Reserve Bank of Australia Governor Michele Bullock said late Thursday that the central projection suggests that if monetary policy is eased too quickly or by too much, disinflation could stall and inflation would settle above the midpoint.

Key quotes

Market reaction

At the press time, the AUD/USD pair was down 0.08% on the day to trade at 0.6398.

The preliminary reading of Australia's Judo Bank Manufacturing Purchasing Managers Index (PMI) rose to 50.6 in February from 50.2 in January, the latest data published by Judo Bank and S&P Global showed on Friday.

The Judo Bank Australian Services PMI improved to 51.4 in February from the previous reading of 51.2, while the Composite PMI increased to 51.2 in February versus 51.1 prior. 

Market reaction

At the press time, the AUD/USD pair was down 0.11% on the day to trade at 0.6395.

• Gold rises 0.23% as risk aversion fuels safe-haven flows.
• Fed Minutes highlight inflation concerns amid Trump’s trade policies.
• Traders eye S&P Global Flash PMIs for further market direction.

Gold's price advanced late in the North American session yet traded off record highs of $2,954 as traders took profits. Trade war woes, a weak US Dollar, and falling US Treasury bond yields kept XAU/USD trading with modest gains of 0.23% near the $2,939 mark at the time of writing.

Bullion’s demand remains fueled by uncertainty about global trade. Risk aversion sparked flows toward the safe-haven appeal of Gold alongside the Japanese Yen (JPY), which posted substantial gains during the day.

The Federal Reserve’s (Fed) Meeting Minutes from Wednesday revealed that Trump’s trade and immigration policies fueled concerns over rising prices. Hence, the Fed Chair Jerome Powell and Co. decided to hold rates unchanged at the January meeting as they assess the current economic data.

In the meantime, some Fed speakers crossed the wires and have turned slightly cautious.  Atlanta Fed President Raphael Bostic sees two rate cuts this year and emphasizes that the economy is not facing a new burst of inflation. St. Louis Fed President Alberto Musalem sees some policy shifts and increased risks of inflation stalling above the Fed’s 2% goal.

Finally, Chicago’s Fed President Austan Goolsbee said that before the recent policy and geopolitical uncertainties, overall inflation "looked pretty good" and was down substantially. However, Trump's broad-based and higher tariffs currently in development keep the Fed nervous.

Data-wise, US job data was softer than expected as the number of Americans filling out unemployment benefits came below estimates. On Friday, Gold traders are eyeing the release of S&P Global Flash PMIs.

Daily digest market movers: Gold price boosted by Trump’s tariff threats fueling safe-haven demand

• US President Donald Trump recently announced that tariffs on cars, automobiles, and computer chips would be around 25%. He also said on Wednesday that duties would broaden to other commodities like lumber.
• US Initial Jobless Claims for the week ending February 15 increased by 219K, exceeding forecasts of 215K.
• The US 10-year Treasury bond yield falls three basis points (bps) and yields 4.505%.
• US real yields, which correlate inversely to Bullion prices, drop three basis points to 2.04%, a tailwind for Bullion prices.
• The World Gold Council revealed that central bank purchases rose more than 54% YoY to 333 tonnes following Trump’s victory, according to its data.
• Money market fed funds futures are pricing in 41.5 basis points of easing by the Fed in 2025.

XAU/USD technical outlook: Gold price faces stir resistance and retreats

Gold price uptrend remains intact, even though it has failed to decisively clear the $2,950 figure, opening the door for a pullback. Momentum shows overstretched as the Relative Strength Index (RSI) exited from overbought conditions, suggesting that sellers are gathering momentum.

In that outcome, the first support would be the February 14 swing low of $2,877, followed by the February 12 daily low of $2,864.

On the other hand, if XAU/USD rises past $2,954, the first resistance would be the psychological $2,950, followed by $3,000.

• NZD/USD jumps to 0.5765 on Thursday, reaching its highest level since January.
• The RSI climbs to 62, nearing overbought territory but still signaling room for further gains.
• MACD histogram shows rising green bars, indicating sustained bullish momentum and potential for continued upside.

The NZD/USD pair staged an impressive rally on Thursday, climbing 1.03% to close at 0.5765, marking its highest point since January. Buyers regained control, building on recent momentum as the pair looks poised to retest the 100-day Simple Moving Average (SMA), which stands as the next major resistance level.

Technical indicators support the bullish outlook. The Relative Strength Index (RSI) surged to 65, edging closer to overbought territory but still offering room for additional upside before triggering exhaustion signals. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram continues to print rising green bars, highlighting sustained buying pressure and strengthening momentum.

Looking forward, a successful break above the 100-day SMA, currently around 0.5805, could open the door for further gains, potentially extending the bullish trend. On the downside, immediate support is seen near 0.5700, with a drop below this level potentially triggering a deeper correction. However, with indicators still favoring buyers, the near-term bias remains tilted to the upside.

NZD/USD daily chart

• The US DXY index falls below 106.50 amid trade optimism.
• Trump signals potential easing of China tariffs before April deadline.
• US Jobless Claims disappoint, rising above market expectations.
• Fed officials voice concerns over inflation risks and economic outlook.

The US Dollar Index (DXY), which tracks the US Dollar’s (USD) performance against six major currencies, extends its decline on Thursday, slipping near 106.30. The pullback follows United States (US) President Donald Trump’s announcement of potential progress on a trade deal with China, offering markets a temporary reprieve from tariff concerns. Despite this relief, weak US jobless claims data and mixed Federal Reserve (Fed) commentary keep traders cautious.

Daily digest market movers: US Dollar softens amid trade optimism and weak data

• US President Donald Trump suggests a trade deal with China could be reached before April, easing tariff concerns.
• Initial Jobless Claims for the week ending February 14 rose to 219,000, missing expectations of 215,000.
• Continuing Jobless Claims increase to 1.869 million, slightly below the forecast of 1.87 million.
• Philadelphia Fed Manufacturing Survey for February hits 18.1, below the 20 forecast and down from 44.3 in January.
• St. Louis Fed President Alberto Musalem warns of potential stagflation risks and rising inflation expectations.
• Atlanta Fed President Raphael Bostic maintains the possibility of two rate cuts this year, depending on economic developments.
• The Fed sentiment index remains fairly neutral but in hawkish terrain which might limit the downside.

DXY technical outlook: Bears keep control as downside pressure builds

The US Dollar Index remains under pressure after falling below 106.50, with bearish momentum gaining traction. The index struggles to reclaim the 20-day Simple Moving Average (SMA), signaling continued weakness. Both the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) remain entrenched in negative territory, suggesting persistent downside pressure. A decisive drop below the 100-day SMA at 106.30 could signal a further bearish breakout, with 106.00 emerging as the next significant support level. Bulls need to reclaim the 107.50 resistance zone to shift momentum in their favor.

• USD/CAD dips as traders digest Fed minutes, signaling cautious stance on rate cuts.
• Trump’s new tariffs on Canadian lumber add fresh trade uncertainty.
• Markets eye Canadian Retail Sales, BoC Governor Macklem’s speech for further cues.

The Canadian Dollar appreciated against the Greenback on Thursday. The USD/CAD dropped below the 1.4200 figure, and the Greenback got battered due to investors digesting the latest Federal Open Market Committee (FOMC) minutes.

Canada’s economic docket revealed that Producer Prices exceeded market estimates and December’s figures in January. Other data showed that housing prices were mixed monthly and yearly.

Regarding tariffs, US President Donald Trump announced plans to enact tariffs on lumber and forest products next month. This is significant for Canada, one of the world's leading producers and exporters.

In the meantime, the Fed’s latest minutes showed that officials are concerned about Trump’s administration's trade and immigration policies. Policymakers noted that some inflation expectations had risen recently, adding that maintaining policy firm is appropriate.

Traders would be eyeing the release of Canadian Retail Sales on Friday and Bank of Canada (BoC) Governor Tiff Macklem's speech. At the same time, S&P Global Flash PMIs will update the status of business activity in the US.

Daily digest market movers: Canadian Dollar rallie amid mixed US data

• Canada’s Producer Price Index (PPI) rose 1.6% MoM in January, above forecasts of 0.8%. In the twelve months to January, the PPI increased 5.8%, up from 4.1%.
• US Initial Jobless Claims for the week ending February 15 increased by 219K, exceeding forecasts of 215K.
• Interest rate differentials between Canada and the United States are putting a lid on the Loonie’s gains.
• Elevated inflation reports in Canada could prevent the BoC from lowering rates in check following the release of January’s CPI data. In that outcome, the USD/CAD could aim lower as the Canadian Dollar appreciates versus the Greenback.

USD/CAD price forecast: Canadian Dollar gathers traction and appreciates on soft US Dollar

The USD/CAD uptrend has lost steam after the pair peaked near 1.4800. Since then, sellers have taken over, pushing prices below the 50-day Simple Moving Average (SMA) at 1.4338 and clearing the January 20 daily low of 1.4260, a crucial level for buyers. Further downside lies ahead if bears push spot prices below the 100-day SMA at 1.4111.

Otherwise, if buyers lift USD/CAD past 1.4300, they must reclaim the 50-day SMA to remain hopeful of higher prices.

The US Dollar came under renewed and significant selling pressure, retreating to two-month lows even though the US tariff narrative remained unchanged and the Russia-Ukraine peace talks showed no signs of improvement.

Here is what you need to know on Friday, February 21:

The US Dollar Index (DXY) tumbled to fresh two-month lows near 106.40 amid declining US yields, the strong appreciation of the Japanese yen and extra buying pressure in the risk complex. The preliminary S&P Global Manufacturing and Services PMIs should grab all the attention, seconded by Existing Home Sales, and the final Michigan Consumer Sentiment print. In addition, the Fed’s Jefferson is due to speak.

EUR/USD rebounded to three-day highs and approached the key 1.0500 barrier on the back of the US Dollar’s sharp pullback. The advanced HCOB Manufacturing and Services PMIs in Germany and the euro bloc will be released, followed by the European Commission’s Winter Forecasts and the speech by the ECB’s Lane.

GBP/USD climbed to levels last seen in early December around 1.2650 following extra weakness in the Greenback and the widespread uptick in the risk-linked assets. The GfK Consumer Confidence comes first, ahead of Retail Sales, the flash S&P Global Manufacturing and Services PMIs and Public Sector Net Borrowing readings.

The intense buying bias in the Japanese yen motivated USD/JPY to retreat sharply to the 149.40 zone for the first time since December. Key Inflation Rate will be at the centre of the debate along with the preliminary Jibun Bank Manufacturing and Services PMIs.

AUD/USD clocked a new two-month high just above 0.6400 the figure following the deep retracement in the US Dollar. Next on tap in Oz will be the RBA’s Monthly CPI Indicator, and Construction Done figures, all due on February 26.

Supply concerns sparked extra gains in WTI prices, lifting the barrel back above the $73.00 mark on Thursday.

Gold prices clinched an all-time peak beyond $2,950 per ounce troy following tariff concerns and difficult peace talks around the Russia-Ukraine crisis. Silver prices advanced to weekly peaks north of the $33.00 mark per ounce.

• Dow Jones drops over 1.40% to 43,980 as investor sentiment weakens.
• The US Dollar Index retreats below 106.90 after Trump hints at a potential trade deal with China.
• US Initial Jobless Claims miss estimates, raising concerns about labor market resilience.
• St. Louis Fed warns of inflation risks, while Atlanta Fed’s Bostic sees room for two rate cuts this year.

The Dow Jones Industrial Average (DJIA), which measures the performance of 30 large-cap US stocks, fell sharply on Thursday, dropping more than 1.40% to 43,980. Investors reacted to mixed economic data and cautious remarks from Federal Reserve (Fed) officials. The labor market showed signs of weakness, while the possibility of a United States (US)-China trade deal helped ease concerns over upcoming tariffs.

Daily digest market movers: Dow Jones tumbles as economic concerns grow

• The Dow extended losses as market participants digested weaker-than-expected weekly jobless claims.
• Initial Jobless Claims rose to 219,000, exceeding estimates of 215,000 and higher than the previous 214,000.
• Continuing Jobless Claims climbed to 1.869 million, surpassing forecasts and the previous 1.845 million.
• The Philadelphia Fed Manufacturing Survey printed at 18.1, below expectations of 20 and January’s 44.3.
• US President Donald Trump hinted at a potential trade deal with China, easing concerns over April’s tariff hikes.
• The US Dollar Index (DXY) fell below 106.90 following Trump’s comments, signaling reduced demand for safe-haven assets.
• St. Louis Fed President Alberto Musalem warned of rising inflation expectations and the risk of stagflation.
• Atlanta Fed President Raphael Bostic reiterated that two rate cuts remain possible this year, depending on economic conditions.
• The Dow remains under selling pressure, struggling to regain key technical levels after breaking below 44,000.

Technical Analysis

The Dow Jones Industrial Average has fallen below 44,000, accelerating downside momentum. The break below the 20-day SMA at 44,580 confirms a bearish trend, with sellers gaining control. If the index fails to hold above 43,900, further declines toward the 100-day SMA around 43,480 could follow. A recovery above 44,200 is needed to ease immediate selling pressure.

• Mexican Peso appreciates, shrugging off dovish Banxico stance, weaker economic outlook.
• Mexico’s December Retail Sales exceed estimates but slow from prior month.
• Banxico minutes reaffirm dovish stance, highlighting progress on disinflation.
• Q4 GDP final reading expected to confirm economic slowdown on Friday.

The Mexican Peso staged a comeback, rising over 0.23% against the Greenback. Retail Sales in December exceeded estimates, yet they lagged compared to the previous month’s figures. The USD/MXN trades at 20.39 after hitting a daily high of 20.46.

Mexico’s economic docket revealed that consumer spending dipped compared to November’s data but exceeded private economists' pessimistic expectations. Meanwhile, Banco de Mexico (Banxico) revealed its latest Meeting Minutes, reaffirming the Mexican institution's dovish stance, and suggested that further rate cuts are eyed.

On Wednesday, Banxico revealed its quarterly report for Q4 2024, in which the central bank downwardly revised its growth forecast for 2025. Furthermore, the bank expects weaker consumption and private spending, reflecting the highly uncertain environment.

Regarding their 50basis-point rate cut in the latest monetary policy decision, the Governing Board ruled out they’re comfortable with the current inflation levels. It highlighted the progress of the disinflationary process.

On Friday, the Instituto Nacional de Estadistica Geografia e Informatica (INEGI) will feature the final GDP reading for Q4 2024, which is expected to show a quarterly contraction and is foreseen expanding annually.

Daily digest market movers: Mexican Peso climbs, unfazed by weaker economic outlook

• Banxico’s latest minutes acknowledged that growth risks are tilted to the downside. The Governing Board expects the economy will grow 0.6% in 2025, down from the 1.2% previously foreseen. The forecast is well below the estimate from Mexico’s Finance Ministry of 2.3% and beneath the Citi Expectations Survey of 1%.
• For 2026, Banxico estimates that Mexico’s economy will expand by 1.8%.
• Mexico’s Retail Sales rose by 0.1% MoM, above estimates for a -0.4% shrinkage. On an annual basis, sales improved from a -1.9% contraction to -0.2% YoY.
• Mexico’s President Claudia Sheinbaum said that Marcelo Ebrard, Mexico’s Secretary of Economy, will meet with the US Commerce Secretary today about tariffs.
• Monetary policy divergence between Banxico and the Fed favors further USD/MXN upside. The Fed is expected to keep rates steady, while Banxico is foreseen cutting rates again by 50 basis points at the next meeting.
• The USD/MXN is advancing due to weakness in the Greenback. The US Dollar Index (DXY) dropped 0.65% to 106.45.
• Trade disputes between the US and Mexico remain front and center. Although the countries found common ground previously, USD/MXN traders should know that there is a 30-day pause and that tensions could arise toward the end of February.

USD/MXN technical outlook: Mexican Peso is steady as USD/MXN is below 50-day SMA

The USD/MXN continued consolidating below the 50-day Simple Moving Average (SMA), keeping bulls in check. Further weakness could drive the exchange rate below the 100-day SMA at 20.22 and threaten to challenge the psychological 20.00 figure. If cleared, the next support would be the October 18, 2024 low at 19.64, ahead of the 200-day SMA at 19.37.

Conversely, if USD/MXN climbs past the 50-day SMA, further gains lie ahead of the 20.50 mark.

• Banxico sees Q4 2024 GDP contraction, with 2024 growth slowing to 1.5%.
• Inflation falls to 3.69%, back within Banxico’s 2-4% target range.
• Most members anticipate further inflation decline, keeping rate-cut path open.

Banco de Mexico, also known as Banxico revealed its monetar policy minutes for the decision announced on February 6. The Central Bank decided to lower borriwng costs by 50 basis points (bps)  to 9.50% via a 4 to 1 vote split, with Deputy Governor Jonathan Heath, supporting a 25 bps rate cut.

Key highlights

On Thursday, St. Louis Fed President Alberto Musalem warned that rising inflation expectations combined with the risk of stubborn stagflation could create a double challenge for the US economy.

Key Takeaways

• EUR/USD rises to 1.0440 on Thursday, reversing losses after a three-day decline.
• Pair rebounded strongly off the 20-day SMA, gained over 0.40% of its intra-weekdrop.
• Momentum indicators show signs of stabilization, with RSI rising sharply and MACD flattening in positive territory.

After a sharp three-day decline that saw EUR/USD shed more than 0.50% of its value following last week’s rally, bulls regained control on Thursday. The pair climbed to 1.0440, marking a 0.40% gain, as buyers defended the 20-day Simple Moving Average (SMA), which acted as a key technical floor.

Momentum indicators hint at a shift in sentiment. The Relative Strength Index (RSI) has turned higher, now at 57, signaling renewed upside momentum after dipping earlier in the week. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram remains flat but holds in green territory, suggesting that bearish momentum has stalled.

Looking ahead, the pair’s ability to hold above the 20-day SMA will be crucial for sustaining a broader recovery. If buyers maintain control, the next key resistance lies near 1.0500, where stronger selling pressure could emerge. On the downside, a break below 1.0420 would invalidate the latest rebound and expose EUR/USD to further losses toward 1.0380.

EUR/USD daily chart

Raphael Bostic, President of the Atlanta Federal Reserve, still sees room for two rate cuts this year, though much depends on the evolving economic conditions.

Key Quotes

• GBP/USD climbs as soft US jobless claims data weakens the Greenback.
• UK inflation above 3% reduces the odds of aggressive BoE rate cuts.
• Traders eye Fed speakers and potential US-China trade deal signals.

The Pound Sterling (GBP) climbs against the US Dollar (USD) and crosses the 1.2600 figure on Thursday, with traders awaiting the release of United Kingdom (UK) Retail Sales data. Meanwhile, a soft United States (US) jobs report weakened the US Dollar. The GBP/USD pair trades at 1.2616, up 0.25%.

Sterling gains 0.25% ahead of UK Retail Sales release

The Cable failed to rally on Wednesday as inflation rose above 3% in January, weakening the case for further interest rate cuts by the Bank of England (BoE). Meanwhile, US President Donald Trump's tariffs rhetoric continues.

Developments in the Russia–Ukraine conflict continued to grab the headlines as Trump called Ukrainian President Volodymyr Zelenskiy a dictator, who questioned discussions of a ceasefire held between Russia and the US in Saudi Arabia.

Market participants cheered the chance of a new trade deal between the US and China. Trump said, “It’s possible,” adding that Chinese President Xi Jinping to visit the US but failed to provide a date.

Data-wise, the US economic docket featured the release of US Initial Jobless Claims for the week ending February 15, which came at 219K, up from 214K, exceeding forecasts of 215.

Ahead in the day, GBP/USD traders would eye Fed speakers. Chicago’s Fed Austan Goolsbee, St. Louis Fed Alberto Musalem, and Governors Michael Barr and Adriana Kugler will cross the wires.

GBP/USD Price Forecast: Technical outlook

GBP/USD is neutral to slightly upward biased after registering a successive series of higher highs and higher lows, alongside strong bullish momentum, as depicted by the Relative Strength Index (RSI). However, if buyers want to regain control they must clear the 100-day Simple Moving Average (SMA) at 1.2664, followed by the 200-day SMA at 1.2787.

On the other hand, if sellers drag the exchange rate below 1.2600, the trend could turn downwards if they surpass 1.2500, followed by the 50-day SMA at 1.2461.

• USD/CAD drops sharply to near 1.4200 as the US Dollar underperforms its major peers.
• Slightly higher US Initial Jobless Claims have weighed on the US Dollar.
• Fed officials are worried about growing upside risks to inflation.

The USD/CAD pair falls sharply to near the key level of 1.4200 in North American trading hours on Thursday. The Loonie pair weakens as the US Dollar (USD) underperforms its major peers, with the US Dollar Index (DXY) declining to near 106.70.

The Greenback faces selling pressure after the release of the slightly higher-than-expected United States (US) Initial Jobless Claims data for the week ending February 14. Department of Labor reported that individuals claiming jobless benefits for the first time were 219K, higher than estimates of 215K.

The US Dollar was already underperforming even though US President Donald Trump announced on Wednesday that tariffs on automobiles, semiconductors, and pharmaceuticals could be imposed over the next month or sooner. Market participants expect Trump’s tariff agenda could lead to a global trade war. Such a scenario will result in a global slowdown.

Meanwhile, hawkish Federal Open Market Committee (FOMC) minutes for the January meeting also failed to support the US Dollar. The FOMC minutes showed on Wednesday that officials were more worried about deepening upside risks to inflation due to Trump’s policies than risks to the labor market.

In the policy meeting, the Fed kept interest rates steady in the range of 4.25%-4.50% and guided a cautious stance on interest rate cuts.

In the neighboring nation, investors await the Canadian Retail Sales data for December, which will be released on Friday. Month-on-month Retail Sales, a key measure of consumer spending, are estimated to have expanded by 1.6% after remaining flat in December

President Trump has shifted the axis of US foreign policy since his return to power just one month ago. Any remaining ambiguity on this issue for Europeans was stripped away by US Defence Secretary Hegseth last week with his remarks that Washington would 'no longer tolerate an imbalanced relationship' and that 'safeguarding European security must be an imperative for European members of Nato', Rabobank's FX analyst Jane Foley notes.  

Fresh headwinds to growth can weigh on the outlook for the EUR

"To drive this point home, Hegseth made clear the US’ expectation that 'Europe must provide the overwhelming share of future lethal and non-lethal aid to Ukraine.' Since then European politicians have been scrambling to respond. Extra spending on defence will be expensive. Fresh headwinds to growth and weakened budgets could weigh on the outlook for the EUR."

"That said, as pointed out by former ECB President Draghi in his essay in the FT last week, many of the existing headwinds facing the Eurozone economy are of its own making. Crucially, Draghi argues that Europe also has the ability to lead itself out of its current predicament if it is prepared to undergo radical change. How European politicians respond to the challenges they currently face could be key in determining the long-term coherence of the Eurozone project and the EUR."

"For now we would argue that with Europe currently unable to match the US in terms of growth and with its leadership position on the world stage undermined by its weak position on defence, that the EUR will struggle to launch a sustained and significant recovery vs the USD near-term. We continue to see risk of a move to EUR/USD parity around the middle of the year."

• AUD/USD advances to near 0.6380 as upbeat Aussie employment data is likely to force traders to pare RBA dovish bets.
• On Tuesday, the RBA cut its OCR by 25 bps to 4.10%, the first interest rate cut in more than four years.
• Higher US Initial Jobless Claims have weighed further on the US Dollar.

The AUD/USD pair posts a fresh two-month high near 0.6380 in Thursday’s European session. The Aussie pair is 0.6% higher as the Australian Dollar (AUD) performs strongly across the board, except the Japanese Yen (JPY), after the release of the better-than-projected Australian labor market data for January.

The Australian Bureau of Statistics reported that the economy added 44K workers, more than double than expectations of 20K but lower than 60K addition seen in December. The Unemployment Rate accelerated to 4.1%, as expected, from 4% in the previous month.

Upbeat Aussie employment data adds to expectations that the Reserve Bank of Australia (RBA) will remain cautious on further policy-easing. On Tuesday, the RBA announced its first-ever interest rate cut decision since November 2020 but cleared that the battle against inflation is not over yet. The RBA guided a cautious stance on interest rate cuts after reducing its Official Cash Rate (OCR) by 25 basis points (bps) to 4.10%.

Meanwhile, a sharp weakness in the US Dollar has also strengthened the Aussie pair. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to near 106.75.

Earlier in the day, the Greenback was already underperforming, slightly higher-than-expected United States (US) Initial Jobless Claims data for the week ending February 14 has weighed further. The Department of Labor reported that individuals claiming jobless benefits for the first time were 219K, higher than estimates of 215K.

•  Initial Jobless Claims rose above consensus to 219K.
• Continuing Jobless Claims increased to 1.869M in the week ending February 8.

US citizens filing new applications for unemployment insurance rose to 219K for the week ending February 15, as reported by the US Department of Labor (DoL) on Thursday. This print missed initial estimates and was higher than the previous week's revised tally of 214K (from 213K).

The report also highlighted a seasonally adjusted insured unemployment rate of 1.2%, while the four-week moving average dropped by 1K to 215.25K from the prior week’s revised average.

Moreover, Continuing Jobless Claims went up by 24K to reach 1.869M for the week ending February 8.

Market reaction

The Greenback maintains its bearish attitude around 106.80 when tracked by the US Dollar Index (DXY), receding to the area of daily lows.

The Japanese Yen (JPY) is leading the currency run higher on the US Dollar (USD), Scotiabank's Chief FX Strategist Shaun Osborne notes.

Markets position for higher inflation data

"The JPY is leading the currency run higher on the USD, with traders taking on board hawkish comments from BoJ policymaker Takata earlier this week and positioning for another jump in Japan’s rate of inflation which will support the outlook for moderately tighter policy."

"Japan releases CPI data this evening. January inflation is expected to push up to 4.0% Y/Y."

Sterling is a little firmer on the session, regaining the low 1.26 zone where recent gains have stalled. The CBI Trends survey reflected slightly better—but still weak—Total Orders (-28) and a dip in Selling Prices (19, from 27), Scotiabank's Chief FX Strategist Shaun Osborne notes.

GBP may struggle to extend

"Other survey data indicate weakening consumer confidence. Despite these challenges, markets have pared BoE rate expectations since the central bank’s policy decision and cautious messaging on the outlook earlier this month. Swaps anticipate 50bps of additional cuts this year."

"Despite a weak (bearish) technical close for Cable yesterday (outside range reversal), the GBP has rebounded moderately so far today to regain 1.26. The low 1.26 zone has been a cap on the GBP’s recent rise, however, and likely remains so (1.2610 is the 38.2% Fibonacci retracement of the September/January drop in Cable). Support is 1.2555/65."

The Euro (EUR) has managed a fairly solid-looking short-term rebound from yesterday’s low near 1.04 on little news other than the broader mood-shift on the USD, Scotiabank's Chief FX Strategist Shaun Osborne notes.

ECB policymakers continue to debate the outlook for rates

"Spot gains are lagging most of the major currencies, however. ECB policymakers continue to debate the outlook for rates; Governor Schnabel commented yesterday that there should be a debate about a halt to rate cuts amid the uncertain inflation outlook. "

"But the rate doves appear to be in the majority and markets are more or less fully priced for a 25bps cut in early March. Solid, local equity returns vs US markets should provide a moderate backstop for the EUR amid current uncertainties."

"The EUR is trading a little higher after rebounding from the 1.04 area yesterday. The rebound in spot from yesterday’s low looks technically positive on the short-term chart but price action looks more like a consolidation than a major reversal at this point. Support is 1.0400 and 1.0375/80. Resistance is 1.0470."

The Canadian Dollar (USD) is a little firmer on the session but it is lagging its commodity peers (AUD, NZD) and the spot market is still essentially range trading and awaiting developments, Scotiabank's Chief FX Strategist Shaun Osborne notes.

CAD is trading marginally higher

"News reports indicate that the Canadian government is asking Canadian financial institutions to help in combating the fentanyl trade as it bolsters efforts to address the trafficking issue and satisfy White House demands to tighten up the border."

"Spot is drifting a little lower but the drop in the USD is hardly decisive or significant from a short-term technical point of view. The USD is maintaining the mild upward bias established after last Friday’s low but momentum is weak and the intraday range is holding within yesterday’s range at this point."

"That may tilt risks towards a renewed dip, if sustained through the close, however. Support is 1.4180/90. Resistance is 1.4250/55."

The general US Dollar (USD) rebound that has developed over the course of this week is showing signs of stumbling, Scotiabank's Chief FX Strategist Shaun Osborne notes.

USD drifts lower as tariff volatility eases

"There is not an evident theme behind the USD dip. However, tariff volatility in the markets generally is subsiding and there are perhaps signs that the 'US exceptionalism' mood that developed around the president’s election win is fading somewhat. US stocks are up 4-5% in YTD terms but European markets—which are clearly facing some growth challenges—are up significantly more (Dax +13%, CAC +10.6% YTD)."

"DXY losses below 107 overnight tip near-term technical risks towards a bit more softness at least and perhaps a retest of last Friday’s low around 106.5. Yesterday’s FOMC minutes reflected the cautious tone of recent comments from top policymakers. The minutes noted that officials wanted more progress on inflation before adjusting rates while uncertainty warranted caution. They also noted trade and immigration policy might hinder disinflation. Swaps suggest the Fed will remain on hold until September when the first full 1/4 point cut is priced into contracts."

"US weekly claims data drop at 8.30ET along with the Philly Fed survey. US Leading Indicators are out at 10ET. The Fed’s Goolsbee, Musalem, Barr and Kugler (all voters this year) are speaking over the course of the day. RBA Governor Bullock delivers her parliamentary testimony at 17.30 ET. Remarks are likely to reflect her cautious comments on the policy outlook that followed the central bank’s first rate cut in four years this week."

• The US Dollar edges lower against major currencies on a calm Thursday. 
• US President Donald Trump lashed out at Ukraine and hinted at a possible trade deal with China.
• The US Dollar Index (DXY) reverses course and dips below 107.00 after a firm upside rejection on Wednesday. 

The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, slips lower on Thursday and trades below 107.00 at the time of writing. The move comes after United States (US) President Donald Trump mentioned that a trade deal with China might come. This is a big sigh of relief in markets on the tariff and trade front, as it would mean that some easing could come before April when levies are due to kick in. 

The US economic calendar is quite calm this Thursday, except for the weekly Initial Jobless Claims, the Philadelphia Fed Manufacturing Survey for February and some speeches by Fed policymakers. However, as it happened in the earlier part of this week, US data is likely to be overshadowed by Trump’s comments. 

Daily digest market movers: Does it matter?

• At 13:30 GMT, the weekly US Jobless Claims are due, with Initial Claims for the week ending February 14 expected to tick up to 215,000 from 213,000. Continuing Claims for the week ending February 7 are expected to head higher as well to 1.87 million, from the previous 1.85 million.
• At the same time, the Philadelphia Fed Manufacturing Survey for February is expected to decline to 20 from 44.3 in January. 
• Quite an army of Fed speakers are scheduled for this Thursday:
  • At 14:35 GMT, Chicago Fed President Austan Goolsbee speaks in a moderated Q&A at an event hosted by the Chicagoland Chamber of Commerce. 
  • At 17:05 GMT, St. Louis Fed President Alberto Musalem speaks to the Economic Club of New York about the US economy and monetary policy
  • At 19:30 GMT, Fed Vice Chair for Supervision Michael Barr talks about supervision and regulation at an event at Georgetown University Law Center. 
  • Around 22:00 GMT, Federal Reserve Governor Adriana Kugler gives a speech on "Navigating inflation waves while riding on the Phillips curve" at a lecture hosted by Georgetown University. 
• Equities are down across the globe, except for the European ones, with the German Dax and the pan-European Stoxx 50 in the green. 
• The CME FedWatch tool shows a 51.2% chance that interest rates will remain unchanged at current levels in June. 
• The US 10-year yield trades around 4.52%, slipping lower from its Wednesday’s high of 4.574%.

US Dollar Index Technical Analysis: Greenback just does not care

The US Dollar Index (DXY) is back to square one and gives up all its Wednesday’s gains. The firm technical rejection at 107.35 was enough to push the DXY back to where it was earlier this week. If US President Trump comes out with more easing or softening comments on tariffs or other deals, a revisit to 106.60 could be in the cards.  

On the upside, the previous support at 107.35 has now turned into a firm resistance. Further up, the 55-day SMA at 107.96 must be regained before reclaiming 108.00. 

On the downside, look for 106.56  (100-day SMA), 106.52 (April 16, 2024, high), or even 105.89 (resistance in June 2024) as support levels. The Relative Strength Index (RSI) momentum indicator in the daily chart shows room for more downside. Therefore, the 200-day SMA at 104.97 could be a possible outcome if a firm catalyst emerges. 

US Dollar Index: Daily Chart

• Silver price strengthens and jumps to near $33.20 amid multiple tailwinds.
• US President Trump’s tariff agenda could lead to a global economic slowdown.
• The Fed is expected to maintain a restrictive interest rate stance for longer.

Silver price (XAG/USD) surges almost 1.5% to near $33.20 in European trading hours on Thursday. The white metal strengthens as investors remain concerned over deepening global trade tensions. United States (US) President Donald Trump announced on Wednesday that he is planning to impose tariffs on lumber, cars, semiconductors, and pharmaceuticals over the next month or sooner.

Market participants expect President Trump's tariffs would lead to a global trade war, which would result in an economic slowdown across the globe.

Meanwhile, Donald Trump has also ordered his team to prepare reciprocal tariffs, which are expected to be unveiled in April.

On the geopolitical front, Ukraine President Volodymyr Zelenskyy feeling left out of Russia-US peace talks to end the war in Ukraine has raised some uncertainty. Ukrainian leader has condemned US Trump for initiating peace talks with Russia without his involvement in discussing the issue in Saudi Arabia.

Signs of a slowdown in the Russia-Ukraine peace talks would boost demand for safe-haven assets, such as Silver.

Meanwhile, the safe-haven demand of the US Dollar has remained weak even though traders becoming increasingly confident that the Federal Reserve (Fed) will keep interest rates in the current range of 4.25%-4.50% for longer. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, declines to near 106.90.

Silver technical analysis

Silver price is inch far from revisiting an over three-month high of $33.40, which it posted on February 14. The outlook of the white metal is bullish as the 50-day Exponential Moving Average (EMA) has been sloping higher, which trades around $31.28.

The 14-day Relative Strength Index (RSI) oscillates in the 60.00-80.00 range, suggesting that the momentum is strongly bullish.

Looking down, the upward-sloping trendline from the August 8 low of $26.45 will act as key support for the Silver price around $30.00. While, the October 22 high of $34.87 will be the key barrier.

Silver daily chart

The US Dollar (USD) is expected to trade between 7.2700 and 7.2900 against the Chinese Yuan (CNH). In the longer run, a breach of 7.2960 would indicate that the USD/CHN is not declining further, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD can decline towards the major support level at 7.2300

24-HOUR VIEW: "Our view for USD to “trade between 7.2620 and 7.2850” yesterday was incorrect, as it traded in a 7.2735/7.2930 range. The price action provides no fresh clues. Today, we expect USD to trade between 7.2700 and 7.2900."

1-3 WEEKS VIEW: "Our most recent narrative was from Monday (17 Feb, spot at 7.2600), wherein 'the increase in downward momentum suggests USD could decline the major support level at 7.2300.' After rebounding from 7.2428, USD has not been able to make further headway on the downside. From here, a breach of 7.2960 (no change in ‘strong resistance’ level), we indicate that USD is not declining further."

LME aluminium prices rose above $2,700/t briefly yesterday, for the first time in a month. This followed reports the EU agreed on a sixteenth package of sanctions against Russia, including a ban on primary aluminium imports. Prices later gave up the gains, ING’s commodity analysts Warren Patterson and Ewa Manthey notes.

More Russian metal has been shipped to China

"The package is expected to be adopted by EU foreign ministers on Monday to mark the third anniversary of Russia’s invasion of Ukraine. This comes as the US conducts talks with Russia on a peace deal to end the war in Ukraine. The US has signalled that sanctions relief could be part of an agreement."

"Any impact is likely to be limited. Although the EU continues to import Russian aluminium, volumes have fallen, with European buyers self-sanctioning. The gap left by Russian supplies has mostly been filled by imports from the Middle East, India, and Southeast Asia, and this trend is likely to continue. Meanwhile, more Russian metal has been shipped to China, the world's biggest aluminium consumer."

"The US and the UK banned the import of metals produced in Russia in 2024. The EU has so far banned aluminium products, including wire, tube, pipe and foil, which account for less than 15% of EU imports. Russia is the world’s largest aluminium producer outside China, accounting for about 5% of global aluminium production."

Outlook is mixed; New Zealand Dollar (NZD) is likely to trade in a 0.5675/0.5725 range vs US Dollar (USD). In the longer run,  upward momentum has slowed; a breach of 0.5675 would indicate that 0.5790 is not coming into view, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Breach of 0.5675 to indicate that 0.5790 is not coming into view

24-HOUR VIEW: "We expected NZD to “trade sideways between 0.5690 and 0.5730” yesterday. Our view was incorrect as it fluctuated between 0.5678 and 0.5730, closing little changed (0.5705, +0.02%). The outlook is mixed after the choppy price movements. Today, we expect NZD to trade in a 0.5675/0.5725 range."

1-3 WEEKS VIEW: "We turned positive in NZD on Monday (17 Feb, spot at 0.5730), indicating that “the price action suggests further NZD strength, potentially to 0.5790.” NZD then rose to 0.5750 but has not been able to build on its gains. Upward momentum has slowed, and a breach of 0.5675 (no change in ‘strong support’ level) would indicate 0.5790 is not coming into view. Note that NZD dropped briefly to 0.5678 yesterday."

Supply uncertainty continues to support the oil market, which faces multiple risks, including disruptions to Kazakh flows, the potential for a delay in the return of OPEC+ barrels, weather events in the US, and ever-present sanctions risks hanging over the market. The concerns pushed ICE Brent back above US$76/bbl yesterday, ING’s commodity analysts Warren Patterson and Ewa Manthey notes.

Buyers might be less willing to accept sanctioned Russian vessels

"This week, the market is dealing with supply disruptions in North Dakota due to extremely cold weather. The North Dakota Pipeline Authority said that oil production is down between 120-150k b/d, while natural gas production has also taken a hit. These disruptions will likely last until the weekend when warmer weather is forecast in the region."

"As for sanctions, the EU agreed to a new sanctions package against Russia. It includes targeting oil exports by sanctioning 73 additional vessels that are part of Russia’s shadow fleet. The EU had sanctioned 79 vessels previously. While similar sanctions from the US on Russia have not led to a significant drop in export volumes, floating storage has increased. This has buyers less willing to accept sanctioned vessels."

"However, potential restarts of oil flows from Iraq’s Kurdistan region, and soon, are offsetting these supply risks. There's talk that these flows could resume soon, after being offline since early 2023. A resumption could bring 300k b/d of supply onto the market. This isn’t the first time that there’s been talk of an imminent restart of flows. In addition, it’s unclear how Iraq would manage its OPEC+ production target if these flows were to resume."

• EUR/USD edges slightly higher as the US Dollar declines, with investors seeming less fearful about President Trump’s tariff threats.
• The FOMC Minutes showed on Wednesday that officials are concerned over upside risks to inflation.
• ECB’s Schnabel expected the central bank to pause the policy-easing cycle.

EUR/USD ticks higher to near 1.0440 as the US Dollar (USD) declines in Thursday’s European session. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near 106.90. The Greenback appears to have resumed its downside journey after a mild recovery earlier this week as investors expect United States (US) President Donald Trump’s tariffs agenda won’t be much more terrifying than the market had anticipated.

Till now, President Trump has imposed 25% tariffs on steel and aluminum, 10% on all imports from China, and has threatened to introduce reciprocal tariffs, with a 25% levy on automobiles, semiconductors, and pharmaceuticals by April. Market participants had anticipated that Trump would force tariffs soon after returning to the White House.

Meanwhile, Donald Trump has mentioned that he refrained from imposing tariffs immediately to allow local manufacturers enough time to increase their operating capacity. Market experts believe that US trading partners would be able to negotiate a deal with Trump in the meantime, and the impact of tariffs would remain limited on the global economy.

Apart from Trump’s tariff agenda, growing optimism over the Russia-Ukraine truce has also diminished the risk premium of the US Dollar. President Trump has agreed to hold more talks with Russia, including Ukraine and Europe, to end the war in Ukraine.

A Russia-Ukraine peace agreement would have a favorable impact on the Eurozone. The truce would improve the global supply chain and lower energy prices. The Eurozone used to be significantly dependent on Russia for energy imports before its war with Ukraine.

Daily digest market movers: EUR/USD ticks higher amid weakness in US Dollar

• EUR/USD edges higher as the US Dollar struggles for a firm footing even though Federal Open Market Committee (FOMC) minutes for the January meeting showed on Wednesday that policymakers hesitated to continue easing the monetary policy amid concerns over a sticky inflation outlook. 
• The FOMC Minutes revealed that producers will pass on the import tariff cost to consumers, according to the output policymakers have received from business owners. Such a scenario will increase inflationary pressures and allow the Fed to maintain a restrictive monetary policy stance for longer. Technically, hawkish FOMC Minutes should have supported the US Dollar, but Trump’s economic policies are driving the asset. 
• In the Eurozone, traders have fully priced in three more interest rate cuts by the European Central Bank (ECB) by this summer. However, ECB executive board member Isabel Schnabel said on Wednesday that she expects the central bank could announce a "halt" in the monetary expansion cycle as risks to inflation have "skewed to the upside" while borrowing costs had eased a lot. Schnabel warned that domestic inflation was "still high" and wage growth was "still elevated", amid "new shocks to energy prices".
• Going forward, the major trigger for the US Dollar and the Euro (EUR) will be flash Purchasing Managers Index (PMI) data for February, which will be released on Friday. In Thursday’s North American session, investors will focus on the Initial Jobless Claims data for the week ending February 14.

Technical Analysis: EUR/USD oscillates inside Wednesday’s trading range

EUR/USD trades inside Wednesday’s trading range around 1.0440 in European trading hours on Thursday. The 50-day Exponential Moving Average (EMA) continues to offer support to the major currency pair around 1.0430.

The 14-day Relative Strength Index (RSI) struggles to break above 60.00. A bullish momentum would activate if the RSI (14) manages to sustain above that level.

Looking down, the February 10 low of 1.0285 will act as the major support zone for the pair. Conversely, the December 6 high of 1.0630 will be the key barrier for the Euro bulls.

• NZD/USD rises to near 0.5730 as the US Dollar weakens amid an upbeat market mood.
• Growing optimism over Russia-Ukraine peace has diminished the safe-haven appeal of the US Dollar.
• The RBNZ cut its OCR by an outsize rate for the third time in a row.

The NZD/USD pair moves higher to near 0.5730 in European trading hours on Thursday. The Kiwi pair gains as the US Dollar (USD) weakens, with the US Dollar Index (DXY) sliding marginally below the key level of 107.00.

The US Dollar weakens as the risk sentiment seems favorable for risk-sensitive currencies. The risk-on mood is the outcome of investors turning confident over the potential Russia-Ukraine truce. Market participants have become more hopeful for an end to the three-year-long war in Ukraine after United States (US) President Donald Trump agreed to have more peace talks with Russia.

President Trump announced that he will also meet Russian leader Vladimir Putin before the end of this month.  Positive developments in Russia-US peace talks are expected to weaken the appeal of safe-haven assets.

On the monetary policy front, the Federal Open Market Committee (FOMC) minutes of the January meeting show that officials hesitate to cut interest rates as Trump’s economic policies are expected to boost inflationary pressures.

Meanwhile, the New Zealand Dollar (NZD) performs strongly as market participants had already priced in that the Reserve Bank of New Zealand (RBNZ) will cut its Official Cash Rate (OCR) by 50 basis points (bps) to 3.75% on Wednesday. The RBNZ reduced its OCR by an outsize rate for the third time in a row, with officials remaining worried about moderating inflation and a fragile economy.

RBNZ Governor Adrian Orr has guided that the central bank could slow down its policy-easing pace and reduce interest rates by 25 bps in the next two policy meetings.

If European bond markets are going to sell off further, life may become even harder for UK Chancellor Rachel Reeves, ING’s FX analysts Chris Turner notes.

GBP/USD can't hold any near-term gains over the 1.26 area

"Remember she is going to provide a spending update on 26 March and needs to credibly argue how the government will hit its fiscal rule of a balanced budget in FY29/30. Higher gilt yields mean a higher bar for a credible spending plan and questions whether she can present a plan that defers spending cuts to the later years."

"If gilt yields are pressing their January highs at the time of the March review, this means either: a) the Chancellor will need to deliver deeper spending cuts or b) UK asset markets get hit should her plans not look credible."

"Neither scenario is a good look for Pound Sterling and that is why we doubt GBP/USD holds any near-term gains over the 1.26 area."

Australian Dollar (AUD) is under mild downward pressure vs US Dollar (USD); it could edge lower but is unlikely to break below 0.6305 (there is another support at 0.6325). In the longer run, momentum is slowing; a breach of 0.6305 would indicate that AUD is likely to trade in a range instead of advancing, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Under 0.6305, AUD is likely to trade in a range

24-HOUR VIEW: "Yesterday, we noted that 'the price movements continue to suggest range trading, likely between 0.6330 and 0.6365.' However, AUD traded in a 0.6337/0.6370 range, closing slightly lower at 0.6345 (-0.14%). There has been a slight increase in downward momentum. Today, we expect AUD to edge lower, but given the mild momentum, any decline is unlikely to break the strong support at 0.6305 (there is another support at 0.6325). Resistance is at 0.6355; a breach of 0.6370 would indicate that the mild downward pressure has eased."

1-3 WEEKS VIEW: "We have held a positive AUD view since early this month. In our latest narrative from Monday (17 Feb, spot at 0.6355), we highlighted, 'momentum remains strong, and we continue to expect AUD to advance, potentially to 0.6410.' Since then, AUD has not been able to make much headway on the upside. Upward momentum is slowing, and a breach of 0.6305 (no change in ‘strong support’ level) would indicate AUD is likely to trade in a range instead of advancing."

• Gold is printing another fresh all-time high at around $2,955.
• US President Donald Trump took markets by surprise when he mentioned a trade deal with China could be done. 
• If US yields drop off further, expect to see more all-time highs in Gold this week. 

Gold’s price (XAU/USD) is jumping again this Thursday while US yields are taking a step back together with a weaker Greenback. The precious metal trades around $2,955 at the time of writing. The push higher comes after United States (US) President Donald Trump said that a trade deal with China could be possible. Geopolitical concerns grew after Trump said Ukraine started the war with Russia and alluded it is time to repay the US for all the funding provided. 

Meanwhile, the Federal Reserve (Fed) Minutes from Wednesday overnight did not have much impact. Only a handful of Federal Open Market Committee (FOMC) members were advocating for a steady interest rate and no rush for any cuts. Considering this, chances for a June interest rate cut still stand. 

Daily digest market movers: Geopolitics take over

• Thousands of Gold bars are being physically moved from the Bank of England's vaults to the US futures market, exposing logistical bottlenecks in the global market. The move is driven by an arbitrage opportunity created by speculation that US President Donald Trump will impose tariffs on Gold, with traders buying spot Gold in London and selling futures contracts in the US, Bloomberg reports.
• Gold Fields Ltd. said full-year profit surged 77% last year after the price of the precious metal soared, while the company started to overcome operational challenges at mines in Chile and South Africa, Reuters reports.
• The relationship between the US and Ukraine reached a new low on Wednesday in a social media frenzy between US President Donald Trump and Ukraine’s President Volodymyr Zelenskiy. There are growing concerns that Trump could halt American support for Ukraine after Russia invaded its neighbor in 2022. The US leader said on social media on Wednesday that Volodymyr Zelenskiy should  “better move fast” to reach a deal with Russia “or he is not going to have a country left,” Bloomberg reports. 

Technical Analysis: Let’s get to $3,000 and be done with it

It looks like even despite a softer tone on tariffs and with a possible trade deal between the US and China, traders will still have enough reasons to push XAU/USD further up. The path to $3,000 looks set and it is just a matter of time before Gold gets to it. As seen with several other asset classes, once the precious metal frenzy reaches the masses, it would be then the cue to sell. 

The first support for this Thursday is located at $2,947, the first resistance, which coincides with  Wednesday’s high. The daily pivot comes in at $2,933. Below there, the low of Wednesday and the S1 support are coming in at $2,919 and should be strong enough to support and brief selling pressure. 

On the upside, the R2 resistance at $2,961 is the level to target for this Thursday. With a light economic calendar, there are great chances that the level will get tested later during the day. From there, the $3,000 handle comes in although it might still be a bit too high to get tested this week. 

XAU/USD: Daily Chart

(This story was corrected on February 20 at 10:19GMT to say that traders buying spot Gold in London and selling futures contracts in the US, Bloomberg reports. Not "Bloomberg supports.")

This is not a broad-based decline but is largely led by developments in Japan, ING’s FX analysts Chris Turner notes.

A sizable USD/JPY move sub-150 on its way

"Here, local investors seem impressed that there has been little official push-back against the recent rise in JGB yields and that the Bank Of Japan may hike again this summer. The OIS market prices 21bp of a 25bp hike in July – which would take the policy rate to 0.75%."

"We have been surprised by the yen's strength in response to these relatively modest moves in Japanese interest rates. And we do note that speculative positioning is now quite long for the yen. However, we don't want to stand in the way of further short-term term USD/JPY losses, because tomorrow's January Japan CPI release could trigger another leg lower."

"That said, we are not looking for a sizable USD/JPY move sub-150 and instead prefer yen out-performance on the crosses – especially against the euro."

EUR/GBP broke firmly below the 0.83 mark during yesterday's session amid higher-than-expected inflation, Danske Bank's FX analyst Mohamad Al-Saraf reports.

Rise in headline inflation is driven by fuel prices

"Headline came in higher than expected at 3.0% (cons: 2.8%, prior: 2.5%), core at 3.7% (cons: 3.7%, prior: 3.2%). Services however was a touch lower than expected, meeting the BoE's expectation of 5.0% (cons: 5.1%, prior: 4.4%)."

"The rise in headline was driven by fuel prices, education (VAT on private school fees), airfares but also stronger food prices. Note, this was the final CPI release ahead of the next BoE meeting on 20 March, where markets price 2bp."

"We see the bar as high for delivering a cut in March, amplified by today's release and expect the next cut in May. We stay bullish on GBP FX and expect a more gradual BoE easing cycle relative to peers to support this view."

The Dollar Index (DXY) is a little softer, ING’s FX analysts Chris Turner notes.

DXY can find support under 107

"When it comes to the US Dollar (USD), we largely see it staying supported. Even though short-dated US yields fell 2bp on last night's release of the January FOMC minutes, the release did not look particularly dovish. The clear message was that the Fed needed to see additional evidence or progress before cutting rates again."

"At the same time, the Fed released a from Vice Chair Philip Jefferson. He noted that those from the entire income spectrum had been enjoying the benefits of wealth effects and seemed to suggest that US household balance sheets were in relatively healthy shape."

"FX markets will also be digesting some overnight comments from President Trump that the US could sign a new trade deal with China. That saw USD/CNH come off a little in Asia, but we doubt it is enough to prompt a big re-rating of the Rest of the World currencies just yet. Assuming that there is no big spike in the US weekly jobless claims data today, we think DXY can find support under 107."

Following are the key takeaways from the People’s Bank of China’s (PBOC) annual macro-prudential work conference.

Market reaction

The Chinese proxy, the Australian Dollar (AUD) is unperturbed by these headlines. AUD/USD is trading 0.50% firmer on the day at 0.6372 as of writing.

EUR/USD has remained rangebound this week, trading with a slight downward bias within the 1.04-1.05 range, as FX markets largely shrugged off Trump's latest tariff threats after he proposed 25% tariffs on autos, chips, and pharma imports , Danske Bank's FX analyst Mohamad Al-Saraf reports.

Weekly jobless claims are on the agenda

"The January FOMC meeting minutes indicated that as long as the economy remains near full employment, policymakers would need to see further tangible progress on inflation before considering rate cuts. Market reaction was muted, though front-end yields edged slightly lower."

"Today is expected to be another quiet session, with only weekly jobless claims on the agenda. Market focus will shift to tomorrow's PMI releases from the US and euro area, where it will be key to see if momentum builds following January's surprisingly strong euro area PMIs."

"Germany's elections this weekend could gain traction, particularly if a CDU/CSU-led coalition is formed, potentially signalling a shift in fiscal policy that could support Germany's weak growth outlook and, in turn, the EUR. We continue to expect EUR/USD to consolidate around current levels in the near term while maintaining our strategically bearish outlook."

Silver prices (XAG/USD) rose on Thursday, according to FXStreet data. Silver trades at $33.08 per troy ounce, up 0.98% from the $32.75 it cost on Wednesday.

Silver prices have increased by 14.47% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 89.27 on Thursday, down from 89.64 on Wednesday.

(An automation tool was used in creating this post.)

The euro is looking soft on the crosses and a new theme may be coming into play on the back of geopolitical developments. US isolationism means that Europe is going to have to ramp up defence spending sharply. The question is: who's going to pay for it? Will spending be undertaken at the European supranational level? Or will a failure to reach any collective agreement put pressure back on local and national budgets, ING’s FX analysts Chris Turner notes.

EUR/USD to stall in the 1.0450/70 area and can drop to 1.0350

"Italy could be in focus here with perhaps one of the greatest needs to increase defence spending but a debt-to-GDP ratio already close to 140%. Our rates strategy team feels that the recent narrowing in Italian-German sovereign bond spreads could well reverse as it dawns on investors that national governments will be paying the defence bill."

"Some of these trends started to show through in financial markets yesterday, where European debt really started to underperform. We are seeing a bearish steepening of European bond curves, where the German 2-10-year Bund curve, now at 38bp, has steepened to the highest levels since October 2022. We are wary that the theme of increased government bond supply can pressure peripheral spreads and demand a new fiscal risk premium of the euro."

"This comes at a time when there is not much trade risk premium priced into EUR/USD either. As above, there do not seem any immediate signs that the US consumer is about to crumble or that the Fed is about to pull the trigger on another rate cut. Overall we have a slight preference that EUR/USD stalls in the 1.0450/70 area and could drop to 1.0350 should we start to see Italian longer-dated government bonds coming under pressure."

Momentum indicators are turning flat; Pound Sterling (GBP) is expected to trade in a sideways range of 1.2550/1.2615 vs US Dollar (USD). In the longer run, upward momentum is beginning to slow; a breach of 1.2525 would indicate that GBP is not strengthening further, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Upward momentum is beginning to slow

24-HOUR VIEW: "We pointed out yesterday that 'although upward momentum has not increased much, there is still a chance for GBP to edge higher today.' However, we were of the view that 'a clear break above 1.2655 still seems unlikely.' GBP subsequently rose to 1.2641, pulling back to close at 1.2586 (-0.22%). Momentum indicators are turning flat, and today, we expect GBP to trade in a sideways range of 1.2550/1.2615."

1-3 WEEKS VIEW: "We turned positive in GBP late last week. After GBP exceeded our initial technical target at 1.2600, we indicated on Monday (17 Feb, spot at 1.2580) that 'further GBP strength appears likely, and the focus now is at 1.2655.' Yesterday, GBP rose to 1.2641 and then pulled back. Upward momentum is beginning to slow, but only a breach of 1.2525 (no change in ‘strong support’ level) would mean that GBP is not strengthening further."

• The US Dollar Index loses ground as yields on US Treasury notes extend their losses.
• Trump has confirmed plans to impose a 25% tariff on imports of automobiles, semiconductors, and pharmaceutical products.
• The latest FOMC Meeting Minutes emphasized needing more time to assess multiple factors before considering any rate adjustments.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, depreciates after registering gains for the last two successive days amid falling Treasury yields. The DXY hovers around 107.00. with 2- and 10-year yields on US Treasury bonds standing at 4.26% and 4.52%, respectively, during the European hours on Thursday.

Market participants are now focused on key US economic data, including weekly Initial Jobless Claims, the CB Leading Economic Index, and the Philly Fed Manufacturing Index, set to be released during the North American session.

However, the US Dollar gained ground as risk aversion rose due to concerns over the latest tariffs from US President Donald Trump, who has confirmed that a 25% tariff on pharmaceutical, semiconductor, and auto imports will take effect in April.

The US Dollar may appreciate as the cautious tone rises following the Federal Open Market Committee (FOMC) Minutes from January’s policy meeting. Federal Reserve (Fed) policymakers reaffirmed the decision to keep interest rates unchanged in January. They also emphasized the need for more time to assess economic activity, labor market trends, and inflation before considering any rate adjustments. The committee also agreed that clear signs of declining inflation are necessary before implementing rate cuts.

Markets are pricing in one rate cut for the federal funds rate in 2025, with the potential for a second. Fed Vice Chairman Philip Jefferson stated late Wednesday that the US central bank has time to assess its next interest rate move, citing a resilient economy and persistent inflation. Meanwhile, Chicago Fed President Austan Goolsbee acknowledged that while inflation has eased, it remains elevated, emphasizing that rate cuts would be considered once inflation reaches a more acceptable level, according to Reuters.

Euro (EUR) is likely to trade in a 1.0395/1.0455 range vs US Dollar (USD). In the longer run, EUR appears to have moved into a 1.0350/1.0500 range trading phase, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

EUR appears to have moved into a range trading phase

24-HOUR VIEW: "Yesterday, we indicated that EUR 'could dip to 1.0430 before recovering.' We also indicated that 'the strong support at 1.0415 is unlikely to come under threat.' However, EUR fell more than expected to 1.0400, closing lower by 0.35% at 1.0421. Despite the decline, there has been no significant increase in downward momentum. This, combined with oversold conditions, suggests EUR is unlikely to weaken much further. Today, EUR is more likely to trade in a 1.0395/1.0455 range."

1-3 WEEKS VIEW: "We highlighted last Friday (14 Feb, spot at 1.0460) that 'the outlook for EUR is positive, with a technical target of 1.0530.' EUR then rose to 1.0514 and then pulled back. Yesterday, it broke below our ‘strong support’ level at 1.0415, indicating that upward momentum has faded. EUR appears to have moved into a range trading phase, and it is likely to trade between 1.0350 and 1.0500 for the time being."

Headline SMEI edged down 0.5pts to 50.4 in February as current performance sub-index fell below 50. Tourism-related services activity dropped m/m after holiday boost; real estate performance rebounded. Manufacturing SMEs reported m/m decline in production, sales and new orders, partly due to seasonality. Credit conditions turned more favourable on lower funding costs for SMEs; FX expectations stabilised, Standard Chartered's economists note.

Performance deteriorates, while expectations improve

"Our proprietary Small and Medium Enterprise Confidence Index (SMEI; Bloomberg: SCCNSMEI <Index>) retreated to 50.4 in February from 50.9 in January. The performance sub-index fell sharply by 2pts to 48.5, into contractionary territory again, registering the lowest reading since end-2022 partly due to holiday distortions. On the bright side, the expectations index improved, with all sub-indices rising into expansionary territory, suggesting the setback might be temporary."

"Manufacturing SMEs reported a m/m decline in sales, production, new orders and profitability. We think Lunar New Year holiday disruptions have been partly reflected in this month’s survey. That said, average key sub-indices’ readings for 2M-2025 fell below 50, likely reflecting the impact of additional tariffs. Tourism-related services activity, such as transport, retail and wholesale, and accommodation and catering, has normalised, after rising sharply in January. Real estate performance has recovered. Construction activity remains subdued."

"The credit sub-indices moderated slightly to 51.8 in February as receivables turnover lengthened. Meanwhile, credit conditions have turned more favourable for SMEs as financing costs trended lower from January. SMEs’ exchange rate expectations stabilised in February after depreciation expectations had spiked in prior months."

• AUD/JPY faces challenges as the BoJ is widely expected to raise interest rates further.
• The risk-sensitive currency cross amid rising global uncertainties following fresh tariffs from the US President Donald Trump.
• Australia’s Unemployment Rate increased to 4.1% in January from 4.0% in December, as expected.

AUD/JPY loses ground for the second successive day, trading around 95.80 during the European hours on Thursday. This downside of the currency cross could be attributed to the growing acceptance that the Bank of Japan (BoJ) would hike interest rates further.

Additionally, the Japanese Yen (JPY) gains ground as the hawkish Bank of Japan (BoJ) expectations push the Japanese government bond (JGB) yields to their highest levels in more than a decade. The resultant narrowing of the rate differential between Japan and other countries provides an additional boost to the JPY.

Additionally, the AUD/JPY cross depreciates as the risk-sensitive Australian Dollar (AUD) faces challenges, while the safe-haven Japanese Yen gains ground due to a fresh wave of the global risk aversion trade, triggered by US President Donald Trump's tariff threats. Trump confirmed that a 25% tariff on pharmaceutical, semiconductor, and auto imports will take effect in April, further escalating global trade tensions.

The downside of the AUD/JPY cross could be restrained as the Australian Dollar (AUD) gains ground against its peers following the release of domestic employment data. Australia’s seasonally adjusted Unemployment Rate rose to 4.1% in January from 4.0% in December, aligning with market expectations. Additionally, Employment Change came in at 44K for January, down from a revised 60K in December (previously 56.3K), but still exceeding the consensus forecast of 20K.

Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser stated while speaking to Bloomberg News on Thursday that the central bank’s policy “is still restrictive.” Hauser noted that the latest jobs data showed little cause for concern. Hauser also emphasized that Australia’s monthly CPI data remains incomplete, requiring a wait for quarterly figures to gain a clearer picture. While market expectations suggest three to four rate cuts, the RBA remains uncertain. The central bank’s primary focus is still on inflation, while global economic uncertainty poses potential risks to Australia’s economy.

• The Pound Sterling rises around 1.2610 against the US Dollar while investors wait for more developments in President Trump’s international policies.
• The FOMC minutes showed on Wednesday that officials are worried about deepening upside risks to inflation.
• Investors await the UK Retail Sales report for January and the preliminary S&P Global UK/US PMI data for February, scheduled for Friday.

The Pound Sterling (GBP) moves higher slightly above 1.2600 against the US Dollar (USD) in Thursday’s European session. The GBP/USD pair gains as the market sentiment is slightly favorable for risk-perceived currencies, with investors gaining confidence that United States (US) President Donald Trump’s tariff agenda won't be as fearful as expected.

On Wednesday, Donald Trump announced that a trade deal with China is “possible”. His comments were optimistic even though he announced 10% tariffs on all imports from the Asian country earlier this month. On Tuesday, Trump also announced that he is planning to impose 25% tariffs on imports of foreign cars, pharmaceuticals and semiconductors. There is no detailed plan for all tariff threats, which he has announced till now. While Trump was expected to start imposing levies soon after returning to the White House.

Meanwhile, growing confidence over potential Russia-Ukraine truce has also improved market mood. President Trump has confirmed that he will hold more talks on a Russia-Ukraine peace deal after discussing the issue with Russian diplomats in Saudi Arabia without including Ukraine and Europe. However, Ukraine has said that it won’t agree to a deal that would be made on its behalf. 

However, the outlook for the US Dollar still seems upbeat on the monetary policy front. The Federal Open Market Committee (FOMC) minutes for the January meeting showed on Wednesday that officials are expected to keep interest rates in the current range of 4.25%-4.50% for longer. 

Fed policymakers were more concerned about the upside risks to inflation due to Trump’s potential tariff policies than risks to the labor market. The FOMC Minutes also indicated that business owners plan to pass on the impact of higher input costs to consumers. Even though tariffs on critical imports would boost local production, those products won’t be competitive in terms of manufacturing cost, given the higher United States (US) labor costs compared to those of its trading partners.

Such a scenario will boost inflationary pressures and prevent Federal Reserve (Fed) officials from continuing the monetary expansion cycle sooner, which started in September 2024.

Daily digest market movers: Pound Sterling continues to underperform on a broader note

• The Pound Sterling remains fragile against its major peers as investors are concerned over the United Kingdom’s (UK) economic outlook. Bank of England (BoE) Governor Andrew Bailey warned this week that the economic growth is expected to remain sluggish and sees the labor market softening.
• The British currency attempted to gain ground after the release of a hotter-than-expected UK Consumer Price Index (CPI) report for January on Wednesday but failed to do so. Governor Bailey had already cautioned that a short-term uptick in inflation is expected due to volatile energy prices, but that won’t be persistent. 
• Year-on-year headline CPI rose by 3%, faster than estimates of 2.8% and the December reading of 2.5%. In the same period, the core CPI – which excludes volatile components of food, energy, alcohol, and tobacco – grew by 3.7%, as expected, faster than the former reading of 3.2%.
• Though the acceleration in inflationary pressures should be temporary, it will not allow the BoE to ease monetary policy further. The central bank reduced its borrowing rates by 25 basis points (bps) to 4.5% in its policy meeting, which took place on February 6 but guided a cautious policy easing outlook.
• Going forward, investors will focus on the UK Retail Sales data for January, and the flash S&P Global UK/US Purchasing Managers Index (PMI) report for February, which will be released on Friday.

Technical Analysis: Pound Sterling struggles around 38.2% Fibo retracement at 1.2620

The Pound Sterling wobbles near 1.2600 against the US Dollar in European trading hours on Thursday. The GBP/USD pair faces pressure while attempting to break above the 38.2% Fibonacci retracement from the end-September high to the mid-January low downtrend, which coincides with the 100-day Exponential Moving Average (EMA), around 1.2620.

The 14-day Relative Strength Index (RSI) struggles to hold above 60.00. The bullish momentum would fizzle out if the RSI (14) fails to sustain above that level.

Looking down, the February 3 low of 1.2250 will act as a key support zone for the pair. On the upside, the 50% Fibonacci retracement at 1.2767 will act as a key resistance zone.

West Texas Intermediate (WTI) Oil price falls on Thursday, according to FXStreet data. WTI trades at $72.10 per barrel, down from Wednesday’s close at $72.16. Brent Oil Exchange Rate (Brent crude) is also shedding ground, trading at $75.78 after its previous daily close at $75.81.

(An automation tool was used in creating this post.)

• USD/CAD tests immediate resistance at the nine-day EMA of 1.4236.
• A break above the falling wedge pattern signals the potential for further upward movement.
• A return to the falling wedge would lead the pair to test the psychological level of 1.4100.

The USD/CAD pair remains steady after registering gains for the last two successive days, trading near 1.4220 during early European hours on Thursday. Technical analysis on the daily chart indicates that the pair has broken above the falling wedge pattern, a bullish formation signaling a potential upward move.

However, the 14-day Relative Strength Index (RSI) remains below the 50 level, indicating a prevailing bearish outlook. A decisive move would be needed to confirm a clear directional trend. Additionally, the USD/CAD pair continues to trade below the nine- and 14-day Exponential Moving Averages (EMAs), reflecting persistent bearish sentiment and weak short-term price action.

The USD/CAD pair faces immediate resistance at the nine-day EMA of 1.4236, followed by the 14-day EMA of 1.4262. A decisive break above these levels could strengthen short-term momentum, potentially pushing the pair toward the psychological level of 1.4300.

On the downside, a return to the falling wedge would reinforce the bearish bias, pushing the USD/CAD pair toward the psychological level of 1.4100, followed by the lower boundary of the wedge at 1.4080. A break below this channel would further strengthen the bearish outlook, potentially driving the pair toward the three-month low of 1.3927, last reached on November 25.

USD/CAD: Daily Chart

Here is what you need to know on Thursday, February 20:

While major currency pairs are having a tough time making a decisive move in either direction, Gold extends its uptrend to a new record-high on Thursday. The US economic calendar will feature the weekly Initial Jobless Claims report and the European Commission will publish the preliminary Consumer Confidence Index data for February. Later in the American session, several Federal Reserve (Fed) policymakers will be delivering speeches.

The minutes of the Fed's January policy meeting showed on Wednesday that officials debated whether it might be wise to slow or even pause the reduction of their balance sheet holdings, given that renewed concerns over the federal debt ceiling have come back into play. Meanwhile, US President Donald Trump noted that it could be possible to make a new trade deal with China. These comments failed to trigger a noticeable market reaction and Wall Street's main indexes ended the day marginally higher. Early Thursday, US stock index futures trade in negative territory and the US Dollar Index holds steady near 107.00 after posting small gains for two consecutive days.

The data from Australia showed early Thursday that the Unemployment Rate edged higher to 4.1% in January from 4% in December, as expected. In this period, Full-Time Employment rose by 54.1K after declining by 23.7K in December. In the meantime, the People’s Bank of China (PBoC), China's central bank, announced that it left the one-year and five-year Loan Prime Rates (LPRs) unchanged at 3.10% and 3.60%, respectively. AUD/USD edged slightly higher in the Asian trading hours and was last seen trading above 0.6360.

EUR/USD failed to gather recovery momentum and closed in the negative territory for the third consecutive day on Wednesday. The pair trades in a tight range below 1.0450 in the European morning on Thursday.

Although stronger-than-expected inflation data from the UK helped Pound Sterling stay resilient against its rivals in the early European session on Wednesday, GBP/USD lost its traction and closed the day marginally lower. The pair holds its ground to begin the European session and trades near 1.2600.

Growing expectations for a hawkish Bank of Japan (BoJ) policy outlook continue to support the Japanese Yen (JPY). Earlier in the day, Japan's 10-year government bond yield touched its highest level in 15 years. At the time of press, USD/JPY was trading at its lowest level since early December near 150.00, losing about 1% on the day.

Following Thursday's choppy action, Gold resumed its uptrend early Thursday and touched a fresh record high near $2,950.

FX option expiries for Feb 20 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

• 1.0300 1.9b
• 1.0315 1.2b
• 1.0350 1.2b
• 1.0400 1.5b
• 1.0410 1.2b
• 1.0420 1.4b
• 1.0430 3.9b
• 1.0450 2.7b
• 1.0500 1.4b
• 1.0525 1.6b

GBP/USD: GBP amounts     

• 1.2350 612m
• 1.2520 1.3b

USD/JPY: USD amounts                                 

• 151.00 579m
• 152.45 590m
• 153.60 954m
• 154.00 1.5b

USD/CHF: USD amounts     

• 0.8935 649m

AUD/USD: AUD amounts

• 0.6235 723m
• 0.6325 759m
• 0.6350 972m
• 0.6375 1.1b

USD/CAD: USD amounts       

• 1.4000 687m
• 1.4100 685m
• 1.4155 735m
• 1.4175 852m
• 1.4400 717m

NZD/USD: NZD amounts

• 0.5660 1.4b

• EUR/JPY tumbles to nearly 156.55 in Thursday’s European session, down 0.85% on the day.  
• Hawkish BoJ expectations boost the JPY.
• Investors will take more cues from the German January PPI, which is due later on Thursday. 

The EUR/JPY cross extends its downside to around 156.55 during the early European session on Thursday. The Japanese Yen (JPY) strengthens amid rising bets for additional Bank of Japan (BoJ) rate hikes. The German Producer Price Index (PPI) for January is due later on Thursday. 

Japan's latest data has reinforced the BoJ's case for raising interest rates, with GDP surpassing expectations and nominal wages rising at the fastest pace in nearly three decades. According to a Reuters poll, over 65% of economists said that the BoJ could hike to 0.75% in the third quarter and the rate of pay increases in this year's labor talks are seen as 5.00% vs. 4.75% in the January poll. 

BOJ Board Member Hajime Takata said on Wednesday that it’s important to continue considering gradual rate hikes, while also noting that Japan’s bond yields are moving in accordance with the market’s view of the economy. The growing speculation the BoJ will hike rates sooner rather than later lifts the JPY and creates a headwind for EUR/JPY. 

On the Euro front, tariff concerns from US President Donald Trump could weigh on the shared currency. Late Tuesday, Trump said that he would likely impose tariffs of around 25% on foreign cars, while semiconductor chips and drugs are set to face higher duties. Trump didn’t provide a clear timeline for when these tariffs will come into effect but said that some of them will be enacted by April 2.

Additionally, the monetary policy divergence between the BoJ and the European Central Bank (ECB) also weighs on the Euro. "Markets imply another 75bps of ECB cuts in the next 12 months, which would see the policy rate bottom at 2.00%,” noted BBH's FX analysts. 
 

Reserve Bank of New Zealand (RBNZ) Deputy Governor Christian Hawkesby said in an interview on Thursday that “New Zealand is well-placed to respond to trade shocks.”

Additional quotes

Market reaction

NZD/USD holds higher ground near 0.5720 following these above comments, up 0.26% on the day.

• USD/CHF attracts some sellers and snaps a three-day winning streak amid renewed USD selling.
• Trump’s fresh tariff threats weigh on the global risk sentiment and benefit the safe-haven CHF. 
• The Fed’s hawkish outlook could act as a tailwind for the USD and help limit losses for the pair.

The USD/CHF pair meets with some supply during the Asian session on Thursday and for now, seems to have snapped a three-day winning streak to the weekly top, around the 0.9055 area touched the previous day. Spot prices currently trade near the lower end of the daily range, around the 0.9025 region, and seem vulnerable to sliding further.

US President Donald Trump said on Wednesday that he will announce tariffs on a number of products next month or even sooner. This fuels concerns about a global trade war and tempers investors' appetite for riskier assets, which is evident from a generally weaker tone around the equity markets and benefits traditional safe-haven currencies, including the Swiss Franc (CHF). Apart from this, the emergence of some US Dollar (USD) selling exerts downward pressure on the USD/CHF pair.

The global flight to safety triggers a fresh leg down in the US Treasury bond yields and to a larger extent, overshadows hawkish FOMC minutes released on Wednesday. This, in turn, fails to assist the USD Index (DXY), which tracks the Greenback against a basket of currencies, to build on its bounce from the vicinity of a two-month low tested earlier this week. That said, expectations for an extended pause on rates by the Federal Reserve (Fed) could support the buck and the USD/CHF pair. 

Hence, it will be prudent to wait for strong follow-through selling before confirming that the currency pair's recovery from the 0.8970-0.8965 horizontal support, or the year-to-date low has run out of steam. Traders now look forward to Thursday's US economic docket – featuring the release of the usual Weekly Initial Jobless Claims and the Philly Fed Manufacturing Index. Apart from this, speeches by influential FOMC members might influence the USD price dynamics and the USD/CHF pair.

• EUR/USD gains ground to around 1.0430 in Thursday’s early European session.
• The pair keeps the positive outlook above the 100-period EMA with a bullish RSI indicator. 
• The immediate resistance level emerges at 1.0461; the first downside target is seen at 1.4936. 

The EUR/USD pair recovers some lost ground to near 1.0425 during the early European trading hours on Thursday. The weakening of the US Dollar (USD) provides some support to the major pair. However, tariff concerns from US President Donald Trump and geopolitical tension might cap its upside.

Technically, the bullish outlook of EUR/USD remains intact as the major pair holds above the key 100-period Exponential Moving Averages (EMA) on the 4-hour chart. However, the Relative Strength Index (RSI) is located below the midline, near 42.85, suggesting that further downside cannot be ruled out. 

The first upside barrier for EUR/USD emerges near 1.0461, the high of February 19. The key resistance level to watch is the 1.0500-1.0505 zone, representing the psychological level and the upper boundary of the Bollinger Band. A decisive break above this level will see a rally to 1.0533, the high of January 27. 

On the other hand, the crucial support level for the major pair is seen at 1.0410, the confluence of the 100-period EMA, and the lower limit of the Bollinger Band. A breach of this level will see a drop to 1.0352, the low of February 6. The additional downside filter is located at 1.0285, the low of February 10. 

EUR/USD 4-hour chart

• GBP/JPY could navigate the support region around the five-month low at 187.05.
• The 14-day RSI remains below the 50 level, indicating strengthening bearish momentum.
• The immediate resistance appears at the nine-day EMA of 190.69.

GBP/JPY extends its decline for the second consecutive day, trading around 189.30 during Asian hours on Thursday. A daily chart analysis suggests that the currency cross remains within a descending channel pattern, signaling a continued bearish bias.

The 14-day Relative Strength Index (RSI), a key momentum indicator, remains below the 50 level, reinforcing the bearish momentum. Moreover, the GBP/JPY cross continues to trade below the nine- and 14-day Exponential Moving Averages (EMAs), indicating weaker short-term price momentum.

Regarding its support, the GBP/JPY cross could navigate the region around a five-month low at 187.05, which was recorded on February 7, followed by the lower boundary of the descending channel around the 185.50 level.

On the upside, the GBP/JPY cross could test immediate resistance at the nine-day EMA of 190.69, followed by the 14-day EMA at 190.91. A break above these levels could weaken the bearish bias and support the currency cross to test the descending channel’s upper boundary at the 192.00 level.

A break above the channel would weaken the bearish bias and support the GBP/JPY cross to explore the area around the two-month high of 198.26.

GBP/JPY: Daily Chart

Bank of Japan (BoJ) Governor Kazuo Ueda said on Thursday that he “had a regular exchange of views with Prime Minister (PM) Shigeru Ishiba.”

Additional quotes

• WTI attracts some sellers on Thursday and snaps a three-day winning streak to a one-week high.
• Indications of a rise in US Crude inventories and worries about Trump’s tariffs weigh on Oil prices.
• Concerns over supply disruption in Russia and a weaker USD could lend support to the black liquid.

West Texas Intermediate (WTI) US Crude Oil prices extend the overnight pullback from the vicinity of the $73.00 mark, or a one-week top, and drift lower during the Asian session on Thursday. The commodity slides to the $71.75 area, or a fresh daily low in the last hour, and for now, seems to have snapped a three-day losing streak. 

Market sources, citing the American Petroleum Institute (API) report, said on Wednesday that US Crude stocks rose by 3.34 million barrels last week. This, along with concerns that US President Donald Trump's trade tariffs could weaken the global economy and dent fuel demand, fails to assist Crude Oil prices to capitalize on a three-day-old recovery from the year-to-date low touched earlier this week. 

Apart from this, worries about slowing demand from the Eurozone and China exert additional pressure on the black liquid. That said, supply disruptions in Russia could help limit deeper losses. In fact, Russia said that oil flows from the Caspian Pipeline Consortium – a major route for crude exports from Kazakhstan – were reduced by 30%-40% after a Ukrainian drone attack on pumping stations.

Furthermore, the emergence of some US Dollar (USD) selling, despite the Federal Reserve's (Fed) hawkish outlook, could act as a tailwind for Crude Oil prices. Traders now look forward to the release of the official US Crude inventories data, due later during the North American session. Nevertheless, the mixed fundamental backdrop warrants some caution before placing aggressive directional bets.

Gold prices rose in India on Thursday, according to data compiled by FXStreet.

The price for Gold stood at 8,204.09 Indian Rupees (INR) per gram, up compared with the INR 8,193.85 it cost on Wednesday.

The price for Gold increased to INR 95,694.53 per tola from INR 95,571.48 per tola a day earlier.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

• Silver price receives support from global uncertainties following fresh tariffs from US President Donald Trump.
• The latest FOMC Meeting Minutes emphasized needing more time to assess multiple factors before considering any rate adjustments.
• The grey metal found support from strong industrial demand driven by electrification and manufacturing.

Silver (XAG/USD) rebounds from recent losses recorded in the previous session, trading around $32.80 per troy ounce during Asian hours on Thursday. The grey metal gains momentum due to its safe-haven appeal remains strong amid global uncertainties. US President Donald Trump recently proposed a 25% tariff on automobiles, along with duties on semiconductors and pharmaceuticals.

However, the non-interest-bearing Silver faced little downward pressure as investors digest the latest Federal Open Market Committee (FOMC) Meeting Minutes, released on Wednesday, which reaffirmed the decision to keep interest rates unchanged in January.

Fed policymakers stressed the importance of further assessing economic activity, labor market trends, and inflation before considering any rate adjustments. They agreed that clear evidence of declining inflation is essential before implementing rate cuts. Some officials also expressed concerns that potential changes in trade and immigration policies could hinder the disinflation process. Additionally, certain inflation expectation measures have risen in recent months.

Markets are currently pricing in one rate cut for the federal funds rate in 2025, with the possibility of a second. Federal Reserve Vice Chairman Philip Jefferson stated late Wednesday that the US central bank has time to deliberate on its next interest rate move, citing a resilient economy and inflation still above target. Meanwhile, Chicago Fed President Austan Goolsbee noted that while inflation has declined, it remains elevated, emphasizing that interest rates could be lowered further once inflation reaches a more acceptable level, according to Reuters.

The precious metal gained support from strong industrial demand from electrification and manufacturing. China’s addition of 357 gigawatts of solar and wind power in 2024 further underscored Silver’s critical role in renewable energy. Additionally, the People’s Bank of China (PBOC) opted to keep its Loan Prime Rates (LPRs) unchanged, with the one-year and five-year rates remaining at 3.10% and 3.60%, respectively, signaling a cautious approach to monetary stimulus.

• Gold price retains its bullish bias amid worries about Trump’s tariffs and a global trade war.
• Sliding US bond yields weigh on the USD and lend additional support to the precious metal.
• The Fed’s hawkish outlook could cap the XAU/USD pair amid slightly overbought conditions.

Gold price (XAU/USD) attracts fresh buyers during the Asian session on Thursday and remains close to the record high touched the previous day. US President Donald Trump's fresh threat to impose tariffs on imported goods sparks concerns about a global trade war and continues to underpin demand for the safe-haven bullion. Meanwhile, flight to safety triggers a fresh leg down in the US Treasury bond yields and turns out to be another factor benefiting the non-yielding yellow metal.

Apart from this, the emergence of some US Dollar (USD) selling lends additional support to the Gold price. That said, hawkish FOMC meeting minutes released on Wednesday reaffirmed expectations for an extended pause on rates by the Federal Reserve (Fed). This could act as a tailwind for the US bond yields and the Greenback, which, in turn, might hold back bullish traders from placing fresh bets around the XAU/USD amid slightly overbought conditions on the daily chart.

Gold price continues to attract safe-haven flows amid rising global trade tensions

• US President Donald Trump said on Wednesday that he will announce heavy tariffs on a number of products next month or even sooner, raising the risk of a further escalation of trade tensions and underpinning the safe-haven Gold price. 
• US Commerce Secretary Howard Lutnick said in a Fox News interview that Trump's goal is to abolish the Internal Revenue Service and let all the outsiders pay. Meanwhile, Trump said that a new trade deal with China is possible.
• The US Dollar struggles to capitalize on its modest recovery gains registered over the past two days amid a fresh leg down in the US Treasury bond yields and turns out to be another factor lending additional support to the precious metal.
• Minutes from the last FOMC policy meeting held in January released on Wednesday revealed officials noted a high degree of uncertainty that requires the central bank to take a careful approach in considering any further interest rate cuts.
• Fed Vice Chairman Philip Jefferson said that the US economic performance has been quite strong, the US labor market is solid, inflation has eased but is still elevated, and the path back to the 2% inflation target could be bumpy.
• Chicago Fed President Austan Goolsbee said that inflation has decreased but it is still excessive and once inflation falls, rates can fall more. This, however, fails to impress the USD bulls or influence the non-yielding yellow metal. 
• Thursday's US economic docket features the usual Weekly Initial Jobless Claims and the Philly Fed Manufacturing Index. This, along with speeches by influential FOMC members, could drive the USD and the XAU/USD pair. 
• The market focus will then shift to the release of flash global PMIs on Friday, which should provide a fresh insight into the global economic health and provide some meaningful impetus to the safe-haven commodity. 

Gold price could consolidate further before the next leg up; bullish bias remains

From a technical perspective, the daily Relative Strength Index (RSI) is holding above the 70 mark and warrants some caution for bullish traders. This, in turn, suggests that the Gold price is more likely to extend over a one-week-old range-bound price action. Nevertheless, the near-term bias remains tilted firmly in favor of bullish traders and suggests that the path of least resistance for the XAU/USD pair remains to the upside. A sustained strength beyond the $2,945-2,950 area will mark a fresh breakout through a short-term range and a consolidation phase. This would set the stage for an extension of a well-established uptrend witnessed over the past two months or so.

Meanwhile, any corrective pullback below the $2,928 immediate support could be seen as a buying opportunity near the $2,918 region, or the overnight swing low, and remain limited near the $2,900 mark. This is followed by the $2,880 horizontal support, which if broken decisively could drag the Gold price to the $2,860-2,855 area en route to the $2,834 zone. Some follow-through selling should pave the way for a fall toward the $2,815 region before the XAU/USD pair eventually drops to the $2,800 mark and the next relevant support near the $2,785-2,784 area.

• USD/CAD could increase further due to fresh tariffs from US President Donald Trump.
• The latest FOMC Meeting Minutes emphasized needing more time to assess multiple factors before considering any rate adjustments.
• The Bank of Canada may rethink its approach to policy easing after January’s inflation data indicated an upward trend.

USD/CAD remains steady after two successive days of gains, trading around 1.4230 during the Asian hours on Thursday. The upside of the pair is attributed to concerns over tariffs from US President Donald Trump, who has confirmed that a 25% tariff on pharmaceutical and semiconductor imports will take effect in April. Additionally, Trump reaffirmed that auto tariffs will remain at 25%, further escalating global trade tensions.

Market participants are now focused on key US economic data, including weekly Initial Jobless Claims, the CB Leading Economic Index, and the Philly Fed Manufacturing Index, set to be released during the North American session.

The Federal Open Market Committee (FOMC) Meeting Minutes for January’s policy meeting, published on Wednesday, reaffirmed the decision to keep interest rates unchanged in January. Policymakers emphasized the need for more time to assess economic activity, labor market trends, and inflation before considering any rate adjustments. The committee also agreed that clear signs of declining inflation are necessary before implementing rate cuts.

The Bank of Canada (BoC) may reconsider easing policy after January’s inflation data showed an uptick, data showed on Tuesday. Canada’s headline CPI inflation rose to 1.9% year-over-year, aligning with forecasts and increasing from the previous 1.8%. Meanwhile, core BoC CPI inflation accelerated to 2.1% YoY, up from 1.8%, marking its fastest pace in nearly a year.

Following the CPI release, market expectations for a 25-basis-point rate cut at the BoC’s March 12 policy meeting dropped to below 30%. “There is too much underlying inflationary pressure in Canada to warrant an inflation-targeting central bank easing monetary policy further,” wrote Scotiabank’s Derek Holt.

• The Indian Rupee steadies in Thursday’s Asian session. 
• Trump tariff threats and persistent outflows from Indian stocks weigh on the INR. 
• RBI intervention and lower crude oil prices might cap the downside for the local currency. 

The Indian Rupee (INR) is holding steady on Thursday. Concerns over the impact of trade tariffs and Foreign Portfolio Investment (FPI) outflows could exert some selling pressure on the local currency. FPIs sold more than $10 billion worth of Indian equities in the first six weeks of 2025, the largest outflow ever recorded during this time. This enormous selloff has resulted in the worst start for domestic markets in over a decade.

Nonetheless, the potential US Dollar (USD) selling intervention by the Reserve Bank of India (RBI) and a decline in crude oil prices might help limit the INR’s losses. Traders will keep an eye on the US weekly Initial Jobless Claims, the CB Leading Economic Index and the Philly Fed Manufacturing Index reports, which will be released later on Thursday. Also, the Federal Reserve’s (Fed) Austan Goolsbee, Michael Barr and Alberto Musalem are scheduled to speak on Thursday. 

Indian Rupee trades sideways amid heightened global market volatility

• The RBI’s foreign exchange reserves have declined sharply by over $75 billion since September 27, while the INR depreciated from 83.70 to 87.96 against the USD on February 10. 
• India’s Gross Domestic Product (GDP) is estimated to grow at 6.6% in the October-December quarter of 2024-25, down from 8.6% recorded in the same period of 2023-24, the Bank of Baroda showed Tuesday. 
• The minutes from the FOMC meeting released on Wednesday indicated that the Fed policymakers believe that it is well positioned to take time to assess the outlook for economic activity, the labor market and inflation. 
• Fed officials agreed that inflation must show clear signs of slowing down before any further rate reductions can be made. 
• Fed Vice Chairman Philip Jefferson said late Wednesday the US central bank has time to weigh its next interest rate decision move, citing a robust economy and still above-target inflation, per Reuters.
• Chicago Fed President Austan Goolsbee stated that inflation has fallen but is still too high, adding that once inflation falls, the interest rates can fall more.

USD/INR keeps the bullish vibe despite consolidation in the near term 

The Indian Rupee trades flat on the day. The bullish tone of the USD/INR pair remains in play as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) stands above the midline near 55.50, supporting the buyers in the near term. 

The first upside barrier for USD/INR is located at the 87.00 psychological level. Bullish candlesticks past the mentioned level could see a rally to an all-time high near 88.00, en route to 88.50. 

In the bearish case, the initial support level to watch is 86.58, the low of February 17. The additional downside target emerges at 86.35, the low of February 12, followed by 86.14, the low of January 27. 

US President Donald Trump is making some repeated comments early Thursday as markets remain on a cautious footing.

Key quotes

Market reaction

These comments fail to lift the sentiment around the safe-haven US Dollar against its major peers. At the press time, the US Dollar Index loses 0.17% on the day to trade near 107.00.

Speaking to Bloomberg News on Thursday, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said the central bank’s “policy is still restrictive.”

Additional quotes

Market reaction

At the press time, AUD/USD is holding steady at around 0.6350.

• The Japanese Yen continues to strengthen amid rising bets for additional BoJ rate hikes.
• Trump’s tariff threats weigh on investors’ sentiment but also benefit the safe-haven JPY. 
• The Fed's hawkish outlook fails to impress the USD bulls or lend support to USD/JPY.

The Japanese Yen (JPY) gained strong follow-through traction on Thursday and dragged the USD/JPY pair to its lowest level since December 9, around mid-150.00s during the Asian session. Firming expectations that the Bank of Japan (BoJ) would increase interest rates further push the Japanese government bond (JGB) yields to their highest levels in more than a decade. The resultant narrowing of the rate differential between Japan and other countries turns out to be a key factor that continues to drive flows toward the lower-yielding JPY. 

Meanwhile, US President Donald Trump's fresh tariff threats dampen investors' appetite for riskier assets. This is evident from a fresh leg down in the equity markets and further underpins demand for the safe-haven JPY. The US Dollar (USD), on the other hand, struggles to lure buyers despite hawkish FOMC meeting minutes released on Wednesday, which further contributes to the USD/JPY pair's decline. With the latest leg down, the currency pair confirms a breakdown below the 151.00 mark and seems vulnerable to weaken further. 

Japanese Yen continues to draw support from hawkish BoJ-inspired rise in JGB yields

• Bank of Japan board member Hajime Takata said on Wednesday that Japan's real interest rates remain deeply negative and the central bank must adjust the degree of monetary support further if the economy moves in line with forecasts.
• This comes on top of Japan's upbeat Q4 Gross Domestic Product (GDP) on Monday and cements expectations that the BoJ would hike interest rates further, which continues to push the Japanese government bond (JGB) yields higher. 
• The yield on the benchmark 10-year JGB hits its highest since November 2009, which, in turn, provides a strong boost to the Japanese Yen during the Asian session on Thursday amid a fresh wave of the global risk aversion trade. 
• US President Donald Trump said on Wednesday that he will announce tariffs on a number of products next month or even sooner, fueling concerns about a global trade war and tempering investors' appetite for riskier assets.
• The Asahi newspaper reported this Thursday that Japan's Trade Minister, Yoji Muto, is planning a trip to the US in March to request that the Trump administration exempt Japan from upcoming tariffs on steel and automobiles.
• Minutes from the January FOMC meeting released on Wednesday revealed that officials noted a high degree of uncertainty that requires the central bank to take a careful approach in considering any further interest rate cuts.
• Fed Vice Chairman Philip Jefferson noted that the US economic performance has been quite strong, the US labor market is solid, inflation has eased but is still elevated, and the path back to 2% inflation could be bumpy.
• Separately, Chicago Fed President Austan Goolsbee said that inflation has decreased but it is still excessive and once inflation falls, rates can fall more. This, however, does little to provide any meaningful impetus to the US Dollar.
• Thursday's US economic docket features the release of Weekly Initial Jobless Claims and the Philly Fed Manufacturing Index. Apart from this, speeches by influential FOMC members will drive the USD and the USD/JPY pair. 

USD/JPY seems vulnerable to slide further; 151.00-150.90 support breakdown in play

From a technical perspective, a sustained break and acceptance below the 151.00 mark could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This, in turn, suggests that the path of least resistance for the USD/JPY pair is to the downside and supports prospects for a slide toward the 150.00 psychological mark. The downward trajectory could extend further towards the 149.60-149.55 region en route to the 149.00 mark and the December 2024 low, around the 148.65 region.

On the flip side, the 150.90-151.00 horizontal support breakpoint now seems to act as an immediate hurdle, above which a bout of a short-covering could lift the USD/JPY pair to the 151.40 hurdle. Any further move up could be seen as a selling opportunity around the 152.00 round-figure mark and runs the risk of fizzling out rather quickly near the 152.65 area. The latter represents the very important 200-day Simple Moving Average (SMA) and should act as a key pivotal point for short-term traders.

• The Australian Dollar depreciates due to the latest Trump tariffs and cautious FOMC Minutes.
• Australia’s Unemployment Rate increased to 4.1% in January from 4.0% in December, as expected.
• President Trump has confirmed plans to impose a 25% tariff on imports of automobiles, semiconductors, and pharmaceutical products.

The Australian Dollar (AUD) extends its losses against the US Dollar (USD) following the release of domestic employment data and China’s interest rate decision on Thursday. However, the AUD/USD pair faced headwinds as risk aversion increased due to concerns over the latest tariffs from US President Donald Trump and a cautious tone in the Federal Open Market Committee (FOMC) Minutes from January’s policy meeting.

On Thursday, the Australian Bureau of Statistics (ABS) reported that Australia’s seasonally adjusted Unemployment Rate rose to 4.1% in January from 4.0% in December, aligning with market expectations. Additionally, Employment Change came in at 44K for January, down from a revised 60K in December (previously 56.3K), but still exceeding the consensus forecast of 20K.

The People’s Bank of China (PBOC) opted to keep its Loan Prime Rates (LPRs) unchanged, with the one-year and five-year rates remaining at 3.10% and 3.60%, respectively.

The AUD faced downward pressure after the Reserve Bank of Australia (RBA) lowered its Official Cash Rate (OCR) by 25 basis points to 4.10% on Tuesday—the first rate cut in four years. RBA Governor Michele Bullock acknowledged the impact of high interest rates but cautioned that it was too soon to declare victory over inflation. She also emphasized the strength of the labor market and clarified that future rate cuts are not guaranteed, despite market expectations.

Australian Dollar declines due to Trump tariffs, FOMC Minutes

• The US Dollar Index (DXY), which measures the USD against six major currencies, hovers around 107.00. Meanwhile, US Treasury yields stand at 4.26% for the 2-year note and 4.52% for the 10-year note at the time of writing.
• The latest Federal Open Market Committee (FOMC) Meeting Minutes reaffirmed the decision to keep interest rates unchanged in January. Policymakers emphasized the need for more time to assess economic activity, labor market trends, and inflation before considering any rate adjustments. The committee also agreed that clear signs of declining inflation are necessary before implementing rate cuts.
• President Trump has confirmed that a 25% tariff on pharmaceutical and semiconductor imports will take effect in April. Additionally, he reaffirmed that auto tariffs will remain at 25%, further escalating global trade tensions.
• "So far, the dollar has tracked the path it had during the previous Trump administration...and we can pretty much agree that Trump is doing exactly what he said," said Chester Ntonifor, chief FX and global fixed income strategist, at BCA Research in Montreal.
• Federal Reserve Bank of Chicago President Austan Goolsbee stated late Wednesday that while inflation has declined, it remains elevated. Goolsbee emphasized that interest rates can be lowered further once inflation falls to a more acceptable level.
• San Francisco Fed President Mary Daly said on Tuesday that prospects of further rate cuts in 2025 remain uncertain despite an overall positive lean to US economic factors. Philadelphia Fed President Patrick Harker emphasized support for maintaining a steady interest rate policy, noting that inflation has remained elevated and persistent in recent months.

Technical Analysis: Australian Dollar tests nine-day EMA support

The AUD/USD pair hovers around 0.6330 on Thursday, trading within an ascending channel that suggests a bullish market sentiment. The 14-day Relative Strength Index (RSI) remains above 50, reinforcing the positive outlook.

On the upside, the AUD/USD pair could challenge the key psychological resistance at 0.6400, which aligns with the channel's upper boundary at 0.6410.

Immediate support is found at the nine-day Exponential Moving Average (EMA) of 0.6326, followed by the 14-day EMA at 0.6311. A stronger support zone lies near the channel's lower boundary at 0.6300.

AUD/USD: Daily Chart

US Commerce Secretary Howard Lutnick said in a Fox News interview late Wednesday commented on US President Donald Trump’s tariff plans.  

Lutnick said, “his goal is simple: to abolish the Internal Revenue Service and let all the outsiders pay.”

Market reaction

The above comments briefly put a fresh bid under the US Dollar Index (DXY) before sellers returned to knock it off to near 107.00, as of writing.

• NZD/USD softens to around 0.5695 in Thursday’s Asian session.
• China’s central bank kept benchmark lending rates steady.
• Trump tariff threats could lift the US dollar and create a headwind for NZD/USD.

The NZD/USD pair trades on a negative note around 0.5695 during the Asian trading hours on Thursday. Traders brace for the US weekly Initial Jobless Claims, the CB Leading Economic Index and the Philly Fed Manufacturing Index reports, which are due later on Thursday. 

On Thursday, the People’s Bank of China (PBOC) held the 1-year Loan Prime Rate (LPR) unchanged at 3.1% and the 5-year LPR at 3.6%. The Chinese authorities prioritize financial stability over interest rate easing to bolster the economy.

The Kiwi remains under selling pressure on the dovish stance of the Reserve Bank of New Zealand (RBNZ). The RBNZ cut its benchmark rate by 50 basis points (bps) to 3.75% at its February meeting on Wednesday. The central bank signaled further reductions in borrowing costs amid moderating inflation as policymakers sought to boost a struggling economy. 

Meanwhile, the fresh US President Donald Trump tariff threats could boost the safe-haven flows, benefiting the Greenback in the near term. Since the inauguration last month, Trump has imposed a 10% tariff on all imports from China, on top of existing tariffs of up to 25%. Late Tuesday, Trump said that he would likely impose tariffs of around 25% on foreign cars, while semiconductor chips and drugs are set to face higher duties.

Federal Reserve Bank of Chicago President Austan Goolsbee said late Wednesday that inflation has fallen but it is still too high.

Key quotes

Market reaction 

At the time of writing, the US Dollar Index (DXY) is trading 0.13% lower on the day to trade at 107.05.

The People’s Bank of China (PBOC), China's central bank, announced to leave its Loan Prime Rates (LPRs) unchanged on Thursday. The one-year and five-year LPRs were at 3.10% and 3.60%, respectively. 

Market reaction

At the time of writing, AUD/USD is holding higher ground near 0.6350, up 0.05% on the day.

On Thursday, the People’s Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead at 7.1712 as compared to the previous day's fix of 7.1705 and 7.2856 Reuters estimates.

• GBP/USD could struggle due to new tariff threats from US President Donald Trump.
• The latest FOMC Meeting Minutes emphasized needing more time to assess multiple factors before considering any rate adjustments.
• The British Pound struggled to gain traction despite a stronger-than-expected annual inflation rate.

GBP/USD holds ground after registering losses in the previous two successive days, hovering around 1.2590 during the Asian session on Thursday. However, the pair faces pressure as concerns over tariffs from US President Donald Trump lent support to the US Dollar (USD).

According to Bloomberg, Trump announced on Tuesday plans to impose a 25% tariff on foreign automobiles, alongside expected increases in duties on semiconductor chips and pharmaceuticals. An official announcement could come as early as April 2. 

Market participants are now focused on key US economic data, including weekly Initial Jobless Claims, the CB Leading Economic Index, and the Philly Fed Manufacturing Index, set to be released during the North American session.

The Federal Open Market Committee (FOMC) Meeting Minutes for January’s policy meeting, published on Wednesday, reaffirmed the decision to keep interest rates unchanged in January. Policymakers emphasized the need for more time to assess economic activity, labor market trends, and inflation before considering any rate adjustments. The committee also agreed that clear signs of declining inflation are necessary before implementing rate cuts.

Despite a stronger-than-expected annual inflation rate released on Wednesday, the Pound Sterling (GBP) failed to gain traction. The UK’s Office for National Statistics (ONS) reported that January’s Consumer Price Index (CPI) rose 3.0% year-over-year, surpassing December’s 2.5% increase and market expectations of 2.8%. This figure remains well above the Bank of England’s (BoE) 2% inflation target.

BoE policymakers have previously acknowledged that inflation could rise in the short term due to higher energy prices before gradually returning to the target level. BoE Governor Andrew Bailey reiterated earlier this week that while inflation may temporarily rise, he does not expect it to be persistent and still sees a gradual disinflationary trend.

Australia’s Unemployment Rate rose to 4.1% in January from 4.0% in December, according to the official data released by the Australian Bureau of Statistics (ABS) on Thursday. The figure came in line with the market consensus of 4.1%.

Furthermore, the Australian Employment Change arrived at 44K in January from 60K in December (revised from 56.3K), compared with the consensus forecast of 20K. 

The participation rate in Australia increased to 67.3% in January, compared to 67.2% in December (revised from 67.1%). Meanwhile, Full-Time Employment increased by 54.1 in the same period from a decline of 23.7K in the previous reading. The Part-Time Employment decreased by 10.1K in January versus 80K prior.

Market reaction to the Australia’s employment data

At the time of writing, the AUD/USD pair is trading 0.05% higher on the day to trade at 0.6350.

Australia’s Unemployment Rate rose to 4.1% in January from 4.0% in December, according to the official data released by the Australian Bureau of Statistics (ABS) on Thursday. The figure came in line with the market consensus of 4.1%.

Furthermore, the Australian Employment Change arrived at 44K in January from 60K in December (revised from 56.3K), compared with the consensus forecast of 20K. 

The participation rate in Australia increased to 67.3% in January, compared to 67.2% in December (revised from 67.1%). Meanwhile, Full-Time Employment increased by 54.1 in the same period from a decline of 23.7K in the previous reading. The Part-Time Employment decreased by 10.1K in January versus 83.7K prior (revised from 80K). 

Market reaction to the Australia’s employment data

At the time of writing, the AUD/USD pair is trading 0.05% higher on the day to trade at 0.6350.

• AUD/USD extends its downside to around 0.6340 in Thursday’s early Asian session. 
• Trump tariff threats lift the US Dollar against the Aussie. 
• Investors brace for the Australian January employment data on Thursday. 

The AUD/USD pair extends its decline to around 0.6340 during the early Asian session on Thursday. Fresh US President Donald Trump tariff threats continue to underpin the US Dollar (USD) and weigh on the pair. 

The strengthening of the Greenback is supported by concerns about escalating trade tensions. Last week, US President Donald Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners. Late Tuesday, Trump said that he would likely impose tariffs of around 25% on foreign cars, while semiconductor chips and drugs are set to face higher duties.

"So far, the dollar has tracked the path it had during the previous Trump administration...and we can pretty much agree that Trump is doing exactly what he said," said Chester Ntonifor, chief FX and global fixed income strategist, at BCA Research in Montreal. 

The minutes from the FOMC meeting released on Wednesday indicated that the Fed policymakers believe that it is well positioned to take time to assess the outlook for economic activity, the labor market and inflation. Fed officials agreed that inflation must show clear signs of slowing down before any further rate reductions can be made. 

The Reserve Bank of Australia (RBA) decided to cut its Official Cash Rate (OCR) by 25 basis points (bps) to 4.10% on Tuesday, the first rate cut in four years. The central bank warned that it was too early to declare victory over inflation and was cautious about the prospects of further easing. Investors await the release of Australian January employment data for fresh impetus, which is due later on Thursday. 

• EUR/USD edges lower to 1.0425 in Wednesday’s late American session.
• FOMC Minutes indicated that the Fed wants to take time before making adjustments to interest rates.
• The fresh round of Trump’s tariff threats weighs on the Euro. 

The EUR/USD pair weakens to near 1.0425 during the late American session on Wednesday. Tariff concerns from US President Donald Trump and geopolitical tension provide some support to the US Dollar (USD). Investors await the US weekly Initial Jobless Claims, the CB Leading Economic Index and the Philly Fed Manufacturing Index reports, which are due later on Thursday. 

The minutes from the FOMC meeting released on Wednesday stated that it was appropriate to keep the target interest rate unchanged at the January meeting, adding that the Fed believes that it is well positioned to take time to assess the outlook for economic activity, the labor market and inflation. Fed policymakers agreed that inflation must show clear signs of slowing down before any further rate reductions can be made. 

The Federal Reserve’s (Fed) Austan Goolsbee, Michael Barr and Alberto Musalem are set to speak on Thursday. Their remarks could offer some hints about the path ahead for US interest rates. Any hawkish comments from Fed policymakers could boost the Greenback in the near term.

The latest round of tariff threats lifts the Greenback and creates a headwind for EUR/USD. Trump has criticized the EU’s car tariffs and threatened reciprocal tariffs on various sectors. Late Tuesday, Trump said that he intends to impose auto tariffs "in the neighborhood of 25%" and similar duties on semiconductors and pharmaceutical imports.