Trading on Thursday opened without a clear direction as investors searched for fresh triggers to extend the U.S. Dollar (USD) rebound. Encouraging U.S. data, firm Federal Open Market Committee (FOMC) Minutes, and mixed risk sentiment shaped the tone, while attention remains fixed on key releases due later in the week.
Geopolitical uncertainty also lingers. CBS News reported that a potential U.S. strike on Iran could occur as soon as Saturday. Senior security officials have reportedly told President Donald Trump that military preparations are complete, though no final authorization has been given. Discussions inside the White House remain ongoing as officials balance escalation risks against political and military costs.
The USD gained ground alongside rising Treasury yields and upside economic surprises. December durable goods orders fell 1.4%, less than the expected 2.0% drop. Orders excluding transportation rose 0.9% versus 0.3% forecast, and nondefense capital goods excluding aircraft increased 0.6% compared with 0.4% expected. Housing indicators improved, industrial production advanced 0.7% against 0.4% projected, and manufacturing output climbed 0.6% versus 0.4% expected. The Atlanta Federal Reserve (Fed) Gross Domestic Product (GDP) Now estimate for Q4 stands at 3.6%, slightly below the prior 3.7%.
The January FOMC Minutes emphasized a prolonged restrictive stance. Two policymakers favored a 25 basis point cut, but most supported holding rates at 3.5%–3.75%. Several members endorsed “two-sided” guidance, acknowledging that policy could tighten or ease depending on inflation trends. Staff projections pointed to stronger growth through 2028 and slightly firmer inflation. Officials warned that returning to the 2% inflation goal may be slower and uneven, cautioning against premature easing.
Notably, the December Minutes had projected inflation reaching 2% in 2028 after tariff-related pressures in 2025 and 2026. The January document described inflation as modestly higher due to tighter resource use and stronger core import prices, expecting tariff effects to fade mid-year, but it omitted the explicit 2028 target reference.
On governance, the Minutes reiterated that the current Federal Reserve Chair remains in office until a successor is formally confirmed. Republican Senator Thom Tillis of North Carolina tied his backing of Federal Reserve nominees to the outcome of a Justice Department probe involving Chair Jerome Powell, calling it a matter of institutional independence.
Federal Reserve Governor Michelle Bowman expressed continued concern about labor conditions, describing the latest jobs report as unusual. Meanwhile, White House economic adviser Kevin Hassett criticized a New York Federal Reserve (NY Fed) study concluding that 90% of tariff costs are borne domestically, calling it deeply flawed. A subsequent NY Fed paper showed December inflation at 2.83%, up from 2.55% in September after adjusting for shutdown-related distortions.
Elsewhere, USDJPY edged higher despite limited global drivers. Core machinery orders surged over 19% month-on-month in December, sharply above the 4.5% forecast, reinforcing capital expenditure strength and supporting the Bank of Japan (BOJ) outlook. Japanese equities recorded their largest weekly foreign inflow in four months and an eighth straight week of net buying. Following Prime Minister Sanae Takaichi’s election victory, market expectations for Japanese growth and the BoJ rate hike shifted. A Reuters poll conducted February 10–18 showed all 76 economists expect no change in March, but 58% now project the policy rate at 1% by June, up from 36% previously.
In the UK, the Consumer Price Index (CPI) data was uneven. Headline inflation matched estimates, while core and services components exceeded forecasts. Still, the GBPUSD dropped on easing hawkish bias surrounding the Bank of England (BoE) and geopolitical tensions in Britain.
The AUDUSD recovered on solid labor figures increased speculation of a Reserve Bank of Australia (RBA) hike at its March 16–17 meeting. Employment growth was modest, unemployment fell for a fourth consecutive month, and hours worked rose 0.6% in January.
In New Zealand, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr Breman said inflation at 3.1% remains uncomfortable. The RBNZ will shift to eight policy meetings annually from 2027 as monthly CPI reporting begins. The Official Cash Rate was held at 2.25%, with officials signaling that while rate cuts appear finished, policy remains supportive. Assistant Governor Karen Silk highlighted balanced risks between weak consumption and persistent inflation.
The American Petroleum Institute (API) reported a headline draw in crude oil inventories.
The U.S. Dollar Index (DXY) climbed to a nine-day high, extending its winning streak to four sessions. EURUSD slid to a two-week low, and GBPUSD touched its weakest level since January 22. USDJPY marked a weekly peak, while AUDUSD and NZDUSD posted mild rebounds. USDCAD reached a two-week high, and crude oil held near weekly tops. Gold and silver stabilized after rebounding, whereas cryptocurrencies edged higher but remain on course for weekly declines. Asia-Pacific equities traded mixed despite positive momentum from major U.S. benchmarks.
The Eurozone has not delivered any major new negative shock, aside from mixed European Central Bank (ECB) commentary and continued stalemate in the Ukraine–Russia peace negotiations. Even so, EURUSD slid to a two-week low in the previous session and remains under pressure.
The decline is mainly driven by broad U.S. Dollar (USD) strength. Firmer U.S. economic data and hawkish FOMC Minutes have supported the greenback. In addition, traders are positioning ahead of key releases, including the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, the first estimate of U.S. Q4 Gross Domestic Product (GDP), and the preliminary February Purchasing Managers Index (PMI) readings for both the European Union (EU) and the U.S.
EURUSD touched a two-week trough, while GBPUSD slid to its weakest level since January 22, despite mixed United Kingdom (UK) inflation data. The drop in GBPUSD appears linked to soft UK employment figures and rising political uncertainty surrounding the Labour Party leadership, which has weighed on sentiment.
At the same time, USDJPY advanced to a one-week high even though hawkish expectations around the Bank of Japan (BoJ) are building and Japanese data have been strong. The move higher is largely supported by optimism that further stimulus could follow the Japanese Prime Minister’s recent snap election victory, along with cautious risk appetite and overall U.S. Dollar (USD) strength.
Most major currencies remain under pressure against the U.S. Dollar (USD), but the Australian Dollar and the New Zealand Dollar showed relative strength. A hawkish tilt from the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ), supported by recent data and policymakers’ remarks, helped AUDUSD and NZDUSD recover the losses recorded in the prior session.
In contrast, USDCAD continues to trade higher despite firm crude oil prices, which are crucial for Canada as a major export commodity. The pair stays supported by softer recent Canadian data and the broader strength of the USD.
The market’s fears surrounding the U.S.-Iran war join the cautious mood ahead of this week’s top-tier data and Fed woes to defend the previous day’s recovery in the gold and silver prices.
Crude Oil benefits from the supply-crunch woes due to the looming U.S.-Iran war and a surprise draw in the U.S. inventories, per the API data.
A stronger U.S. Dollar (USD) and mixed, though generally positive, market sentiment are limiting upside in Bitcoin (BTC) and Ethereum (ETH). Even with slight intraday gains, both cryptocurrencies remain on track for weekly losses.
In Asia, South Korea’s KOSPI climbed to a record high, while markets in mainland China and Hong Kong remained closed. U.S. equities also extended gains. The Dow Jones Industrial Average added 0.28%, the Standard and Poor’s 500 Index rose 0.56%, and the Nasdaq Composite Index increased 0.70%.
According to Morgan Stanley’s analysis of fourth-quarter 13F filings, mega-cap technology shares are now the most under-owned relative to the Standard and Poor’s 500 Index in 17 years, with an ownership gap of negative 155 basis points. NVIDIA has a negative 2.57 percentage point gap versus its index weight, Apple stands at negative 2.16%, Microsoft at negative 2.13%, and Amazon at negative 1.37%.
Thursday begins with second-tier figures from Canada and the Eurozone, especially Consumer Confidence, before markets shift focus to a packed United States schedule. The main releases include Weekly Jobless Claims, the Philadelphia Federal Reserve (Fed) Manufacturing Index, and remarks from Federal Reserve policymakers.
Apart from economic numbers, investors will monitor headlines related to possible U.S.–Iran tensions and the pending U.S. Supreme Court decision on Trump-era tariffs and Federal Reserve independence. These factors gain added importance ahead of Friday’s key data: the U.S. Personal Consumption Expenditures (PCE) Price Index, Q4 Gross Domestic Product (GDP), and the February Purchasing Managers Index (PMI) reports.
Given the ongoing strength of the U.S. Dollar (USD), supported by solid data and firm Fed guidance, additional downside in major pairs like EURUSD cannot be dismissed. Meanwhile, gold, silver, and crude oil may remain underpinned if geopolitical risks escalate. Equities could extend their recovery on encouraging data, whereas cryptocurrencies may stay pressured by the resilient USD.
It is also worth noting that markets often pause or partially reverse earlier moves on Thursdays. If incoming data or event risks challenge the recent USD rally, the currency could trim gains, opening room for further upside in gold and silver, along with a corrective rebound in EURUSD. Still, the broader trend may dominate as traders position ahead of Friday’s high-impact releases.
May the trading luck be with you!
