Q4 GDP data from Canada and Switzerland coupled with monthly inflation data from Australia will highlight week ahead in terms of economic news. We will get all important NVDA earnings on February 25 and US – Iran developments will have impact on markets.
USD
FOMC minutes from January meeting showed that members want to see lower inflation before cutting rates again. Members see that downside risks to employment easing and that economic activity is relatively strong. Minutes confirmed that Fed did a rate check on USDJPY on the behalf of US Treasury on Friday January 23 which could be interpreted that administration does not mind lower USD.
On Friday Supreme Court ruled that President’s use of tariffs under IEEPA were illegal. Trump was not deterred by this and announced 10% tariffs on all countries under different legal framework (section 122 of Trade Act from 1974) which allows him to impose them for 150 days and then on Saturday he raised them to 15%. Administration will be looking to use section 301 which would allow them to impose tariffs on the ground of “unfair trade practices”. The first part of the $550bn Japan investment in US, as a part of a trade deal was announced. It will total around $36bn spread over three projects with largest being a $33.3bn investment in a natural gas production power plant for data centers located in Ohio.
Advanced Q4 GDP showed full effects of government shutdown as it printed 1.4% vs 3% annualized as expected and down from 4.4% in Q3. Net exports contributed only 0.08pp after adding 1.62pp in previous quarter while government spending deducted from GDP 0.90pp, it has been a positive contributor of 0.38pp in Q3. December PCE showed headline tick up to 2.9% y/y vs 2.8% y/y as expected and in November. Monthly rise was 0.4% vs 0.3% as expected. Core came in stronger at 3% y/y vs 2.9% y/y as expected and up from 2.8% y/y in November with also 0.4% m/m growth in prices. Powell has warned that PCE will come in at around 3% so this will not sway markets.
The yield on a 10y Treasury started the week at 4.05%, rose to 4.11% and finished the week at around 4.08%. The yield on 2y Treasury started the week at 3.39%, rose to 3.49% and finished the week at around 3.48%. Spread between 2y and 10y Treasuries started the week at 62bp and finished the week at 60bp. FedWatchTool sees the probability of a 25bp rate cut at March meeting at around 6% while probability of no change is at around 94%. Gold hovered around $5000 and then finished the week strongly on Friday when it gained almost $150 and closed above $5100. WTI was lifted above $66 on the back of US-Iran tensions.
EUR
ECB has announced that starting from Q3 of 2026 it will significantly expand its repo program EUREP for all central banks thus moving it into global stage and allowing EUR liquidity at higher than market rates. The move gives easier access to EUR liquidity and thus increases EUR’s role in trade and reserves giving it a more global role. Financial Times published the article stating that ECB president Lagarde may leave her post before her term expires in October of 2027. The main reason cited is that French elections are in April and since Macron cannot run for a third term this move will allow him to have a say in who the next ECB president will be. Two leading candidates to replace Lagarde are Pablo Hernandez de Cos from Span and Joachim Nagel from Germany. Lagarde clarified that she is committed to stay in her role of ECB president.
Preliminary February PMI were higher across the sectors and across countries, with exception of French manufacturing which dipped into contraction with a 49.9 print. Manufacturing PMI rose back to expansion with a 50.8 print, highest since June of 2022, from 49.5 in January. New orders are leading the growth. German reading returned to expansion with a 50.7 from 49.1 the previous month. Services ticked up to 51.8 from 51.6 in January as German services surged to 53.4 from 52.4 the previous month. New business lead to growth in services sector, Price pressures in services sector eased a bit which will be welcomed by ECB. Composite was lifted to 51.9 from 51.3 in January. Final January CPI readings from Germany were unchanged with headline printing 2.1% y/y and core printing 2.5% y/y. French readings was also unchanged at 0.3% y/y.
GBP
January payrolls change saw economy lose another 11k jobs after losing 6k in December. ILO unemployment rate for December ticked up to 5.2% from 5.1% in November while wages, both regular and ex bonus, showed growth of 4.2% 3m/y thus slowing from 4.6% 3m/y and 4.4% 3m/y growths seen the previous month respectively. There are still issues with data collection in the employment report but these results are not encouraging and will nudge markets to price in more cuts from BoE by the end of the year and give more credence to March rate cut.
Inflation report for the month of January saw headline number print 3% y/y as expected and same as in January of 2025, down from 3.4% y/y in December. Prices for motor fuels led the declines followed by air fares and food prices with latter dropping to 3.6% from 4.5%. Core inflation slipped to 3.1% y/y from 3.2% y/y the previous month but markets were expecting a 3% y/y print. Services inflation remains very high ticking only slightly to 4.4% y/y from 4.5% y/y in December. GBP stabilized on the news but March remains as the time for the next BoE rate cut.
Preliminary PMI data for the month of February saw improvement in manufacturing to 52 from 51.6 in January as there was a surge in new export orders. Services ticked down to a still healthy 53.9 from 54 the previous month. The issue is that employment index continues to decline signalling persistent job losses. Overall, composite increased to 53.9 from 53.7 indicating that UK economy continues to grow.
AUD
Minutes from the February RBA meeting showed that Board judged risks to inflation and employment had “shifted materially” thus strengthening case for February hike and agreeing that inflation will likely stay above the target for too long if the bank does not react. The Board stressed uncertainty as risks are present on both sides, inflation and employment, and reiterated that they are data-dependent and on no preset path for rates.
Employment report showed economy added 17.8k jobs in January after adding upwardly revised 68.5k jobs in December. The unemployment rate and participation rate stayed at 4.1% and 66.7% while markets were expecting a tick up to 4.2%. and 66.8% respectively. All of the jobs added were full-time (50.5k) indicating a stronger labor market while part-time jobs lost 32.7k. Additionally, putting cherry on the cake, was the fact that number of unemployed people dropped for the fourth straight month. Such a strong employment report will nudge RBA towards another hike in March and keep AUD supported.
This week we will have monthly inflation reading.
Important news for AUD:
Wednesday:
CPI
NZD
RBNZ has left the Official Cash Rate (OCR) at 2.25% as was widely expected. The statement shows that economy finished 2025 with inflation above the targeted range stating that “Increases in food and electricity prices and local council rates were the biggest contributors to above-target inflation.” Inflation is most likely returning to the targeted range in Q1. The Committee is confident that inflation will return to 2% in the next 12 months citing spare capacity in the economy as well as moderating wages. The economy is seen at the early stage of the recover while labor market is stabilizing although the unemployment rate remains high.
New projections see OCR higher across the board with 2.26% in June of 2026, up from 2.2% previously and 2.4% in December indicating that it is, at the moment, earliest we can have rate hikes. March 2027 was lifted to 2.52% from 2.34% and June 2027 is seen at 2.62% vs 2.45% previously. OCR is seen at 3% in March of 2029. Minutes showed that today’s decision was unanimous though members see risks on both sides (leaving policy accommodative for too long and hiking rates too quickly).
RBNZ Governor Breman reiterated at press conference that monetary policy remains accommodative and that there is a possibility of a rate hike by the end of the year, but that it depends on the way economy evolves. She added that Q4 hike is not fully priced in into RBNZ’s projections. Breman and statement sounded more dovish than expected as they will be potentially raising rates only in Q4 and policy will remain accommodative until then which markets did not like and NZD got sold quickly. RBNZ Assistant Governor Silk clarified that central scenario is that easing cycle is over. Risks to the downside include weaker household consumption while upside risks are that inflation proves sticky.
CAD
January inflation report surprised to the downside as it came at 2.3% y/y vs 2.4% y/y in December while markets expected a tick up to 2.5% y/y. Monthly figure showed no increase in prices of the CPI basket of goods while expectations were for a 0.2% print. Digging into the details of the print we can see that biggest reason inflation declined was a huge drop in gasoline prices. Shelter printed 1.7% y/y which is the first sub-2% reading in five years. On the other hand, food from restaurants was up very concerning 12.3% y/y followed by increases in alcoholic, beverages, tobacco products and recreational cannabis. All three of the core numbers also declined with median printing 2.5% y/y, common 2.7% y/y and trim 2.4% y/y.
This week we will get Q4 GDP print.
Important news for CAD:
Friday:
GDP
JPY
Japan economy grew by just 0.1% q/q and 0.2% annualized vs 0.4% q/q and 1.6% annualized as expected. Private consumption grew by 0.1% q/q well below 0.4% q/q growth seen in Q3. Capital formation showed a 0.2% q/q growth, much smaller than 0.8% q/q as expected. Exports declined by 0.3% which led to no contribution from net exports. Given that Q3 GDP was negative this reading shows that economy is stabilizing, but not yet accelerating. December core machinery orders, a very volatile series but a good predictor of CAPEX in the 6-9 months future, surged 19.1% m/m and 16.8% y/y smashing expectations and reinforcing view that economy is on a nice recovery path.
January national inflation data saw headline number print 1.5% y/y, weaker than 1.6% y/y as expected and down from 2.1% y/y in December and a first sub-2% print since March of 2022. Core inflation, ex fresh food, printed 2% y/y as expected and down from 2.4% y/y the previous month while “core-core”, ex fresh food & energy, declined to 2.6% y/y from 2.9% y/y in December and bigger decline than 2.7% y/y as expected. Preliminary February PMI showed improvements across the boards with manufacturing jumping to 52.8 from 51.5 in January while services ticked up to 53.8 from 53.7 and thus lifted composite to 53.8 as well. The report shows that new export orders surged with index within composite expanding at the fastest pace in eighth years! Price pressures continued to increase with services showing stronger costs inflation. Optimism improved across the sectors. These reports are showing declining inflation and accelerating economy but with inflation pressures in PMI report still going strong we think that BoJ will continue with a hike in April.
CHF
SNB total sight deposits for the week ending February 13 came in at CHF452.7bn vs CHF447.3bn the previous week thus returning to the level seen two weeks ago. Preliminary Q4 GDP reading sees economy growing 0.2% q/q, same as in Q4 od 2024 and improving from negative 0.5% q/q growth in previous quarter. Swiss economy grew by 1.4% in 2025 which is higher growth than in previous two years, but below 45-year average of 1.8%. The report shows industry detracting from GDP, except for pharmaceuticals which positively contributed, with entire growth being made by services sector.
This week we will be having final Q4 GDP print.
Important news for CHF:
Friday:
GDP
