RBNZ meeting, GDP from the US and Japan, inflation data from the US, UK and Canada, employment data from the UK and Australia as well as preliminary February PMI data from the European and UK will highlight the jam packed week ahead of us. Monday is holiday in the US (President’s Day) so US banks will be closed, liquidity will be thinner with potential for higher volatility, caution is advised.
USD
December retail sales missed hard coming in flat for the month vs growing 0.4% m/m as expected and down from 0.6% increase in November. Control group, excluding volatile categories and used for GDP calculation, decreased by 0.1% m/m vs increasing by 0.4% m/m as expected with November figure being downwardly revised. The biggest increase was seen in building materials followed by sporting goods and musical instruments. Declines were biggest in furniture stores as well as miscellaneous store retailers. Food services and drinking places, a good indicator of disposable income and consumer sentiment, declined 0.1% m/m.
January employment report saw headline NFP number at 130k vs 70k as expected. The details of the report are looking even better as the unemployment rate ticked down to 4.3% while markets expected it to tick up to 4.5%. This was accomplished with participation rate moving up to 62.5%. Underemployment rate dropped to 8% from 8.4% in December. Hourly wages rose 0.4% m/m and 3.7% y/y compared to 0.3% m/m and 3.8% y/y growth in the previous month. All of the jobs added were in private sector, 173k while government saw job losses to the tune of 42k. Within private sector healthcare led the way with 82k jobs added followed by 42k in social assistance. On the other hand financial services saw a loss of 22k jobs followed by IT which lost 12k jobs, showing effects of AI implementation. Problems with labor market are found in revisions. They show economy added 862k fewer jobs last year than reported. ING gives us a chilling information “the key point is that this wipes out all the job gains in sectors that aren’t government, leisure & hospitality and private education and healthcare services over the past three years.” Number of job openings has dropped and we now have to 0.88 unfilled positions per unemployed person.
Headline CPI for the month of January printed 2.4% y/y vs 2.5% y/y as expected and down from 2.7% y/y in December. Monthly reading showed growth of 0.2% vs 0.3% the previous month. Food prices are still running hot at 2.7% y/y but they eased to 0.2% m/m after a 0.7% m/m increase in December with food away from home increasing 4% y/y. Energy deducted 0.1% y/y with energy commodities plunging 7.3 y/y but on the other hand energy services surging 7.2% y/y due to utility gas services jumping 9.8% y/y. Core CPI came in at 2.5% y/y as expected ticking down from 2.6% y/y in December. Core rose 0.3% m/m, (0.295% m/m unrounded) a bit faster than 0.2% m/m as expected. Prices for used cars and tracks fell 2% y/y while shelter remained the biggest contributor to inflation with prices rising 3% y/y. Core services were at 2.9% y/y with supercore at 0.355% m/m and 2.09% y/y. Progress on disinflation continues which should increase chances of future Fed rate cuts.
The yield on a 10y Treasury started the week at 4.22%, rose to 4.25% and finished the week at around 4.04%. The yield on 2y Treasury started the week at 3.50%, rose to 3.53% and finished the week at around 3.40%. Spread between 2y and 10y Treasuries started the week at 72bp and finished the week at 64bp. FedWatchTool sees the probability of a 25bp rate cut at March meeting at around 10% while probability of no change is at around 90%.
This week we will get minutes from the latest FOMC meeting as well as advanced Q4 GDP reading and Fed’s preferred inflation measure PCE.
Important news for USD:
Wednesday:
FOMC Minutes
Friday:
GDP
PCE
EUR
The Governor of Bank of France Francois Villeroy de Galhau announced his resignation before his term expires in October of 2027 citing personal reasons. EU leaders met with former ECB President Draghi and Enrico Letta in a castle in Belgium to discuss improving European competitiveness. Europe is on track to continue with its “One Europe, one market” plan which is expected to be completed by the end of 2027 and which will focus on reducing administration, improving the internal market and building one energy market with energy grids that run cross-border.
This week we will have preliminary February PMI data expected to show further improvements.
Important news for EUR:
Friday:
Manufacturing PMI (Eurozone, Germany, France)
Services PMI (Eurozone, Germany, France)
Composite PMI (Eurozone, Germany, France)
GBP
Fallout in the UK government is due to Peter Mandelson’s. appointed as the US ambassador last year, involvement in Epstein files. Prime Minister Starmer’s former chief of staff Morgan McSweeney was forced to resign yesterday for his role in the appointment of Peter Mandelson as UK ambassador.
UK economy grew by 0.1% q/q in fourth quarter, same as in Q3, vs 0.2% q/q as markets were expecting. Additionally, economy showed 1% y/y growth vs downwardly revised 1.2% y/y growth in the previous quarter. Services showed no growth in Q4 and all growth came in from production. Real household consumption grew 0.2% while business investment plunged 2.7% and construction plunged 2.1%. The economy grew by 1.3% in 2025. ONS notes that “Real GDP per head is estimated to have increased by 1.0% annually in 2025, following no growth in 2024.” December GDP print saw economy grow by 0.1% m/m, as expected, entirely led by services 0.3% m/m vs 0.1% m/m with industrial and manufacturing production detracting 0.9% m/m and 0.5% m/m respectively.
This week we will have employment, inflation (expected to drop to 3% y/y) and preliminary February PMI data.
Important news for GBP:
Tuesday:
Payrolls Change
Unemployment Rate
Wednesday:
CPI
Friday:
Manufacturing PMI
Services PMI
Composite PMI
AUD
RBA Governor Bullock spoke in the Parliament and stated that primary goal of higher rates is to cool off demand and in that way help bring inflation down. She added that stronger AUD will help with cheaper imports which in turn will lower inflation. Additionally, she warned that without increase in productivity economy will struggle to grow above 2%. Bullock did not want to pre-commit to any rate path, saying that bringing inflation down may or may not require more hikes and reiterated that bank remains data-dependent. Inflation prints will thus remain the main data point for future policy decisions.
After some positives on the inflation front in the months leading to the end of 2025, China is starting 2026 with a miss on inflation. January headline number came in at 0.2% y/y vs 0.4% y/y as expected showing smaller increase than 0.8% y/y in December. Food prices fell 0.7% y/y and were the main contributor of downward pressures. It is expected, however, that food prices will stabilize in February and thus lift inflation as is indicated by 0.2% monthly inflation increase. Non-food inflation also missed expectations coming in at 0.4% y/y vs 0.8% y/y the previous month. PPI managed to continue improving, showing smaller drop (-1.4% y/y vs -1.9% y/y in December), but it remains in negative territory since September of 2022. USDCNY fell to the lowest level since 2023.
This week we will have employment data.
Important news for AUD:
Thursday:
Employment Change
Unemployment Rate
NZD
January manufacturing ticked down to 55.2 from 56.1 in December but it still shows a healthy expansion of the sector as the economy enters 2026. Production and new orders showed strongest gains. Share of positive comments about sector declined massively and dropped into contraction as manufacturers cite weak demand. Kiwi had a great first half of the week and then gave some of it back as risk off mood started on Thursday.
This week we will have RBNZ meeting where no change to rate is expected. This is the first meeting by Governor Brennan so markets will be interpreting her wording with a great care.
Important news for NZD:
Wednesday:
RBNZ Interest Rate Decision
CAD
CAD had a rough week as its fortunes were tied to USD. It managed to eek gains against EUR and GBP in the first part of the week but gave it all back later on. CAD did not have a chance against JPY and CHF strength and lost ground there.
This week we will have inflation data expected to tick up.
Important news for CAD:
Monday:
CPI
JPY
Prime Minister Takaichi managed to win super-majority in the Lower House elections by securing 316 votes for her ruling LDP while her coalition partner Nippon Ishin managed to win additional 36 seats. Securing 310 seats gives control of 2/3 of the Lower House and Takaichi managed to surpass it. She is a China hawk so further spending on military is in the cards. Also she is a fiscal dove, looking for more fiscal stimulus which should push downward pressure on JPY. Nikkei loved results of the election as it made a new all time high pushing above 56k. After her victory Takaichi stated that plan is to suspend tax on food sales for two years. She added that it will not be funded by additional borrowing which managed to calm down the bond market. New, alternative ways are being looked at for funding, including subsidies.
December saw nominal wages rise 2.4% y/y after an upwardly revised 1.7% y/y in December. However, when we take inflation into account, real wages dropped 0.1% y/y thus making it twelve straight months, a full year, of falling real wages. Additionally, real wages dropped 1.3% in 2025 thus making it fourth consecutive year of annual declines. Japanese authorities seized Chinese fishing boat as it enters its Exclusive Economic Zone (EEZ). This is the first seizure of Chinese vessel since 2022 and it further elevates tensions between two countries.
This week we will have preliminary Q4 GDP reading.
Important news for JPY:
Monday:
GDP
CHF
SNB total sight deposits made a new six-month low in the week ending February 6 as they printed CHF447.3bn vs CHF452.7bn the previous week. This is the lowest reading since mid-June of last year. January inflation data was stable with both headline and core number coming in as expected and unchanged from December at 0.1% y/y and 0.5% y/y respectively.
This week we will have preliminary Q4 GDP reading.
Important news for CHF:
Monday:
GDP
