- Amid sensitive discussions surrounding succession, Lagarde expressed her desire to conclude her term at the ECB.
- Westpac highlights that Australia’s unemployment rate may obscure underlying weaknesses in demand and falling workforce participation.
- Currency intervention reports suggest that the Reserve Bank of India is selling USD/INR to bolster the rupee.
- Goldman forecasts that gold prices will reach $5,400 per ounce by the end of 2026 driven by robust demand.
- The RBNZ indicated inflation will revert to target, maintaining no fixed path; the New Zealand dollar fell alongside the Australian dollar.
- Elarian announced a freeze on fund redemptions, warning that private credit could be a “canary in the coal mine.”
- The current strength of the US dollar, powered by strong economic data, may not sustain; uncertainties in policy and political factors loom.
- The Supreme Court’s forthcoming tariff ruling is pending, while JPM projects S&P 500 movements under four scenarios.
- Japan’s preliminary PMI for February increased, with the composite index reaching 53.8 thanks to a surge in exports.
- Japan’s inflation rate eased to 1.5% in January while key policies are relaxed; what are the Bank of Japan’s thoughts on this?
- Japan’s Core CPI for January 2026 stood at 2.0%, matching expectations but marking the lowest since January 2024.
- President Trump is considering military options, with Iran cautioning it would respond strongly if attacked.
- The Fed’s Daily commentary states that policy is “on the right track” as inflation decreases and the role of AI in productivity increases comes into focus.
- Australia’s preliminary PMI for February shows a cooling effect at 52.0 compared to an earlier 55.7 as price pressures mount.
- New Zealand’s January 2026 trade figures indicate that imports and exports fell short compared to December.
- Reports suggest President Trump is contemplating a measured strike on Iran to expedite a nuclear agreement, according to the Wall Street Journal.
- Investment Live notes that the outlook for GDP has dimmed due to an increasing US trade deficit.
Overview:
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The Fed’s Daily remarked that its policy is “in good shape” following a 75 basis points rate reduction, with a tone that feels stable and slightly dovish.
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The RBNZ reported that inflation returned to target in the first quarter, emphasizing a cautious approach to rate hikes. Both the NZ dollar and Australian dollar are under pressure.
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ECB’s Lagarde indicated to the Wall Street Journal that her term is set to end in 2027 but refrained from commenting on speculation regarding her early resignation.
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Traders indicated that the Reserve Bank of India likely intervened by selling USD/INR ahead of the local market opening to safeguard the pre-open 91 level.
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Japan’s CPI reflected a significant deceleration in inflation, with an annual rise of 1.5%, the lowest since March 2022, and the Core CPI at 2.0%, the lowest since January 2024.
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Japan’s PMI data for February shows a strong Composite Index, the highest level seen since May 2023.
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USD/JPY remains steady within its range as Japan’s markets prepare for a long weekend, closing on Mondays.
There’s been a lot of chatter about central banks lately!
Mary Daly, President of the San Francisco Fed, noted that after a cumulative interest rate cut of 75 basis points last year, monetary policy appears to be in a “good place.” She mentioned that the labor market remains stable and predicted inflation will resume its downward trend as the effects of tariffs diminish. The overall tone was fairly even, suggesting the Fed feels comfortable with its current strategy and doesn’t face immediate pressure to act hastily.
In New Zealand, RBNZ Governor Anna Breman acknowledged the challenges of returning to 2% inflation but expressed optimism that it could already be in the target range for the first quarter. He reassured that inflation is expected to hit the midpoint over the next year. Chief economist Paul Conway emphasized that there isn’t a fixed plan for policy changes and that the central bank isn’t keen on rapidly increasing interest rates. This outlook has negatively impacted the New Zealand dollar, also affecting the Australian dollar.
Meanwhile, in Europe, ECB’s Christine Lagarde shared in a Wall Street Journal interview that her term is expected to conclude in October 2027 but chose not to address reports suggesting she might resign sooner.
It was reported that the Reserve Bank of India likely sold USD/INR during the pre-opening session to maintain control over the exchange rate before it escalated beyond the $1/$91 threshold.
On the data front, Japan’s CPI reported a significant deceleration in inflation, with January’s overall CPI increasing by 1.5% year-on-year, which is a drop from 2.1% previously and the lowest since March 2022. This also indicates a continued breach of the Bank of Japan’s 2% inflation target for the last 45 months. Core CPI, excluding fresh food, decreased to 2.0% from 2.4%, the lowest since January 2024. The core-core index, which excludes both fresh food and energy, also dropped from 2.9% to 2.6%.
Following these inflation trends, February’s preliminary PMI showed marked improvement, with the composite index achieving its highest growth rate since May 2023.
Throughout the session, USD/JPY traded within its typical range as traders anticipated the upcoming long weekend in Japan. Naturally, I’m also looking forward to tonight’s US PCE report ;-).
Just a quick aside, I was on vacation in China this week, but I’ll be back next week. Things in the Asian markets should return to regular pace!
