In recent trading sessions, major assets were influenced by specific catalysts, with traders navigating concerns over trade wars, rising oil demand predictions, and at least one expected rate cut from the Federal Reserve this year.
Curious about how your favorite assets performed in the latest trading sessions? We’ve got the scoop for you!
Headlines:
- Japan’s producer prices for January rose by 4.2% year-over-year, slightly above forecasts of 4.0%, compared to a previous 3.9%.
- Australia’s January inflation expectations climbed from 4.0% to 4.6%.
- The Reserve Bank of New Zealand now expects inflation to ease from 2.12% to 2.06% in the fourth quarter of 2024.
- The UK’s preliminary GDP for Q4 2024 grew by 0.1% quarter-over-quarter, defying expectations of a 0.1% contraction and improving from a stagnation at 0.0%.
- The NIESR reported that the UK GDP estimate improved from 0.1% month-over-month to 0.3% in January.
- Switzerland’s Consumer Price Index for January was down by 0.1% month-over-month, in line with forecasts.
- The US dollar weakened as traders shifted their focus from the US headline Producer Price Index (PPI) to the Federal Reserve’s policy outlook.
- US initial jobless claims for the week ending February 8 stood at 213,000, below the forecasted 217,000 and previous 220,000.
- The International Energy Agency’s Oil Market Report predicts demand growth reaching 1.1 million barrels per day in 2025, up from 870,000 barrels per day in 2024.
- President Trump signed a significant reciprocal tariff plan, which will be implemented after Commerce Secretary Howard Lutnick sets the appropriate levels by April 1.
Broad Market Price Action:
The past trading sessions saw assets reacting to multiple key events, including unexpected US PPI data, a surprising uptick in UK GDP growth, and evolving trade policies. Despite the strong PPI figures, traders zeroed in on milder core components, which led US 10-year yields to plummet and fueled expectations for Fed rate cuts. Across the Atlantic, robust Q4 GDP growth in the UK eased fears of a recession, although weak corporate earnings kept the FTSE lagging.
Gold soared to record highs, bolstered by a weaker US dollar and heightened demand for safe havens due to concerns about inflation and geopolitical risks. Bitcoin, after an initial dip, recovered from $95,400 and settled around $96,400 as investor sentiment picked up. In the oil market, WTI crude experienced a back-and-forth battle; diplomatic talks between Russia and Ukraine dampened prices, but uncertainty around trade policy and the IEA’s revised 2025 demand forecast provided some support. Tech stocks drove Wall Street higher, while most European markets gained, with German equities performing robustly and UK stocks trailing behind.
FX Market Behavior: U.S. Dollar vs. Majors:
The US dollar began the session on a weaker note, as traders in Asia responded to the dollar-bearish sentiment from the prior day’s US CPI releases. By the time European traders kicked into gear, the dollar found some support, likely as market participants rebalanced positions ahead of the US PPI announcement. In the US session, even with stronger-than-expected PPI data, the dollar slipped as traders focused on the softer components that affect the Fed’s core PCE price index. Ongoing expectations of Fed rate cuts weighed on the dollar, dragging it down against other major currencies. However, the dollar briefly surged when President Trump revealed plans for retaliatory tariffs, but any gains were short-lived as his measured approach allayed global trade war fears, pushing the dollar lower by the end of the day.
Upcoming Potential Catalysts on the Economic Calendar:
- Germany’s wholesale price index at 7:00 AM GMT
- Switzerland’s PPI reports at 7:30 AM GMT
- Eurozone flash employment change and GDP at 10:00 AM GMT
- Canada’s manufacturing and wholesale sales at 1:30 PM GMT
- US retail sales, import prices at 1:30 PM GMT
- US capacity utilization rate and industrial production at 2:15 PM GMT
- US business inventories at 3:00 PM GMT
- FOMC member Logan speaking at 8:00 PM GMT
Today’s European session turns its focus to Germany’s wholesale prices and Eurozone GDP and employment data. Surprises in growth or labor market conditions could sway the euro. Meanwhile, in the US session, retail sales, import prices, and industrial production will guide Fed expectations, while any statements from FOMC member Logan, along with trade developments or Trump-related news, could heighten volatility across key assets.
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