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NFP may beat expectations, but unlikely to trigger Dollar range breakout

    By
    ActionForex.com
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    Today’s US Non-Farm Payroll report is the focal point for market participants, with consensus estimates pointing to 169k new jobs in January and an unemployment rate holding steady at 4.1%. Average hourly earnings growth is expected at 0.3% month-over-month, maintaining the robust wage gains of recent months.

    There are indications the data could surprise to the upside. Latest ISM surveys showed employment components improving, with manufacturing’s gauge jumping from 45.4 back into expansion at 50.3, and services employment rising to 52.3 from 51.3. ADP private payrolls number also showed a solid 183k increase, little changed from December’s 176k. Meanwhile, initial jobless claims remain near historical lows, with the four-week moving average inching up only slightly from 213k to 217k.

    If today’s jobs report beats expectations, the case for Fed to maintain its pause on easing for longer would strengthen. However, persistent uncertainties—especially US trade policies—may limit the Dollar’s ability to rally significantly. While a strong labor market may keep rate cuts at bay, investors will weigh other geopolitical and economic factors before pushing the greenback through key near term resistance levels.

    Technically, Dollar Index is currently extending the consolidation pattern from 110.17 short term top. In case of deeper pull back, downside should be contained by 38.2% retracement of 110.15 to 110.17 at 106.34 to bring rebound. On the upside, firm break of 110.17 is needed to confirm resumption of recent up trend. Otherwise, outlook would remains neutral for more sideway trading.

    IMF backs BoJ’s gradual rate hikes, sees policy rate moving toward neutral by 2027

      By
      ActionForex.com
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      Nada Choueiri, deputy director of IMF’s Asia-Pacific Department and mission chief for Japan, stated that IMF remains “supportive” of BoJ’s current monetary policy course. She emphasized that rate hikes should be implemented in a gradual and flexible manner to ensure that domestic demand continues to recover.

      Choueiri projected that BoJ’s policy rate could rise “beyond 0.5%” by the end of this year, with a longer-term path toward the “neutral level” by the end of 2027.

      IMF estimates Japan’s neutral rate to be within a band of 1% to 2%, with a midpoint of 1.5%.

      Also, IMF maintains an optimistic outlook for Japan’s economy, forecasting 1.1% GDP growth in 2025, supported by increasing wages and stronger consumer spending.

      Given these projections, IMF expects BoJ to continue its tightening cycle in a controlled manner.

       

      BoC’s Macklem warns tariff threats already weighing on confidence

        By
        ActionForex.com
        -

        Speaking at a conference in Mexico City, BoC Governor Tiff Macklem raised concerns over the economic uncertainty stemming from U.S. President Donald Trump’s tariff threats. He noted that “threats of new tariffs are already affecting business and household confidence, particularly in Canada and Mexico.”

        “The longer this uncertainty persists, the more it will weigh on economic activity in our countries,” he warned.

        Macklem stressed that central banks face a challenging task in managing the economic fallout. He explained that policymakers cannot counteract both “weaker output” and “higher inflation” simultaneously.

        The challenge will be to assess the downward pressure on inflation from reduced economic activity while balancing it against the upward pressure from higher input costs and supply chain disruptions caused by tariffs.

         

        Fed’s Logan sees rates on hold “for quite some time” even if inflation drops

          By
          ActionForex.com
          -

          Dallas Fed President Lorie Logan suggested at a BIS conference overnight that interest rates may remain on hold for “quite some time,” even if inflation continues to move closer to the 2% target. She emphasized that a decline in inflation alone would not be a sufficient trigger for policy easing, as long as labor market conditions remain strong.

          She argued that such a scenario would “strongly suggest that” interest rate is
          already pretty close to neutral, “without much near-term room for further cuts”.

          Instead, Logan highlighted that signs of a weakening labor market or a slowdown in demand would be more relevant factors in determining when easing should begin.

          US initial jobless claims rises to 219k vs exp 214k

            By
            ActionForex.com
            -

            US initial jobless claims rose 11k to 219k in the week ending February 1, above expectation of 214k. Four-week moving average of initial claims rose 4k to 217k.

            Continuing claims rose 36k to 1886k in the week ending January 25. Four-week moving average of continuing claims rose 2k to 1872k.

            Full US jobless claims release here.

            BoE cuts rates to 4.50% in surprisingly dovish vote

              By
              ActionForex.com
              -

              BoE lowered its policy rate by 25 basis points to 4.50%, as widely expected, but the tone of the decision was unexpectedly dovish.

              The Monetary Policy Committee vote split at 7-2, with Swati Dhingra advocating for a more aggressive 50bps cut—as expected—but hawkish member Catherine Mann surprisingly joining her, marking a significant shift in her stance.

              BoE emphasized a “gradual and careful” approach to easing, a slight adjustment from December’s messaging, which only referenced “gradual” reductions. This shift highlights policymakers’ growing concerns over inflation persistence and economic fragility. Governor Andrew Bailey reaffirmed that rate adjustments would be assessed on a “meeting-by-meeting” basis, with no pre-determined path for cuts.

              In its updated economic projections, BoE raised its inflation outlook, now expecting headline CPI to peak at 3.7% in Q3 2025, up from a prior forecast of 2.8%. The revision reflects higher energy costs and expected increases in regulated utility and transport prices. Inflation is not anticipated to return to the 2% target until Q4 2027, six months later than previously projected.

              Growth forecasts were also downgraded sharply for 2025, with expected GDP expansion halved to 0.75%, citing weak business sentiment, sluggish consumer activity, and poor productivity growth. However, projections for 2026 and 2027 were revised slightly upward to 1.5% from 1.25%, suggesting policymakers see a slow but eventual economic recovery.

              Full BoE statement here.

              Eurozone retail sales falls -0.2% mom in Dec, EU down -0.3% mom

                By
                ActionForex.com
                -

                Eurozone retail sales slipped by -0.2% mom in December, missing market expectations of -0.1% decline and pointing to continued weakness in consumer demand. The drop was largely driven by -0.7% contraction in food, drinks, and tobacco sales, while non-food products saw a modest 0.3% increase. Automotive fuel sales in specialized stores also ticked up 0.2%, providing some offset to the broader decline.

                At the EU-wide level, retail sales fell even further, down 0.3% mom. The country-level breakdown highlights stark contrasts in retail activity. Slovenia (-2.2%), Germany (-1.6%), and Poland (-1.5%) saw the sharpest contractions, while Slovakia (+8.2%), Finland (+2.1%), and Spain (+1.4%) registered solid gains.

                Full Eurozone retail sales release here.

                ECB’s Cipollone open to March cut, flags risks of full US-China trade war

                  By
                  ActionForex.com
                  -

                  ECB Executive Board member Piero Cipollone indicating that while “there is still room for adjusting rates downwards”, the March decision remains uncertain. He stated that ECB must be “extremely careful” in its assessment, and he will enter the meeting “with an open mind”.

                  Discussing the concept of the neutral rate in a Reuters interview, Cipollone downplayed its practical significance in policy setting. He pointed out that when estimates for the neutral rate vary widely—such as between 1.75% and 2.25%—it becomes “not terribly useful for setting monetary policy.” If ECB operates near either end of the range, it could risk either undershooting or overshooting its inflation target.

                  Cipollone also raised concerns about the evolving global trade situation. The immediate impact of US tariffs depends on European retaliation and specific product categories affected, He warned that a “full trade war” between the US and China poses a more significant threat.

                  With China accounting for 35% of global manufacturing capacity, broad trade restrictions could flood European markets with Chinese goods. This would create a dual challenge— “deflationary” pressures from lower-priced imports and a “contractionary” effect as European producers struggle to compete.

                  Full interview of ECB’s Cipollone here.

                  BoE to cut 25bps, focus on MPC split and stagflation risks

                    By
                    ActionForex.com
                    -

                    BoE is widely expected to lower interest rates by 25bps to 4.50% today, marking its third cut in the current cycle. The central bank is likely to maintain a cautious stance, reinforcing its guidance of a “gradual” approach, which suggests a pace of four quarter-point cuts throughout 2025.

                    The Monetary Policy Committee’s vote split will be a key focus, as divisions among policymakers could influence BoE’s forward guidance. Known hawk Catherine Mann may dissent and argue for keeping rates steady, while dovish member Swati Dhingra could push for a more aggressive 50bps cut. A wider split would highlight internal uncertainty over the pace of easing.

                    Alongside the rate decision, BoE will release its updated quarterly Monetary Policy Report, which is expected to reflect downward revisions to growth projections for 2025-2027. However, inflation forecasts, at least for 2025, could be revised higher. Such a combination would reinforce concerns over stagflation, a scenario where sluggish growth coincides with persistent inflationary pressures.

                    GBP/USD is hovering near a critical technical resistance zone ahead of BoE decision. The zone include 55 D EMA (now at 1.2522) and 38.2% retracement of 1.3433 to 1.2099 at 1.2609. Firm rejection from this zone would reinforce the view that recent price action from 1.2099 remains corrective, keeping the broader bearish trend intact. In this case, decline from 1.3433 should resume through 1.2099 low at a later stage.

                    BoJ’s Tamura advocates rate hike to 1% by late fiscal 2025

                      By
                      ActionForex.com
                      -

                      BoJ board member Naoki Tamura, a known hawk, reinforced his stance on the need for tighter monetary policy, stating that Japan’s short-term interest rates should rise to at least 1% by the second half of fiscal 2025 to mitigate inflation risks.

                      Tamura explained that inflationary pressures are mounting, necessitating a shift away toward a more neutral rate. He highlighted that by late fiscal 2025, the Japanese economy is expected to reach a point where the 2% inflation target can be considered sustainably achieved, supported by broad-based wage increases, including among smaller firms.

                      “Bearing in mind that short-term interest rates should be at 1% by the second half of fiscal 2025, I think the Bank needs to raise rates in a timely and gradual manner, in response to the increasing likelihood of achieving its price target,” he said.

                       

                      Australia’s NAB business confidence improves, but profitability weakens

                        By
                        ActionForex.com
                        -

                        Australia’s NAB Business Confidence rose from -7 to -4 in Q4, reflecting a slight improvement in sentiment. However, Business Conditions remained unchanged at 3, as trading conditions slipped from 6 to 5, and profitability turned negative from 0 to -1. Employment conditions as steady at 3.

                        Forward-looking indicators showed a mixed picture. Expected business conditions for the next three months edged lower, but sentiment for the 12-month horizon improved by five points, aligning with a three-point increase in capital expenditure plans, suggesting firms are cautiously optimistic about long-term prospects.

                        Cost pressures moderated, with labor cost growth slowing to 0.9% qoq from 1.2%, and purchase costs easing to 0.7% qoq from 1.0%. Retail price growth also softened to 0.5% qoq from 0.7%, though overall product price growth remained stable at 0.4% qoq, indicating ongoing margin pressure despite easing input costs. Wage costs remained the top concern for businesses, while demand constraints and labor shortages persisted as key challenges.

                        Full Australia quarterly NAB Business Confidence release here.

                        Goolsbee warns Fed may struggle to distinguish tariff-driven inflation from overheating

                          By
                          ActionForex.com
                          -

                          Chicago Fed President Austan Goolsbee cautioned that a “series of new challenges to the supply chain”, ranging from natural disasters to trade policy shifts, could create fresh inflationary pressures.

                          He highlighted the increasing risks from events like tariffs and trade wars, hurricanes, port closures, geopolitical tensions, and labor strikes, all of which could complicate the inflation outlook in 2025.

                          A key concern for Fed, Goolsbee noted, is differentiating between inflation stemming from economic overheating versus price increases caused by new tariffs. This distinction will be critical in determining the Fed’s policy response.

                          Goolsbee also compared the current situation to the 2018 trade tensions under President DonaldTrump, noting that while companies previously shifted production out of China, further adjustments could be more challenging this time. The remaining imports from China may be less replaceable.

                          “In that case, the impact on inflation might be much larger this time,” Goolsbee noted.

                          Separately, Fed Vice Chair Philip Jefferson signaled that the central bank is in no rush to adjust its policy stance as it assesses the economic impact of the Trump administration’s policy policies on tariffs, immigration, deregulation and taxes. “We can be patient and wait to see the net effect of any policy changes by the current administration,” he said.

                          Riding the Wave: Unveiling the Advantages of Trading Signals

                          By
                          ActionForex.com
                          -

                          Trading, whether in stocks, forex, or cryptocurrencies, is a complex and often unpredictable endeavor. Success requires a potent mix of market knowledge, analytical skills, disciplined risk management, and, crucially, timely decision-making. In this dynamic landscape, trading signals have emerged as a valuable tool, offering a potential edge to both novice and experienced traders. This article explores the multifaceted advantages of incorporating trading signals into your strategy, examining how they can enhance your trading performance and streamline your decision-making process.

                          Deciphering the Signal’s Allure – Enhanced Decision-Making and Time Efficiency

                          Trading signals are essentially recommendations or alerts generated by sophisticated algorithms, technical indicators, or seasoned analysts. They suggest specific trading actions, such as buying or selling an asset at a particular price and time. These signals are derived from a variety of data sources, including price charts, market news, economic indicators, and even sentiment analysis. The appeal of trading signals lies in their potential to provide traders with several key advantages.

                           1. Streamlined Decision-Making:

                          One of the most significant benefits of trading signals is their ability to simplify the decision-making process. Instead of spending hours poring over charts and analyzing market data, traders can rely on signals to identify potential trading opportunities. This is particularly advantageous for novice traders who may lack the experience or confidence to interpret market data effectively. Signals provide a starting point, a direction, allowing traders to focus on risk management and trade execution rather than getting bogged down in complex analysis

                          2. Time Efficiency:

                          Time is a precious commodity, especially for those who juggle trading with other commitments. Analyzing markets and identifying profitable trades can be incredibly time-consuming. Trading signals can significantly reduce the time required for market research and analysis. By providing ready-made trading ideas, signals free up traders to focus on other aspects of their lives, making trading more accessible and manageable

                          3. Reduced Emotional Bias:

                          Emotions, such as fear and greed, can often cloud judgment and lead to impulsive trading decisions. Trading signals, particularly those generated by automated systems, can help to mitigate the influence of emotions. By relying on objective data and pre-defined criteria, signals can promote a more rational and disciplined approach to trading

                          4. Access to Expert Knowledge:

                          Many trading signals are generated by experienced analysts or professional traders who possess a deep understanding of market dynamics. By subscribing to these signals, traders can effectively tap into the expertise of these professionals, gaining access to insights and strategies they might not otherwise have. This can be particularly beneficial for traders who are still learning the ropes and seeking guidance from more experienced players

                          5. Learning Opportunities:

                          Observing and analyzing the signals generated by experienced traders can be a valuable learning experience. By understanding the rationale behind the signals, traders can gain insights into different trading strategies and improve their own analytical skills. This can accelerate the learning curve and help traders develop their own profitable trading systems.

                          6. Diversification of Strategies:

                          Trading signals can cover a wide range of assets and trading strategies. This allows traders to diversify their portfolios and explore new markets without having to become experts in each one. For example, a trader might specialize in stock trading but use signals to explore opportunities in the forex or cryptocurrency markets. 

                          Navigating the Signal Landscape – Risks, Due Diligence, and the Path to Success

                          While trading signals offer numerous advantages, it’s crucial to acknowledge that they are not a guaranteed path to riches. Like any trading tool, they come with their own set of risks and require careful consideration

                          1. No Guarantee of Profit:

                          Trading signals are merely suggestions, not guarantees. Market conditions can change rapidly, and even the best signals can sometimes lead to losses. It’s essential to remember that past performance is not indicative of future results.

                           2. Risk of Scams and Fraudulent Signals:

                          The trading signal industry is not immune to scams and fraudulent providers. It’s crucial to conduct thorough research and due diligence before subscribing to any signal service. Look for providers with a proven track record, transparent methodology, and verifiable results.

                          3. Over-Reliance and Lack of Independent Analysis:

                          Relying too heavily on trading signals without developing your own analytical skills can be detrimental in the long run. It’s important to use signals as a supplement to your own analysis, not as a replacement for it. Strive to understand the reasoning behind the signals and develop your own critical thinking skills

                          4. Cost of Subscription:

                          Many trading signal providers charge subscription fees, which can eat into your profits. It’s important to weigh the cost of the subscription against the potential benefits and ensure that the signals are worth the investment

                          5. Importance of Risk Management:

                          Even when using trading signals, risk management remains paramount. Never risk more than you can afford to lose, and always use stop-loss orders to limit potential losses. Diversify your portfolio and avoid putting all your eggs in one basket

                          6. Finding the Right Signals:

                          The sheer number of trading signal providers can be overwhelming. It’s crucial to find signals that align with your trading style, risk tolerance, and investment goals. Consider factors such as the provider’s track record, the types of assets covered, the frequency of signals, and the cost of the subscription. 

                          Conclusion:

                          A Powerful Tool in the Trader’s Arsenal

                          Trading signals can be a valuable asset for traders of all levels, offering enhanced decision-making, time efficiency, and access to expert knowledge. However, it’s crucial to approach trading signals with a healthy dose of skepticism and conduct thorough due diligence before subscribing to any service. By using signals responsibly and in conjunction with your own analysis and risk management strategies, you can leverage their potential to improve your trading performance and increase your chances of success in the dynamic world of trading. Remember, trading signals are a tool, and like any tool, their effectiveness depends on how they are used. The key lies in combining the insights they offer with your own knowledge, discipline, and a well-defined trading plan.

                          ECB’s Lane: Exiting restrictive policy requires wider considerations than neutral rate

                            By
                            ActionForex.com
                            -

                            ECB Chief Economist Philip Lane emphasized the need for a balanced approach in the easing cycle, advocating a measured pace to avoid either stifling economic growth or fueling excessive inflation.

                            He highlighted that a “middle path is appropriate,” ensuring that policymakers do not lean too heavily on either upside or downside risks.

                            Lane reiterated the importance of maintaining flexibility, stressing that the ECB must “maintain agility” in its decision-making, relying on incoming data and a meeting-by-meeting assessment rather than committing to a predefined rate path.

                            The economist also pointed out that determining the appropriate level of monetary restrictiveness is complex and involves multiple factors beyond just policy rates.

                            He outlined nine key elements, including the transition from cheap debt refinancing to higher rates, the forward-looking impact of expected rate cuts, global term premium pressures, evolving bank lending conditions, and the overall response of consumption and investment to shifting monetary policy.

                            This multi-faceted assessment indicated that ECB rate decisions will be guided by a broader set of financial and economic indicators.

                            It “cannot be summarised by a single indicator such as comparing the prevailing policy rate to a highly-uncertain estimate of the so-called neutral rate,” Lane emphasized.

                            Full speech of ECB’s Lane here.

                             

                            US ISM services falls to 52.8 as business activity and new orders weaken

                              By
                              ActionForex.com
                              -

                              US ISM Services PMI declined from 54.0 to 52.8 in January, falling short of market expectations of 54.2.

                              The drop was driven primarily by slower growth in business activity and new orders, both of which saw noticeable declines. Business activity/production slipped from 58.0 to 54.5, while new orders dropped from 54.4 to 51.3. Meanwhile, employment edged higher from 51.3 to 52.3, and prices eased from 64.4 to 60.4, suggesting some moderation in inflationary pressures within the service sector.

                              According to ISM, the weaker composite reading reflects a slowdown in business momentum, with adverse weather conditions frequently cited by respondents as a factor dampening production and demand. While concerns over potential US government tariffs were mentioned, businesses did not yet report significant direct impacts.

                              The decline in services activity points to some softening in economic momentum, though the sector remains in expansion territory above the 50.0 threshold. Current Services PMI reading aligns with an annualized GDP growth of 1.4%, suggesting moderate economic expansion.

                              Full US ISM services release here.

                              US ADP jobs beats expectations with 183k gain, led by services

                                By
                                ActionForex.com
                                -

                                US ADP private employment report showed a stronger-than-expected job gain of 183K in January, surpassing market forecasts of 149K.

                                Service sector was the clear driver of employment, adding 190K jobs, while goods-producing industries shed -6K positions. By company size, small businesses contributed 39K jobs, medium-sized firms led with 92K, and large corporations added 69K.

                                Wage growth remained elevated, with annual pay increases for job-stayers at 4.7% yoy, while job-changers saw an even stronger 6.8% yoy rise.

                                According to Nela Richardson, Chief Economist at ADP, the report reveals a “dichotomy” in the labor market, with consumer-facing industries leading the way, while business services and production lag behind.

                                Full US ADP release here.

                                Eurozone PPI rises 0.4% in Dec, flat annually

                                  By
                                  ActionForex.com
                                  -

                                  Eurozone PPI increased by 0.4% mom in December, slightly below market expectations of 0.5% MoM. On a year-over-year basis, PPI was unchanged, above expectations of a -0.1% yoy decline.

                                  Breaking down the monthly price changes in Eurozone, energy prices saw the biggest increase at 1.4%, followed by durable consumer goods (+0.2%). Capital goods, intermediate goods, and non-durable consumer goods all edged up by 0.1%.

                                  At the EU level, PPI rose 0.4% mom and 0.1% yoy. The biggest price gains were seen in Bulgaria (+5.1%), Croatia (+2.4%), and Slovakia (+1.5%). On the other hand, Ireland (-1.5%), Romania (-1.3%), and the Netherlands (-0.4%) saw the largest declines.

                                  Full Eurozone PPI release here

                                  UK PMI services finalized at 15-month low, stagflation concerns rise

                                    By
                                    ActionForex.com
                                    -

                                    UK PMI Services was finalized at 50.8 in January, slipping from December’s 51.1, marking its joint-lowest level in 15 months. PMI Composite edged up slightly to 50.6, indicating that overall economic activity remains stagnant, with minimal expansion.

                                    According to Tim Moore, Economics Director at S&P Global Market Intelligence, “stagflation conditions appeared to take a firmer hold”, with weak output growth coupled with persistent cost pressures. Input cost inflation accelerated for the fifth consecutive month, reaching its highest level since April 2024.

                                    Renewed decline in new business volumes adds to signs that the UK’s economic outlook remains weak, as firms report softening demand conditions. Business confidence has also taken a hit, with expectations for future activity dropping to their lowest level since December 2022.

                                    The most concerning development is the sharp deterioration in employment trends, as service providers cut jobs at the fastest pace in four years. The “twin perils” of shrinking workloads and rising payroll costs has forced many firms to halt recruitment.

                                    Full UK PMI services final release here.

                                    Eurozone PMI services finalized at 51.3, no major growth leap expected

                                      By
                                      ActionForex.com
                                      -

                                      Eurozone Composite PMI was finalized at 50.2 in January, up from 49.6 in December, marking the first month of economic expansion since August. However, PMI Services Index was finalized at 51.3, down from prior month’s1.6, suggesting that while the services sector remains in growth territory, momentum is fading.

                                      Among individual countries, Spain led the expansion with a Composite PMI of 54.0. Germany’s index climbed to 50.5, hitting an eight-month high, signaling tentative stabilization. Italy remained in contraction at 49.7, while France improved slightly to 47.6.

                                      According to Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, the services sector has been instrumental in preventing a broader economic contraction in the Eurozone. Modest but accelerating new orders and employment offer some optimism that the sector could gain momentum in Q1 2025. However, rising costs in services, particularly due to wage pressures, remain a concern for the ECB.

                                      The services outlook is “modest”, with business expectations declining slightly and staying below historical averages since mid-2024. Political uncertainties in the Eurozone, including Germany’s upcoming elections and France’s fragile government, continue to weigh on sentiment.

                                      “No major growth leaps are expected in this sector for now,” de la Rubia added.

                                      Full Eurozone PMI services final release here.

                                      China’s Caixin PMI services PMI drops to 51.0

                                        By
                                        ActionForex.com
                                        -

                                        China’s Caixin Services PMI slipped to 51.0 in January, down from 52.2 and below expectations of 52.3. PMI Composite also edged lower from 51.4 to 51.1, marking a four-month low, as both manufacturing and services sectors struggled to gain momentum.

                                        According to Caixin Insight Group, while supply and demand conditions showed improvement, services growth lagged behind, pointing to weaker consumer activity.

                                        Wang Zhe, Senior Economist added, “Employment in both sectors fell significantly, and overall price levels remained subdued, particularly factory-gate prices in manufacturing.”

                                        Full China Caixin PMI services release here.

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