Financial markets began the key data week on a quiet note due to China’s week-long Lunar New Year holiday, US Presidents' Day, and a partial bank holiday in Canada. Mainland China markets are closed for the week, with added holidays in Singapore and Hong Kong. In the US, equity markets were shut, and the Securities Industry and Financial Markets Association (SIFMA) recommended a full closure of US dollar fixed-income trading, leading to thin global liquidity.
In the US, the January Consumer Price Index (CPI) showed easing inflation. Headline CPI rose 2.4% year-on-year (YoY) versus 2.5% expected, while the previous reading was 2.7% month-on-month (MoM). On a MoM basis, CPI increased 0.2% compared to 0.3% expected and 0.3% prior. Markets reacted dovishly, with the US dollar falling and bond prices rising as investors moved toward safer assets amid volatility. Federal Reserve (Fed) official Goolsbee said the CPI report had both encouraging and concerning parts, adding that interest rates can still be lowered, but more progress on inflation is required.
US Treasury Secretary Scott Bassent said any action would likely involve clarification on incidental objects and confirmed talks with the United States Trade Representative (USTR). He also discussed the Federal Reserve leadership issue, as Senator Tillis may try to block the nomination of Kevin Warsh, former President Donald Trump’s choice to replace Jerome Powell as Fed Chair. Bassent stressed the need to proceed with Senate hearings and said there appears to be agreement to move ahead. On China trade, he clarified that the US does not want to decouple but to de-risk and promote fair trade. Regarding metal tariffs, reports suggest Trump may scale back steel and aluminium tariffs, a politically important move ahead of the midterm elections. Meanwhile, the US Supreme Court announced that next Friday will be a decision day.
In China, President Xi Jinping called for stronger domestic demand as the country prepares for rising global trade uncertainty. Investors became optimistic about Chinese technology and housing policies before the holiday. However, authorities deployed ‘national team’ investors to control the surge in Artificial Intelligence (AI) stocks through selling intervention. Separately, the US boarded a second Venezuela-linked oil tanker in the Indian Ocean.
USDJPY snapped a five-day losing streak, bouncing off a two-week low, amid the USD’s corrective bounce and concerns that the BoJ might have difficulties raising rates. Additionally, a cautious mood ahead of today’s meeting between the Japanese PM and the BoJ Governor also allowed the Yen pair to consolidate the biggest weekly loss since late November.
The British pound (GBP) rallied on Friday after hawkish remarks from Bank of England (BOE) chief economist Pill.
In Australia, the International Monetary Fund (IMF) concluded its 2026 Article IV consultation, stating that the economy is achieving a soft landing but warning of slower growth, renewed inflation pressures, and fiscal looseness.
In New Zealand (NZ), retail sales stayed soft ahead of the Reserve Bank of New Zealand (RBNZ) policy decision, where a hold is widely expected. January card spending gave mixed signals, and although the services sector expanded, momentum slowed, reflecting fragile household demand.
Crude Oil prices fell after reports that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, may resume oil output hikes from April, though no final decision has been made before the 1 March meeting. Notably, a fresh escalation in risks to oil supplies helped crude rebound from a two-week low.
Overall, the modest price action allowed the US dollar to pare earlier losses linked to softer CPI data and mixed Fed commentary. Gold and Silver weakened, USDJPY gained, EURUSD and GBPUSD stayed pressured, AUDUSD bounced, USDCAD eased, and NZDUSD remained quiet. Equities edged higher following Wall Street, while cryptocurrencies continued to trade on the weaker side.
With the US dollar’s corrective rebound and market consolidation ahead of this week’s top-tier data and events, EURUSD and GBPUSD recorded mild losses early Monday after posting weekly gains.
Last week, the softer US dollar helped both pairs stay supported. At the same time, hawkish comments from Bank of England (BOE) Chief Economist Huw Pill and relatively stronger European Union (EU) data compared to US figures allowed EURUSD to remain firmer overall.
USDJPY starts the week with mild gains, rebounding from a two-week low and marking its first daily rise in six sessions, mainly after softer Japan growth data.
Japan’s fourth-quarter Gross Domestic Product (GDP) disappointed. GDP increased just 0.2% annualised and 0.1% quarter-on-quarter (QoQ), below market expectations. Private consumption and capital expenditure (CapEx) showed only modest improvement, while exports fell 0.3%. Despite weak growth, inflation remains firm, keeping the Bank of Japan (BOJ) on a cautious policy normalisation path.
A junior coalition leader backed a suspension of the food tax and defended BOJ independence. Prime Minister Sanae Takaichi is scheduled to meet BOJ Governor Kazuo Ueda at 5 pm Tokyo, 0800 Greenwich Mean Time (GMT), and 0300 US Eastern Time (ET), with markets closely monitoring the meeting for fresh policy signals.
Even as the US dollar recovered, commodity-linked currencies, commonly called the Antipodeans, showed mixed performance amid China’s holidays and limited domestic clarity.
AUDUSD posted modest gains after the International Monetary Fund (IMF) expressed cautious optimism about Australia’s economic outlook. In contrast, NZDUSD edged lower as traders positioned for this week’s expected rate hold from the Reserve Bank of New Zealand (RBNZ).
At the same time, a rebound in Crude Oil, Canada’s key export commodity, along with improving sentiment around Canada, put pressure on USDCAD during the day.
Gold and Silver posted modest losses early Monday, pressured by a firmer US dollar, market positioning ahead of this week’s key data and events, and China’s week-long holidays. Gold had risen for two consecutive weeks previously, while Silver ended a three-week downtrend last week.
OPEC+ supply concerns, ongoing US‑Iran talks, and rising US crude oil inventories put downward pressure on crude prices last week, even as geopolitical tensions offered occasional support. Recent data showed US crude stockpiles rising significantly, which weighed on prices despite Middle East risks.
Crude oil began this week on a positive note after the US boarded a Venezuela‑linked oil tanker in the Indian Ocean, boosting geopolitical worries and helping prices rebound.
In US equity markets, futures were deeply negative before the latest Consumer Price Index (CPI) release but recovered to flat after softer inflation readings. After the market opened, buying lifted the S&P 500 Index nearly +50 points at its peak, but selling pressure returned later in the session, briefly pushing the index into negative territory before a late flat finish. Shares of Amazon fell for a ninth straight session, reflecting ongoing tech sector weakness.
In the cryptocurrency market, Bitcoin (BTC) and Ethereum (ETH) posted mild losses as traders lacked confidence amid a slightly stronger US dollar, growing geopolitical concerns, and consolidation ahead of this week’s top‑tier data and events.
Overall, despite last week’s pressures, crude rebounded, and equities showed resilience, while crypto assets remained under stress.
Apart from Federal Reserve (Fed) talks and mid-tier data from Canada, Monday’s economic calendar is light due to holidays in the US and China.
This week, however, promises key events, including US Gross Domestic Product (GDP), Core Personal Consumption Expenditures (PCE) Price Index, Federal Open Market Committee (FOMC) Minutes, February Purchasing Managers’ Indexes (PMIs), Reserve Bank of New Zealand (RBNZ) decisions, and the US Supreme Court ruling on Trump-related tariffs, making it an eventful week despite China’s long holiday.
With dovish Fed expectations returning and weighing on the US dollar (USD), any further softness in US growth or inflation, combined with dovish Fed remarks, could put additional downside pressure on the greenback.
A softer USD may support Gold and Silver, potentially extending last week’s gains, while other major currencies will likely need positive risk sentiment to stay firm. Equities and Crude Oil could see modest weakness, and cryptocurrencies may remain under pressure.
USDJPY may face further pressure as the Japanese yen (JPY) benefits from its traditional haven status, coupled with uncertainty around Bank of Japan (BOJ) rate hikes and Prime Minister Sanae Takaichi’s stimulus plans.
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