Sample Category Title

AUD/USD stays in consolidations below 0.7146 last week and outlook is unchanged. Initial bias stays neutral this week first. Deeper retreat cannot be ruled out, but downside should be contained above 0.6896 support. On the upside, above 0.7146 will resume larger up trend to 100% projection of 0.5913 to 0.6706 from 0.6420 at 0.7213.

In the bigger picture, current development argues that rise from 0.5913 (2024 low) is reversing whole down trend from 0.8006 (2021 high). Further rally should be seen to 61.8% retracement of 0.8006 to 0.5913 at 0.7206. This will remain the favored case as long as 0.6706 resistance turned support holds, even in case of deep pullback.

In the long term picture, rise from 0.5913 is seen as the third leg of the whole pattern from 0.5506 (2020 low). It's still early to judge if this is an impulsive or corrective pattern. But in either case, further rise should be seen back to 0.8006 and possibly above.

USD/CAD extended the consolidation pattern from 1.3480 with another bounce last week. Initial bias remains neutral this week first. While another rise cannot be ruled out, upside should be limited by 55 D EMA (now at 1.3752) to complete the pattern. On the downside, firm break of 1.3480 will resume larger down trend from 1.4791 to 61.8% projection of 1.4791 to 1.3538 from 1.4139 at 1.3365.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen as the pattern extends, to 61.8% retracement of 1.2005 to 1.4791 at 1.3069. For now, medium term outlook will be neutral at best, until there are signs that the correction has completed, or that a bearish trend reversal is confirmed.

In the long term picture, rising 55 M EMA (now at 1.3569) remains intact. Thus, up trend from 0.9056 (2007 low) should still be in progress. However, considering bearish divergence condition M MACD, sustained trading below 55 M EMA will argue that the up trend has completed with five waves up to 1.4791, and turn medium term outlook bearish for correction to 38.2% retracement of 0.9056 to 1.4791 at 1.2600.

GBP/JPY edged lower to 207.20 last week but quickly recovered. Initial bias stays neutral this week first. On the downside, break of 207.20 will extend the corrective fall from 214.98 to 38.2% retracement of 184.35 to 214.98 at 203.27. Nevertheless, firm break of 209.68 will turn bias back to the upside for stronger rebound first.

In the bigger picture, considering the break of 55 D EMA (now at 209.96), a medium term top could be formed at 214.98. Deeper correction would be seen, but downside should be contained by 38.2% retracement of 184.35 to 214.98 at 203.27. On the upside, break of 214.98 will resume larger up trend from from 123.94 (2020 low), and target 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90.

In the long term picture, up trend from 116.83 (2011 low) is in progress. Next target is 251.09 (2007 high). This will remain the favored case as long as 55 M EMA (now at 184.02) holds.

EUR/JPY's extended rebound last week suggests short term bottoming at 180.78. Fall from 186.86 might have completed after hitting 38.2% retracement of 172.24 to 186.86 at 181.27. Initial bias stays mildly on the upside this week for retesting 186.22/86 resistance zone. However, sustained break of 181.27 will argue that fall from 186.86 is correcting whole up trend from 154.77, and bring deeper decline.

In the bigger picture, considering bearish divergence condition in D MACD and break of 55 D EMA, a medium term top could be formed at 186.86 already. Deeper correction would be seen but downside should be contained by 38.2% retracement of 154.77 to 186.86 at 174.60 to bring rebound. Meanwhile, firm break of 186.86 will resume larger up trend to 78.6% projection of 124.37 to 175.41 from 154.77 at 194.88 next.

In the long term picture, up trend from 94.11 (2021 low) is in progress. Next target is 138.2% projection of 94.11 to 149.76 (2014 high) from 114.42 (2020 low) at 191.32. This will remain the favored case as long as 154.77 support holds.

EUR/GBP breached 0.8744 resistance a few times last week but failed to sustain above there. Initial bias remains neutral this week first . On the upside, decisive break of 0.8744 should confirm that fall from 0.8863 has completed as a correction at 0.8661. Further rise should then be seen back to retest 0.8663 high. On the downside, break of 0.8685 support will turn bias back to the downside for 0.8611. Sustained break of 38.2% retracement of 0.8221 to 0.8663 at 0.8618 will carry larger bearish implications and turn outlook bearish.

In the bigger picture, rise from 0.8221 medium term bottom (2024 low) is seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8632) should confirm that this corrective bounce has completed. In this case, deeper fall would be seen back to 0.8201/21 key support zone. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.

In the long term picture, price action from 0.9499 (2020 high) is seen as part of the long term range pattern from 0.9799 (2008 high). Range trading should continue between 0.8201 and 0.9499, until there is clear signal of imminent breakout.

EUR/AUD stayed in range above 1.6620 last week as consolidations continued. Initial bias stays neutral this week first and further fall is expected. Decisive break of 1.6620 will resume the larger decline from 1.8554 to 138.2% projection of 1.8554 to 1.7245 from 1.8160 at 1.6351 next. However, firm break of 1.6830 resistance will indicate short term bottoming, and bring stronger rebound.

In the bigger picture, fall from 1.8554 medium term top is seen as reversing the whole up trend from 1.4281 (2022 low). Deeper decline should be seen to 61.8% retracement of 1.4281 to 1.8554 at 1.5913, which is slightly below 1.5963 structural support. For now, risk will stay on the downside as long as 1.7245 support turned resistance holds, even in case of strong rebound.

In the longer term picture, rise from 1.4281 is seen as the second leg of the pattern from 1.9799 (2020 high), which is part of the pattern from 2.1127 (2008 high). Current development argue that it has already completed at 1.8554. Sustained trading below 55 M EMA (now at 1.6603) will confirm this bearish case, and pave the way back towards 1.4281.

EUR/CHF stayed in range trading above 0.9092 low last week. Current development suggests that 0.9092 is already a short term bottom, and slightly lengthier consolidation is underway. Strong rebound might be seen to But upside should be limited by 38.2% retracement of 0.9394 to 0.9092 at 0.9207. On the downside, firm break of 0.9092 will resume larger down trend.

In the bigger picture, down trend from 0.9928 (2024 high) is still in progress with falling 55 W EMA (now at 0.9326) intact. Next target is 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. Outlook will stay bearish as long as 0.9394 resistance holds, in case of rebound.

In the long term picture, EUR/CHF is also holding well inside long term falling trend channel. Down trend from 1.2004 (2018 high) is still in progress. Outlook will continue to stay bearish as long as falling 55 M EMA (now at 0.9739) holds.

Canadian Highlights

• The U.S. Supreme Court decision to strike down the IEEPA tariffs offers limited near-term relief for Canada, as ample uncertainty remains.
• Canada’s trade diversification thus far relies heavily on gold and oil, raising questions about whether it is sustainable.
• Focus remains on the CUSMA review process, with the resulting uncertainty expected to hang over the economy.

U.S. Highlights

• A Supreme Court decision on Friday struck down a large chunk of President Trump’s second-term tariffs.
• January FOMC minutes reinforced a shift in the balance of risks toward inflation, with policymakers signaling little urgency to resume rate cuts.
• GDP growth cooled to 1.4% at the end of 2025, reflecting a sharp contraction in federal outlays. Core PCE inflation rose to 3.0% y/y in December, remaining well above target.

Canada – IEEPA Tariff Struck Down, But Uncertainty Lingers

The biggest piece of news this week came Friday morning as the U.S. Supreme Court struck down the U.S. administration’s use of IEEPA legislation to impose tariffs. These duties were 35% on non-CUSMA compliant goods flowing from Canada to the United States. The market reaction was relatively muted as the decision was expected given the skepticism expressed by justices in oral arguments in November. Canadian equities are up this week as rising commodities prices have buoyed prospects for the energy sector. Meanwhile, bond yields were little changed on the week as the stream of economic data left the narrative on the country’s economic prospects relatively unchanged.

For Canada, the removal of the IEEPA tariffs represents some limited near-term relief, but it would be optimistic to assume this tariff relief is permanent or provides a sustainable upside risk to growth. First, the administration is likely to use other tariff tools, including the possibility to apply 50% duties on countries for trade practices deemed to “discriminate” against the U.S. We expect some new form of tariff regime will be established. Moreover, the IEEPA tariffs only applied to the subset Canadian goods that were not compliant with CUSMA rules of origin and that were not covered under Section 232 tariffs (autos, steel, aluminum, etc.), leaving many goods unaffected by the decision.

This week’s trade data gives some indication of the tariff impact. Exports to the U.S. were down $30.9 billion through 2025, of which $15.5 billion were in categories of goods affected by Section 232 tariffs. Of the remaining $15.4 billion decline, $13.5 billion is attributable to a decline in oil exports (which have been weighed down by lower prices and refinery outages in the U.S.). The decline in exports of goods that are not oil, gold, or covered by Section 232 was roughly $3.8, down a meagre 1.4% relative to last year.

So, the focus for Canada remains the trade landscape and ongoing efforts to diversify its trade partnerships. As of December, Canada shipped roughly 68% of its goods exports to the U.S. The figure is down significantly from the 76% registered in December 2024, roughly unchanged since October. The 68% share is similar to the export composition during the pandemic, and a level of interaction not seen in over 40 years (Chart 1).

The rotation is underway, but it’s not all good news. Exports that are being negatively affected by U.S. tariffs are struggling to find new markets. Much of Canada’s success on the trade front has relied on two commodities; gold and oil. Total exports to the U.S. are down $30.9 billion through 2025, while flows to the rest of the world are up $28.8 (Chart 2). However, strip out the effects of these two commodities and the declines to the U.S. register $19.3 billion with a smaller $10.5 billion offset from the rest of the world.

This lack of new export markets for affected industries and the prominent role of commodities prone to large price changes does little to assuage concerns about the long-term sustainability of the current export mix, and the prospects for Canadian industry. Looking forward, the CUSMA review is set to pick up steam, and the resulting uncertainty is expected to hang over the economy.

U.S. – Tariff Uncertainty Makes a Comeback

Financial markets were largely rangebound for much of this week as investors digested the January FOMC minutes and an important run of macro data. Early market reaction to the Supreme Court’s decision to strike down a large chunk of President Trump’s second term tariffs appears broadly positive, with the S&P 500 is up 0.9% from last week’s close at time of writing.

The Supreme Court ruling found that the law that underpins many of Trump’s global tariffs – the International Emergency Economic Powers Act (IEEPA) – “does not authorize the President to impose tariffs”. The decision did not rule on how or if tariffs that have already been paid should be refunded – a potentially messy process. We expect the U.S. administration will act quickly to recreate its tariff regime using justification from other statutes. For more on this, see our commentary here.

Prior to the tariff decision, the January FOMC minutes dominated the financial market limelight. Two key takeaways stood out from the minutes. First, the balance of risks has shifted away from labor market weakness and toward inflation staying uncomfortably high. Driving home this point was the fact that most committee members judged that “downside risks to employment had moderated, while the risk of more persistent inflation remained”. Importantly, this assessment occurred before the release of last week’s delayed payrolls report, which showed a firmer labor market than many feared. Second, most participants judged that the current policy rate is closer to neutral rather than restrictive. That assessment diminishes the urgency to resume rate cuts.

This week’s macro data broadly echoed the tone of the minutes, even as growth was weaker than expected at the end of 2025. Fourth-quarter GDP growth came in at 1.4% annualized in the first estimate, a notable slowdown from 4.4% in the third quarter (Chart 1). The disappointment was driven largely by a steep pullback in federal outlays, reflecting the 43-day government shutdown. Importantly, final sales to private domestic purchasers rose 2.4%, underscoring the resilience of underlying private sector demand despite the headline slowdown.

The December personal income and outlays report added further color to the economic backdrop at year‑end. Real consumer spending was up just 0.1% m/m in December, reflecting a pullback in goods spending. Inflation pressures, meanwhile, re‑accelerated at the margin. Core PCE inflation rose to 3.0% y/y, remaining well above target (Chart 2).

All told, even after accounting for this morning’s miss on Q4 growth, we still feel that the U.S. economy has entered 2026 with considerable momentum. That said, it appears that 2026 may start off in similar fashion to 2025 after all – with elevated tariff uncertainty. This reinforces the notion that the Fed will remain on hold for the time being, as it waits for the policy fog to clear.

Summary

• As expected, the Supreme Court struck down the president's authority to levy tariffs under the International Emergency Economic Powers Act (IEEPA). President Trump was quick to announce new tariffs. The bottom line is these actions did not deliver complete relief to affected importers, but it did ease their burden even if refunds will take awhile.
• The ruling invalidates the legal basis for IEEPA tariffs, but it does not trigger automatic refunds. Importers must pursue refunds individually through established claims processes.
• Potential refunds are large, but unlikely to be fully realized. Roughly $264B in tariff revenue was collected last year, and we estimate about half—around $130B—was collected under IEEPA. The true total may be somewhat higher once January–February collections are included, but refunds will be handled case by case, meaning not all IEEPA tariff revenue is likely to be returned.
• Any refunds will arrive gradually. Payments are expected to trickle in over months, if not years, and should be delivered directly to the importers who originally paid the tariffs.
• The administration retains the ability to re‑impose tariffs, but nothing grants the President the same broad power with immediate effect as IEEPA would have.
• President Trump announced a 10% global tariff under Section 122 of the Trade Act of 1974 "effective immediately". He also announced starting Section 301 investigations.
  • Section 122, Trade Act of 1974: President can impose tariffs up to 15% for 150 days to address balance-of-payments issues. Tariffs can be extended indefinitely with Congressional approval. No federal investigation required.
  • Section 301, Trade Act of 1974: U.S. Trade Representative can impose tariffs for four years, under the President's direction, if it finds unjustifiable, unreasonable or discriminatory action against U.S. businesses and/or a violation of trade agreements. Tariffs may be imposed indefinitely, if continuation is requested and extended every four years.
• This action keeps the 10% baseline global tariff effectively active, but lowers the higher IEEPA tariff burden for countries exposed to 'reciprocal' tariffs under IEEPA. These actions result in a lower total tariff burden. We estimate the average U.S. effective tariff rate is now around 13% in the wake of today's actions, rather than the ~16% based on policy as of yesterday.
• Tariffs weighed on U.S. goods imports last year as firms were cautious about committing to foreign sourcing amid unsettled and frequently changing tariff policy. Some shifts in trade flows signal some rejiggering of sourcing, though permanent effects may be overstated thus far.

The Court Ruling is Something Short of a Complete Policy Reset

The Supreme Court’s decision to strike down the administration’s broad‑based tariffs imposed under the International Emergency Economic Powers Act (IEEPA) marks a meaningful legal turning point, but not a clean policy reset. The ruling invalidates reciprocal and fentanyl‑related tariffs enacted under IEEPA, opens the door for importers to seek refunds potentially totaling around $130 billion, and sharply curtails the president’s authority to impose sweeping tariffs without involvement.

What the decision does not do is remove tariffs from the trade policy landscape. Alternative statutory paths remain available to the administration, while none confer the same breadth or immediacy as IEEPA. In fact, President Trump announced today that all existing Section 232 and 301 tariffs remain in effect, and a 10% global tariff takes effect immediately under Section 122. He also announced the start of Section 301 investigations.

Navigating the Detour: Trade Flows in a Still-Tariffed World

The experience of U.S. importers over the past year makes clear that tariffs constrained trade less by raising costs outright than by injecting persistent uncertainty into sourcing decisions.

The U.S. collected nearly $265 billion in tariff revenue last year, more than three times the amount collected in 2024. Measured against total imports that means the realized average effective tariff rate rose to roughly 8% last year, up from just under 3% the year prior. With a full year of data now available, the key question is how this dramatic increase in tariffs ultimately affected U.S. import behavior.

At first glance, the answer appears counterintuitive. Total goods imports increased last year, rising 4.3% above 2024 levels. But, that top line figure obscures important underlying weakness. Once gold‑related categories are excluded, the annual gain in goods imports is cut roughly in half, suggesting the headline strength overstates the true momentum in import growth.

A closer look reveals that import growth was highly concentrated in a narrow set of categories, particularly high‑tech goods. Imports of computers, computer accessories, communications equipment, and semiconductors surged 35% over the year, consistent with other indicators showing businesses prioritizing investment in all things tech being viewed as critical to future competitiveness. While these categories were not the only contributors to import growth, they were decisive. Excluding them entirely, goods imports fell 3.6% last year (Figure 1). The lag in underlying imports suggests firms were cautious about committing to foreign sourcing amid unsettled and frequently changing tariff policy.

Supply Chains in Motion: Structural Shift or Tactical Workaround?

Tariffs also coincided with notable shifts in the geographic composition of U.S. imports. As shown in Figure 2, imports from China declined sharply, while shipments from other Asian economies increased. Figure 3 highlights the countries that gained—and lost—share of U.S. imports over the year. In particular, Taiwan, Vietnam and Thailand more than offset the decline in imports from China, at least in aggregate terms.

Whether this pattern reflects a genuine reorientation of global supply chains or merely a rerouting of trade flows is difficult to determine with certainty; it could well be a little of both. Source country does not necessarily imply source product either, and there is precedent for firms adjusting final assembly locations to mitigate tariff exposure. Following the first U.S.–China trade war in 2017–2019, for example, Chinese firms established or expanded production facilities in Southeast Asia, blurring the distinction between diversification and transshipment. The current data likely reflect some combination of both dynamics.

Not all country‑level shifts appear structural. Some look temporary and category‑specific. Imports from Switzerland, for instance, were driven largely by a surge in gold‑related inflows, while imports from Ireland were boosted by pharmaceutical products—a category in which Ireland accounts for roughly 40% of total U.S. imports. In both cases, demand appears to have been at least partially pulled forward ahead of potential tariff changes, and both series are historically volatile.

Cautious Adjustment, Not a Clean Break

Taken together, the data suggest that businesses are indeed reassessing supply chains in response to historically high tariffs—but the adjustment process remains incomplete. Rather than a wholesale retreat from global sourcing, the pattern so far is one of caution, selectivity and timing shifts. We repeatedly hear this anecdotally in our discussions with banking clients that source materials from overseas. Firms are willing to import when the strategic value is high, but understandably reluctant to expand exposure broadly amid policy uncertainty.

With underlying imports suppressed by hesitation rather than capacity constraints, goods imports may be ripe for a rebound in coming months, even despite tariffs. Lean inventories require replenishment whether or not uncertainty persists. Headline import growth is likely to remain a poor guide to the true state of trade, masking weakness beneath a narrow set of resilient—and strategically important—categories. The Supreme Court ruling doesn't reset trade policy, and President Trump's swift actions signal tariffs are here to stay even if they are adjusted in coming months.

Summary

• Canada Q4 GDP: Negative Q4 GDP Sets the Stage for a BoC Cutting Restart • (02/27)
• Australia January CPI: A Soft(er) Print Ahead, Not a Green Light for March Hike • (02/25)
• India Q4 GDP: Disregard a Q4 Slowdown, Solid Growth Ahead • (02/27)
• Mexico Biweekly CPI: Banxico Flirting with Policy Error • (02/24)

G10

Canada GDP • Friday

Negative Q4 GDP Sets the Stage for a BoC Cutting Restart

We expect Q4-2025 GDP to undershoot consensus, contracting by 0.8% quarter-over-quarter (SAAR) following an exceptionally strong Q3. Quarterly growth has been volatile, reflecting large swings in trade and inventories, and Q4 is likely to mark a reversal. We see a pullback in exports alongside a moderation in inventory accumulation as the key drags on activity. On a monthly and year-on-year basis, we look for GDP growth of 0.1% and 0.4%, respectively. While growth through 2025 has proven more resilient than anticipated—supported by solid domestic demand and inventory dynamics—we expect momentum to fade in 2026. Rising trade tensions should weigh on business investment, while a softer labor market increasingly constrains household spending. Consensus expectations of 1.0%-1.5% growth in 2026 (roughly in line with potential) implicitly assume a benign outcome from USMCA renegotiations, either a muddle-through status quo or a successful renewal. More adverse scenarios, including materially higher tariffs or a USMCA withdrawal, would likely push annual growth into negative territory, depending on the severity of the shock. Against this backdrop, the balance of risks to growth remains clearly skewed to the downside. Combined with ongoing disinflation, this reinforces the asymmetry in Bank of Canada (BoC) policy toward easing. We expect the BoC to restart rate cuts in Q2, potentially as early as the April meeting, coinciding with the release of a new Monetary Policy Report and updated forecasts.

Australia CPI • Tuesday

A Soft(er) Print Ahead, Not a Green Light for March Hike

For next week's January inflation print, we expect headline CPI to ease slightly to 3.6% year-over-year (vs. 3.7% consensus), with trimmed mean CPI holding at 3.3%, in line with consensus. Even in the event of an upside surprise, we do not see this as sufficient to raise the likelihood of a near-term RBA hike. We continue to expect the next rate increase in May to 4.10% and see greater downside risk to the hiking path. The reason for this conviction comes from the fact that inflation pressures are increasingly driven by policy-related and regulated components rather than competitively priced market goods, which should limit the RBA’s scope to tighten further. Consistent with this view, at the RBA’s most recent monetary policy meeting where they hiked rates, their forecasts showed headline and trimmed mean inflation peaking in Q2-2026, while the Cash Rate was held at 3.85%, with further hikes only anticipated beyond that point.

EMs

India Q4 GDP • Friday

Disregard a Q4 Slowdown, Solid Growth Ahead

We expect India's economy softened at the end of last year as tariff uncertainty disrupted local activity. But now that a U.S.-India trade deal, as well as an EU-India trade agreement, has been reached, some of that uncertainty should be lifted and activity can be supported going forward. Point being, Q4 GDP data may show an economic deceleration, but we would view these data as backward-looking at this point. On a go-forward basis, India can be one of the top performing major economies in 2026. Reduced trade uncertainty helps, which combined with the lagged effects of prior Reserve Bank of India (RBI) easing, we believe India's economy can grow ~7% this calendar year. Reduced trade and geopolitical uncertainty as well as improved growth prospects should also be an input into RBI policymakers monetary policy decisions. Policymakers opted to keep rates unchanged at the February meeting, and while the balance of risk is tilted toward additional easing later this year, we believe rates will be left unchanged for an extended period of time as growth recovers and the economy reflates. Perhaps the most interesting dynamic in India is the path of the rupee. INR has faced persistent depreciation pressure despite broad-based U.S. dollar depreciation. RBI FX intervention has done little to prevent or materially disrupt INR weakness, while constant intervention has made India's external buffers less robust. To be clear, the RBI has adequate FX reserves, so running out of firepower is not necessarily an issue. But with inflation below target, manufacturing becoming more of a focus and FX reserves being drawn down, we often wonder why the RBI does not let INR be a more market-driven currency. For us, should current FX policy continue to be pursued, INR is likely to remain under pressure for the foreseeable future and USDINR will consistently set new all-time highs.

Mexico Biweekly CPI • Tuesday

Banxico Flirting with Policy Error

Financial markets continue to price near-term Banxico easing, and next week's biweekly CPI may offer additional insight into whether market participants are getting ahead of themselves or accurately predicting rate decisions in Mexico. Rather than offer a view on the direction of biweekly inflation data, we wish to highlight that should data be consistent with rate cuts and Banxico indeed ease monetary policy in March and possibly again later this year, we would view those decisions as taking Banxico to the edge of a policy mistake. A few more Banxico rate reductions would make the Fed-Banxico rate spread historically narrow and not the most appealing carry profile to sustain capital flows into Mexico. Also, Banxico has limited FX reserves and, at least historically, has not opted to purchase FX reserves to build external buffers. Shock events are common, and Mexico is potentially exposed to a material shock scenario this year: USMCA negotiations. For now, we believe the USMCA re-negotiation will not cause much damage to Mexico, but the risk of an unfavorable trade agreement (or perhaps no North America trade agreement) is elevated. Additional Banxico rate cuts do not offer much room for error in Mexico and leaves MXN vulnerable to a trade-related shock, or any other external shock that may materialize. Our base case is for MXN to outperform Latam peer FX on political stability, but if political stability is upended, MXN can experience a sharp selloff that takes USDMXN back to a 20-handle quick.