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Daily Pivots: (S1) 152.69; (P) 153.12; (R1) 153.54; More...

No change in USD/JPY's outlook and intraday bias stays neutral. As noted before, fall from 159.44 is seen as correcting the rise from 139.87. Strong support should be seen from 38.2% retracement of 139.87 to 159.44 at 151.96 to bring rebound, at least on first attempt. On the upside above 154.86 minor resistance will turn intraday bias to the upside for recovery. However, decisive break of 151.96 will argue that it is reversing whole rise from 139.87. Deeper decline would then be seen to 61.8% retracement at 147.34.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 151.35) holds. However, sustained break of 55 W EMA will argue that the pattern from 161.94 is extending with another falling leg.

Daily Pivots: (S1) 1.3753; (P) 1.3801; (R1) 1.3858; More...

Intraday bias in GBP/USD remains neutral as consolidations continue below 1.3867 temporary top. Downside should be contained by 1.3641 to bring another rally. Firm break of 100% projection of 1.3008 to 1.3567 from 1.3342 at 1.3901 will pave the way to 161.8% projection at 1.4246, which is close to 1.4248 key structural resistance. However, break of 1.3641 will turn bias to the downside for deeper pullback.

In the bigger picture, rise from 1.0351 (2022 low) is resuming by breaking through 1.3787 high. Further rally should be seen to 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. For now, outlook will stay bullish as long as 1.3008 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.7620; (P) 0.7663; (R1) 0.7686; More….

Intraday bias in USD/CHF remains neutral for consolidations above 0.7603 temporary low. Outlook will stay bearish as long as 0.7792 resistance holds Break of 0.7603 will resume the larger down trend to 0.7382 projection level next. However, firm break of 0.7792 will turn bias back to the upside, for stronger rebound to 0.7860 support turned resistance.

In the bigger picture, larger down trend from 1.0342 (2017 high) is still in progress and resuming. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8184) holds.

Daily Pivots: (S1) 1.3457; (P) 1.3519; (R1) 1.3553; More...

Intraday bias in USD/CAD stays on the downside at this point. Firm break of 1.3538 low will resume whole fall from 1.4971. Next target is 61.8% projection of 1.4791 to 1.3538 from 1.4139 at 1.3365. On the upside, above 1.3607 minor resistance will turn intraday bias neutral and bring consolidations, before staging another fall.

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, and break of 1.3538 will target 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.

Daily Pivots: (S1) 0.6981; (P) 0.7038; (R1) 0.7106; More...

A temporary top is firmed at 0.7093 in AUD/USD with current retreat. Some consolidations would be seen but risk will stay on the upside as long as 55 4H EMA (now at 0.6905) holds. Above 0.7093 will extend larger up trend to 100% projection of 0.5913 to 0.6706 from 0.6420 at 0.7213 next. Nevertheless, break of 55 4H EMA will confirm short term topping, and bring lengthier consolidations before rally resumption.

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.

Dollar is consolidating within a narrow range today, reflecting a temporary balance between supportive near-term developments and persistent longer-term headwinds. Volatility has subsided, but price action lacks the conviction typical of a durable turnaround.

A sharp pullback in precious metals has played a key role in easing pressure on the greenback. Gold has retreated below 5,200 after printing fresh record highs above 5,500, with traders locking in gains after a steep and extended rally. That said, the broader trend in Gold remains intact. The correction appears technical in nature, offering relief to Dollar without undermining the longer-term appeal of hard assets as hedges against policy uncertainty. Equity markets also contributed to a slightly more cautious tone. Asian stocks traded lower following a brief US selloff, led by a sharp decline in Microsoft shares. However, broader US indexes stabilized quickly, preventing risk aversion from escalating.

Another notable source of support came from US political developments. President Donald Trump said he would announce his pick for the next Fed chair on Friday, adding that the choice is “somebody that could have been there a few years ago.” The remark was widely read as a strong hint toward former Fed Governor Kevin Warsh. Warsh is viewed by many investors as a stabilizing choice, combining deep Fed experience with credibility as an orthodox central banker. His potential nomination is seen as reducing tail risks around overt political interference in monetary policy, even if pressure on the Fed is unlikely to disappear entirely.

At the same time, lawmakers moved to defuse a looming fiscal cliff. Senators reached agreement on a spending package designed to avert a partial government shutdown, easing a risk that had been weighing on sentiment. Trump endorsed the bipartisan deal publicly, signaling White House backing and reducing the likelihood of last-minute disruption, even as procedural hurdles remain in the House.

These factors collectively explain why the Dollar has managed to steady. The easing of near-term political and fiscal tail risks has encouraged traders to pause rather than press bearish bets aggressively. Yet the underlying narrative has not materially changed. Persistent uncertainty around US trade relations, foreign policy, and political interference continues to motivate diversification away from the Dollar into real assets and alternative currencies. In that sense, Dollar's current recovery looks tactical rather than structural. The broader trend toward Dollar erosion remains in place, with today’s consolidation best viewed as a breather within a larger adjustment.

Performance tables reinforce that view. For the week so far, Dollar sits firmly at the bottom, followed by Euro and Sterling. Kiwi leads, with Swiss Franc next, while Aussie, Yen, and Loonie are clustered in the middle of the performance table.

Swiss KOF falls to 102.5, but outlook remains above average

Switzerland’s KOF Swiss Economic Institute Economic Barometer eased from 103.6 to 102.5 in January, undershooting expectations of 103.2. Despite the pullback, the index remains comfortably above its medium-term average, suggesting the outlook has softened but is far from weak.

The decline was driven mainly by deterioration in hospitality and construction, where confidence faded at the start of the year. By contrast, sentiment improved in manufacturing as well as financial and insurance services, helping to cushion the overall slowdown.

Within the producing sector, signals were mixed. Employment prospects, profit expectations, exports, and assessments of production constraints came under pressure. However, brighter readings for order backlogs, general business conditions, and competitive positioning point to underlying resilience, reinforcing the view of moderation rather than a sharp downturn.

Tokyo CPI slows to 2% on fuel subsidies, BoJ normalization path intact

Japan’s January Tokyo core CPI (excluding fresh food) eased from 2.3% to 2.0% yoy, undershooting expectations of 2.2% and marking a 15-month low. Core-core CPI (excluding fresh food and energy) also eased from 2.3% to 2.0% yoy. Headline inflation slowed more sharply from 2.0% to 1.5%.

The slowdown was driven largely by one-off factors. Food inflation excluding fresh food decelerated for a fifth straight month, while energy prices fell -4.2% yoy after gasoline subsidies and the abolition of a provisional fuel tax surcharge. Gasoline prices dropped -14.8%, with electricity and city gas bills also declining. Base effects from last year’s food price surge further weighed on the data.

Despite the softer print, the figures are unlikely to derail the BoJ’s normalization. While fuel subsidies may push core inflation below target in coming months, policymakers are expected to focus on whether firms continue to pass through higher import costs from a weak yen—an outcome that would keep underlying inflation pressures alive.

Japan's industrial production fall -0.1% mom in December, consumption falters

Japan’s industrial production edged down -0.1% mom in December, a milder decline than expected -0.4% mom and consistent with a sector struggling for direction rather than deteriorating sharply. The Ministry of Economy, Trade and Industry maintained its assessment that output “fluctuates indecisively,” reflecting uneven momentum across industries.

Forward-looking guidance from manufacturers remains volatile. Firms surveyed expect output to jump 9.3% in January, followed by a 4.3% decline in February, highlighting stop-start dynamics rather than a clear recovery trend.

Sector performance was split, with declines in production machinery, chemicals, and paper products offset by gains in general machinery, electronics, and motor vehicles. Supply-side indicators pointed to some imbalance. Industrial shipments fell -1.7%, while inventories rose 1.0%, suggesting demand has not kept pace with production and raising the risk of further output adjustments if sales do not improve.

That concern was reinforced by a sharp disappointment in consumption. Retail sales fell -0.9% yoy in December, far below expectations for a 0.7% increase.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6981; (P) 0.7038; (R1) 0.7106; More...

A temporary top is firmed at 0.7093 in AUD/USD with current retreat. Some consolidations would be seen but risk will stay on the upside as long as 55 4H EMA (now at 0.6905) holds. Above 0.7093 will extend larger up trend to 100% projection of 0.5913 to 0.6706 from 0.6420 at 0.7213 next. Nevertheless, break of 55 4H EMA will confirm short term topping, and bring lengthier consolidations before rally resumption.

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.

Markets

FX and FI market moves were fairly limited on a closing basis but that hides some bigger intraday swings, at least partially driven by president Trump commenting on a wide range of topics, from Cuba over Venezuela to Canada and the UK. The dollar generally traded on the backfoot with modest losses against all G10 peers. As an example of the volatility, EUR/USD opened at 1.1954 and closed at 1.1971 but intraday moves stretched a full big figure. DXY held north of 96 and USD/JPY fell marginally to 153.11. Net daily changes on US interest rate markets amounted to less than 1.5 bps down across the curve. German Bunds, if anything, slightly outperformed at the front. The eye-watering rally in gold and silver came to a screeching halt but volatility was the name of the game here too. After both hit new record highs, they suddenly crashed 8-12% before paring losses back to opening levels. It turned out to be a prelude for today though with both precious metals tumbling down to yesterday’s intraday lows. The drop follows speculation that president Trump is expected to pick Kevin Warsh as the new Fed chair instead of Rick Rieder. Warsh was seen at the White House yesterday evening. Trump afterwards said he’d announce Powell’s successor Friday morning (US time). “A lot of people think this is somebody that could’ve been there a few years ago”, Trump said seen as a reference to Warsh missing out on the chairmanship to Powell in 2017. Warsh had the reputation of a hawk before he aligned himself with Trump’s views on lower rates. Markets seem to give him the benefit of the doubt with the kneejerk reaction in gold and silver accompanied by a higher dollar and US yields. We’d warn against assuming Warsh is a done deal before Trump’s actual announcement though. Any nomination also needs confirmation by the Senate. Some Republicans have threatened to block any nominee until the DoJ probe into Fed chair Powell’s testimony to Congress about the HQ renovations. In terms of event risks, the one for a (partial) drawn-out shutdown is all but gone (see below), removing a potentially hampering factor for the US dollar. But other important ones are as live as they can be. Trump’s comments in recent days have increased the probability for a US strike on Iran after his “massive armada” arrived at or near the region. This is also what lifted oil prices to around the highest levels since the summer of last year. Weekend strikes in the past have been Trump’s preferred MO. The (geo)politics interfere with an interesting European economic agenda with Q4 GDP and several national January inflation numbers due. The latter will be viewed against the backdrop of these rising oil prices as well as some ECB policymakers flagging the potential impact of a stronger euro on the inflation outlook.

News and views

The White House and Senate Democrats agreed on a deal to avert a long partial government shutdown. Under the agreement, Senate would split off five of the remaining six spending bills (funding until the end of fiscal year; Sept 30) that already cleared the House while passing a two-week extension to fund the Department of Homeland Security to allow more time for negotiations on proposed restrictions on immigration enforcement. After Senate approved the modified package, it needs to go back to the House. It’s highly uncertain that this process will be completed by tonight’s deadline given that the House is out this week and not scheduled to return until Monday. A short-term funding lapse is likely.

The US Treasury released its semi-annual report to Congress on macroeconomic and FX policies of major trading partners to the US. Under the period under review, Q2 2024-Q2 2025, Treasury found no major trading partner that met all three criteria for enhanced analysis. Those are running a bilateral goods trade surplus with the US exceeding $20bn, having a current account surplus of more than 3% of GDP and engaging in net FX purchases totaling more than 2% of GDP over a 12-month period. While Treasury has not designated China as a currency manipulator in this report, China stands out among our major trading partners in its lack of transparency around its exchange rate policies and practices. It remains on the monitoring list together with Japan, Korea, Taiwan, Thailand, Singapore, Vietnam, Germany, Ireland, and Switzerland. Only Thailand didn’t feature on the list in the June 2025 report. The country met the first two criteria because of trade re-routing.

Switzerland’s KOF Swiss Economic Institute Economic Barometer eased from 103.6 to 102.5 in January, undershooting expectations of 103.2. Despite the pullback, the index remains comfortably above its medium-term average, suggesting the outlook has softened but is far from weak.

The decline was driven mainly by deterioration in hospitality and construction, where confidence faded at the start of the year. By contrast, sentiment improved in manufacturing as well as financial and insurance services, helping to cushion the overall slowdown.

Within the producing sector, signals were mixed. Employment prospects, profit expectations, exports, and assessments of production constraints came under pressure. However, brighter readings for order backlogs, general business conditions, and competitive positioning point to underlying resilience, reinforcing the view of moderation rather than a sharp downturn.

Full Swiss KOF release here.

Japan’s industrial production edged down -0.1% mom in December, a milder decline than expected -0.4% mom and consistent with a sector struggling for direction rather than deteriorating sharply. The Ministry of Economy, Trade and Industry maintained its assessment that output “fluctuates indecisively,” reflecting uneven momentum across industries.

Forward-looking guidance from manufacturers remains volatile. Firms surveyed expect output to jump 9.3% in January, followed by a 4.3% decline in February, highlighting stop-start dynamics rather than a clear recovery trend.

Sector performance was split, with declines in production machinery, chemicals, and paper products offset by gains in general machinery, electronics, and motor vehicles. Supply-side indicators pointed to some imbalance. Industrial shipments fell -1.7%, while inventories rose 1.0%, suggesting demand has not kept pace with production and raising the risk of further output adjustments if sales do not improve.

That concern was reinforced by a sharp disappointment in consumption. Retail sales fell -0.9% yoy in December, far below expectations for a 0.7% increase.

Japan’s January Tokyo core CPI (excluding fresh food) eased from 2.3% to 2.0% yoy, undershooting expectations of 2.2% and marking a 15-month low. Core-core CPI (excluding fresh food and energy) also eased from 2.3% to 2.0% yoy. Headline inflation slowed more sharply from 2.0% to 1.5%.

The slowdown was driven largely by one-off factors. Food inflation excluding fresh food decelerated for a fifth straight month, while energy prices fell -4.2% yoy after gasoline subsidies and the abolition of a provisional fuel tax surcharge. Gasoline prices dropped -14.8%, with electricity and city gas bills also declining. Base effects from last year’s food price surge further weighed on the data.

Despite the softer print, the figures are unlikely to derail the BoJ’s normalization. While fuel subsidies may push core inflation below target in coming months, policymakers are expected to focus on whether firms continue to pass through higher import costs from a weak yen—an outcome that would keep underlying inflation pressures alive.