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Australia’s monthly CPI for January came in hotter than expected, reinforcing expectations of further tightening from the RBA. Headline inflation held unchanged at 3.8% yoy, above the 3.7% consensus and marking the joint highest reading since mid-2024.

More concerning for policymakers, trimmed mean CPI rose from 3.3% yoy to 3.4%, also exceeding forecasts and standing at its highest level since Q3 2024. Core inflation has now been at or above 3% since July 2025, remaining clearly outside the RBA’s 2–3% target band.

Housing (+6.8%), food and non-alcoholic beverages (+3.1%), recreation and culture (+3.7%), were the largest contributors to annual price pressures.

Markets had already leaned toward a May rate hike, and today’s data does little to challenge that view. Some economists argue the RBA may be “a little bit behind the curve,” risking a scenario where inflation becomes entrenched and requires more forceful tightening later. With price pressures proving persistent, another rate increase is increasingly viewed as close to inevitable.

Full Australia monthly CPI release here.

Key Highlights

• Ethereum started a fresh decline after it faced rejection near $2,150.
• ETH could extend losses and revisit $1,750 or even $1,600.
• Bitcoin price gained bearish momentum after it broke the $65,500 support.
• XRP remained in the red zone and might dive to $1.20.

Ethereum Technical Analysis

Ethereum failed to stay above $2,000 and started a fresh decline. ETH traded below $1,950 and $1,920 to reenter a bearish zone.

Looking at the daily chart, the price failed to clear the 23.6% Fib retracement level of the downward move from the $3,400 swing high to the $1,739 low. It trimmed gains and traded below a bearish pattern with support at $1,920 on the daily chart.

On the downside, the bulls might be active near $1,750 and $1,740. The main support is now forming near $1,650, below which the price could slide toward $1,620. Any more losses might call for a move toward $1,500.

On the upside, the bears might remain active near $1,920. The first key resistance could be near the $2,150 level. The main hurdle for the bulls sits near $2,550 and the 50% Fib retracement level of the downward move from the $3,400 swing high to the $1,739 low.

A close above $2,550 could encourage the bulls to push the price above a key bearish trend line at $2,750 and the 100-day simple moving average (red).

Looking at Bitcoin, there was another bearish reaction, and the bears were able to push the price below the $65,500 support zone.

Economic Releases

• US Import Price Index for Dec 2025 (MoM) – Forecast +0.2%, versus +0.4% previous.
• US Export Price Index for Dec 2025 (MoM) – Forecast +0.2%, versus +0.4% previous.
• US Retail Sales for Dec 2025 (MoM) – Forecast +0.4%, versus +0.6% previous.

Boston Fed President Susan Collins indicated that the Fed is likely to keep interest rates steady “for some time”, pointing to improving labor market conditions and unresolved inflation pressures. In remarks delivered at at event overnight, she said employment data show “at least some more signs” of stability.

Collins argued that after 175 basis points of easing, policy is now only mildly restrictive and may already be close to neutral. Given that backdrop, she said it is “quite likely” the current rate range will remain "appropriate" while officials seek "more evidence" that inflation is firmly moving back toward 2%.

Turning to trade policy, Collins noted that the Supreme Court’s ruling against sweeping tariffs injects fresh uncertainty into the outlook. She warned that if companies have already passed higher import costs through to consumers, those price increases are unlikely to be reversed, potentially keeping inflation elevated.

Summary

China's rise to the world's largest economy is again delayed. We now estimate China overtakes the U.S. to become the largest economy in the world in 2049, pushed out from a prior estimate of early 2040s. Despite last year's resilience, the delay is a product of deteriorating underlying fundamentals that determine potential growth. China's population is smaller and older, deflation pressures are persistent, and rising private and public sector leverage re-introduces "hard landing" risks in China.

At the same time, fundamentals in the U.S. are on an improving trajectory and diverging from underlying trends in China. Just as worsening fundamentals will keep China stuck in second place for a longer period of time, improvements across potential growth indicators should set a solid foundation for long-term U.S. economic growth. "Hard landing" risks in China are not as apparent in the U.S., which also keeps downside risks centered in China.

Embedded in our 2049 estimate is also the view that the Chinese renminbi will strengthen going forward. We continue to believe Chinese authorities have fundamentally shifted the way FX policy is considered and set with a preference for financial stability as opposed to currency weakness. FX policy can change as domestic and external conditions change, and while our renminbi assumption is more constructive relative to FX forwards, should the renminbi trend in line with forward pricing, China's ascension to the top of the economic pedestal could come earlier than we expect, despite imbalances and structural impediments to sustainably high growth rates.

Demographics, deflation and debt are China's most pressing challenges. Each of which have contributed to slower growth over the years, and each of which have deteriorated recently. So much so that demographics, deflation and debt are likely to apply even more downward pressure on China's growth than we previously anticipated. On demographics, China's problems are known, although perhaps not fully appreciated is how China's population is now shrinking more rapidly (Figure 1) and aging quicker (Figure 2), according to the United Nations (UN). The UN now expects China's population to more than halve over the coming decades, a significantly quicker decline than prior forecasts. A similar dynamic exists for age as the UN now estimates China's population is getting older quicker than expected.

All else equal, a smaller and older labor force equals slower potential growth, and while the U.S. is far from setting the standard for ideal demographics, U.S. labor force trends are on a better trajectory than those in China. Population size is set to grow in the U.S. and that population is set to age at a less rapid pace. At least from a demographics' perspective, long-term economic growth should be more resilient in the U.S. than China, and population trends are a key input into our view that China's timetable for overtaking the U.S. is pushed out.

Diverging inflation trends between the U.S. and China also play a role in China lagging further behind the United States. We can point to multiple factors that generate deflation pressures in China (e.g., low consumer confidence, high household savings, sluggish domestic demand, real estate sector collapse), although just as influential are local manufacturers cutting prices to clear excess inventory (Figure 3). China's export price index is down ~15% from the peak in 2023, and while anti-involution policies have helped put a floor underneath prices, export prices remain suppressed.

Front-running tariffs catapulted China's share of the global export market higher, but if China wants to retain current market share, prices may be kept low and deflationary pressures could linger. U.S. inflation trends diverge from those in China (Figure 4). While above-target inflation in the U.S. can generate economic issues, for now, strong U.S. GDP growth combined with inflation pressures widens the gap between the U.S. and China.

Historically, an overleveraged private sector, not excessive public sector debt, has preceded rapid economic slowdowns and acted as catalysts for financial crises (e.g., Japan 1980s, EM Asia 1990s, U.S. 2000s). For China, the most pressing leverage problems still exist in the private sector, and after multiple failed attempts at deleveraging, China's private sector debt problems are intensifying. For the past few years, China's private sector debt burden has been rising and is approaching all-time highs. Corporate debt is likely to rise further now that "three red lines" policies have been relaxed, a decision that can not only pressure long-term growth rates but also re-introduces China "hard landing" financial crisis scenarios.

The trajectory of China's private sector debt burden is diverging from trends in the United States (Figure 5), leaving the U.S. economy on a more stable foundation for long-term growth. Whether a crisis unfolds in China or not, diverging private debt trends keep "hard landing" financial risks top of mind in China not the U.S., leaving downside risks to long-term growth more present in China. Also, for all we hear about U.S. government debt, China's public sector debt burden is larger, at least when adjusting for local government financing vehicles (Figure 6). Should private sector leverage issues spill over into the public sector, China has more acute issues, a dynamic that also delays China from catching up to the U.S., in our view.

The IMF suggests China may never overtake the United States... As far as comparing our growth and inflation outlooks, the IMF is more pessimistic on China's growth prospects, at least over the Fund's forecast horizon (i.e., the next five years). We—as well as the IMF—expect China's economy to be unable to sustain 5% growth rates going forward, but the IMF expects a more rapid economic deceleration. At the same time, the Fund is more optimistic that China will be able to reflate its economy to 2% in the coming years than we are. Although taken together, IMF nominal GDP forecasts are less constructive than how we see China's economy evolving. However, the IMF takes a less optimistic view on U.S. nominal GDP growth relative to ours. We both believe U.S. nominal GDP will hold steady going forward as opposed to trend deceleration in China, the IMF just holds a less optimistic definition of steady. If we extrapolate the IMF's relative views on China and the U.S. over a longer-term horizon, the IMF is inherently, based on our longer-term extrapolations, saying China will never overtake the U.S. as the world's largest economy.

...but the renminbi is the larger swing factor for China ascending to the world's largest economy. IMF forecasts, however, assume the Chinese renminbi holds steady around current levels for the foreseeable future. While the Chinese renminbi is not a particularly volatile currency, our base case 2049 estimate assumes China's currency gradually strengthens going forward as we believe China's FX policy is based on currency strength to promote financial stability (perhaps due to "hard landing" risks rising) as opposed to a historical preference for RMB weakness to support export competitiveness.

In our base case 2049 scenario, we assume RMB strengthens 1% per year going forward. We made this same assumption in our prior estimate for when China could overtake the U.S., so no change that distorts the analysis is coming from FX. We believe worsening underlying fundamentals, not RMB, are the driving force of China's delayed rise.

But while we assume RMB strength going forward, worth noting is that we still hold a less optimistic view on RMB relative to FX forward pricing. If we were to incorporate our baseline GDP and CPI forecasts with current RMB forward pricing, China could overtake the U.S. as early as 2038. Even if we were to use the IMF's GDP and inflation forecasts and adjust for FX forwards, China becomes the world's largest economy in 2039. In a scenario where the renminbi weakens, China moves further away from overtaking the United States.

Point being, just as much as underlying fundamentals play a role, so does China's currency. Typically, currency performance moves in line with economic fundamentals, but not necessarily when a managed currency regime similar to China's is in play. Granted, FX policy is not static and can change based on external or domestic factors, but if Chinese authorities are committed to financial stability and promoting the renminbi as a world's reserve currency at a time when the dollar is broadly depreciating, China's ascension could come a bit quicker even if underlying fundamentals are being eroded.

USDJPY jumped 0.9% on Tuesday after Japan PM Takaichi raised concerns about BoJ’s further interest rate hikes that collides with wide market expectations for increase in borrowing cost by 1% in the first six months of 2026 and the first action expected as early as April.

Fresh uncertainty about anticipated monetary policy trajectory deflated yen, which fell to the lowest in two weeks against the US dollar on Tuesday.

Tuesday’s rally generated signal of bullish continuation after rally from 152.26 Feb 12 low) paused for two-day shallow pullback, extension above Fibo 61.8% of 157.65/152.26 bear-leg (155.60) and cracking the base of daily Ichimoku cloud (156.13) adding bullish signals.

Bulls slowed after testing cloud base (seen by traders as good take-profit level after today’s significant rally), with overbought stochastic and north-heading 14-d momentum still holding under the centreline, setting stage for a pause.

Firmer technical picture and supportive fundamentals suggest that bulls may take a breather for consolidation and positioning for fresh attack at daily cloud (which is quite thick and may provide further headwinds), with stronger penetration into cloud to fuel hopes of full retracement of 157.65/152.26 fall.

Broken Fibo 61.8% (155.60) offers immediate support ahead of more significant 154.95 level (100DMA / broken Fibo 50%).

Res: 156.13; 156.38; 157.00; 127.40
Sup: 155.60; 154.95; 154.73; 154.32

Dow Jones: ⬆️ Buy

• Dow Jones reversed from support zone
• Likely to rise to resistance level 50500,00

Dow Jones index recently reversed up from the support zone between the key support level 48760,00 (which has been reversing the price from December) and the lower daily Bollinger Band.

This support zone was further strengthened by the support trendline of the daily up channel from December.

Given the strong daily uptrend, Dow Jones index can then be expected to rise to the next resistance level 50500,00 (which stopped earlier impulse wave 1).

AUD/USD experienced a tug-of-war session on Tuesday as market participants navigated a complex landscape of hawkish domestic policy expectations and rising global trade uncertainty.

The AUD/USD pair hovered around the 0.7040 – 0.7070 region, struggling to find a clear directional break after failing to sustain its recent push toward the 0.7100 handle. This seems to be the trend at present and has persisted since February 12.

The Aussie did manage to recover some of Monday's losses despite a resilient US Dollar which received a boost from some hawkish Fedspeak.

Let us take a look at some of the factors affecting AUD/USD at present.

What is affecting AUD/USD at the moment

In my previous article I looked at the possibility of a pullback for AUD/USD. Now while the pair has edged its way lower, it has been a real grind. The downside has well and truly been capped at this stage.

Part of the reason could be a hawkish RBA. Following the Reserve Bank of Australia’s (RBA) recent hike to 3.85%, policymakers have signaled that the battle against inflation is far from over. The RBA’s technical assumption of approximately 60 basis points of additional hikes this year has fundamentally shifted the AUD’s outlook from bearish to cautiously constructive.

Now this is even more pertinent given that Australian CPI data will be released shortly.

Expectations heading into the Australian CPI release are for a sticky print. Markets are expecting a 3.7% YoY, the narrative of persistent price pressures continues to provide a "yield floor" for the Aussie.

Beyond inflation data, a stable outlook for the Chinese economy is also underpinning the Aussie.The People’s Bank of China (PBoC) kept its Loan Prime Rates (LPR) unchanged, reinforcing a "stability over stimulus" approach. This provided a neutral anchor for the AUD, preventing a steeper sell-off but failing to provide the "rocket fuel" needed for a breakout.

The CPI data coupled with tariff risk will likely be the catalyst for the next move in AUD/USD. Markets are closely watching the upcoming State of the Union (SOTU) speech and further tariff rhetoric.

Any escalation in trade tensions typically drives "risk-off" sentiment, which favors the US Dollar over the Aussie.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Analysis - AUD/USD

From a technical point of view, AUD/USD has been range-bound for the past two weeks.

Traders will be hoping that the CPI print could shake the Aussie dollar back to life and make a move beyond the 0.7100 handle.

The 0.7100 has become a hurdle in a way over the past two weeks.

The pair first needs to find acceptance above this level if bulls are finally ready to take control

A break to the downside really needs to first clear the 100-day MA before recent lows at 0.70300 comes into focus.

AUD/USD Daily Chart, February 24, 2026

Source:TradingView.com

• USD/CAD is testing a critical confluence level at 1.3728, a key resistance area.
• The pair's rise is primarily driven by a resurgent US Dollar and stronger-than-expected US economic data.
• Key catalysts to watch are the upcoming Canadian Q4 GDP and US PPI data on Friday, as well as Oil price movements.

The loonie has continued to lose ground against the greenback today reaching a daily high around the 1.3725 handle.

One of the key drivers of late has been a resurgent greenback which has overshadowed the rise in Oil prices. Similar to what we saw last year with the implementation of the liberation day tariffs where the US dollar weakened as a result, the US Supreme Court decision has given the US dollar a boost.

Stronger-than-expected US data, including a rise in Consumer Confidence (91.2 vs. 87.1 forecast) and an uptick in the ADP Employment Change four-week average, also bolstered the greenback.

Technical Analysis - USD/CAD

Back to the technicals though and USD/CAD has made its way back to a key confluence level at 1.3728.

This makes the upcoming sessions key as it could see USD/CAD extend its rally higher or we could be starting a new leg to the downside.

The 1.3728 handle has been a key area of support in 2025 before serving as a key resistance area since the start of 2026.

A break of this level does face further areas of resistance above with the 100 and 200-day MAs resting at 1.3859 and 1.3810 respectively.

If the greenback runs out of steam and we do get a pullback, immediate support rests at 1.3650 before the 1.3500 handle comes into focus.

USD/CAD Daily Chart, February 24, 2025

Source: TradingView.com (click to enlarge)

What catalysts could facilitate the move

The market was in a "wait-and-see" mode regarding domestic Canadian data. Investors were looking ahead to the Q4 annualized GDP report due that Friday, which was expected to provide the next major catalyst for the Canadian Dollar's direction.

From the US we will get PPI data on Friday which could also stoke volatility.

Beyond the data, Oil prices may still have a role to play. If the US-Iran situation heads toward conflict, Oil prices may surge. This in turn could lend the Canadian dollar some support and scupper any attempted move higher.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar.

Markets

The latest AI disruption scare caused losses of 1.05% (S&P) to 1.65% (Dow) for major US indices yesterday evening. European risk sentiment was weak at the onset of trading but key bourses managed to flip those losses to small gains currently amid an empty eco calendar. For Chicago Fed Goolsbee (non-voter this year) it’s not obvious that Fed policy is restrictive. He sees room for more rate cuts, but that requires progress on inflation. The current 3% is not good enough. The labour market and growth don’t seem to be especially fragile. It’s the current majority thinking within the FOMC. As long as the stabilization on the labour market holds, rate cuts are only the outcome in case of goods disinflation. Even Fed board member Waller yesterday suggested that he might flip back from voting in favour of a rate cut to rate stability if the February jobs report is strong. Dallas Fed Logan over the weekend suggested that 30k monthly job gains are currently probably sufficient to keep the job market stable. Looking further, Fed Waller remains on high alert though with firms starting to shed labour after over-hiring post-Covd and with CEO’s telling him that significant job cuts are coming from AI. The US yield curve at the moment shows a very modest bear steepening with the US 2-yr and 10-yr holding above support levels at respectively 3.4% and 4%. EUR/USD is going nowhere at 1.1775. US equity benchmarks open unchanged, but AI disruption headlines hit the screens again as AI giant Anthropic launched new updates to Claude Cowork and released new plugins for workflows related to investment banking and HR. Focus for US investors shifts to this evening’s State of the Union address by President Trump (9pm ET or 3am CET). Three large software firms release earnings this week (Workday, Salesforce and Intuit) in what might also gather more attention than usual given the AI disruption scare.

The biggest moves in FX space came from Asia today. The Chinese yuan extends its strengthening run with USD/CNY trading below 6.90 for the first time since April 2023 amid the trade truce between the two nations. US President Trump is still planning to travel to China from March 31 to April 2 for a meeting with Chinese President Xi Jinping to talk on tariffs, truce, Taiwan and returning to a stable relationship. The Japanese yen suffers ground with USD/JPY one big figure higher after local media reported that PM Takaichi voiced apprehension over more rate hikes in a meeting with BoJ governor Ueda last week. EUR/GBP holds below 0.8750 resistance as BoE governor Bailey left the March rate debate open: "The question for me is have I seen enough further evidence to feel that I'm confident to take that (rate cut) step. It is a genuinely open question at the moment."

News & Views

Business and consumer combined Czech confidence rose from 100.2 to 101.1 to remain among the highest since the last couple of years. A slight decline in consumer views was offset by rising corporate confidence (from 98.6 to 99.8), particularly in the industrial and construction sector. Trade remained unchanged while services fell a couple of points. The consumer gauge fell 0.6 points to a still-solid 107.6. The share of households expecting their financial situation to improve over the next twelve months declined and was only partially offset by a smaller share anticipating the economy to deteriorate and a fewer believing they are financially worse off than in the previous 12 months. The number of respondents who do not plan to make any major purchases in the next twelve months remained almost unchanged. The Czech crown trades little changed on the day. EUR/CZK holds steady around 24.23 and is trapped in a months-long tight sideways trading range.

The Hungarian central bank (MNB) cut the policy rate by 25 bps to 6.25%. It resumed policy normalization after having held the rate steady for almost 1.5 years. The trigger to do so were January inflation figures that brought headline CPI to 2.1% and core inflation to 2.7%. The MNB noted that the January repricing in market services, a flash point for the MNB, was at is lowest level observed in recent years. Combined with the price margin restrictions recently being extended until the end of May, the general improvement in the external cost environment and the pass-through of a stronger forint, the MNB anticipates inflation to remain below the 3% target in coming months. It repeated expectations for a sustained return to 3% by 2027H2 and added that risks to the outlook are balanced. The central bank keeps a slight hawkish edge in the statement by saying that price stability can be achieved through tight monetary conditions. It will as such continue to ensure positive real interest rates. The forint reacted stoic with EUR/HUF hovering around 379.25.