per barrel, while a compromise could see prices fall to $60.00 per barrel.
