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• Gold has pushed above the $5200/oz handle, eyeing a seventh straight monthly gain.
• The rally is primarily driven by a surge in haven demand following news of potential imminent US military action against Iran, escalating geopolitical risk.
• High-impact US data next week (ISM, jobs report) will influence the US Dollar. The Fed is not anticipated to cut rates until at least June due to lukewarm job breadth and elevated price pressures.
• Gold maintains a bullish trajectory, with the next resistance challenges at $5249/oz and $5300/oz, and downside support at $5,150/oz.

Gold prices have pushed beyond the $5200/oz handle on Friday with a hot US PPI print failing to deter Gold bulls. The PPI release led to temporary US Dollar strength but the DXY has since pushed lower to trade in the red for the day.

As discussed in the previous piece on February 25, Gold needs acceptance above the $5200 for bulls to seize the initiative. Well, what better way to achieve this than a break and weekly candle close above the $5200/oz handle?

Gold fundamental outlook

Gold is heading into the end of February eyeing a seventh straight monthly gain. The recent selloff did give market participants food for thought but a renewed surge in haven demand has boosted the precious metal.

News earlier today from various sources point to the potential of an imminent US attack on Iran. Chinese authorities have warned their citizens to leave Iran and Israel while an Al-Arabiya correspondent on X posted that the US State Department has ordered the evacuation of non-essential staff and their families from the US Embassy in Baghdad.

These moves together point to a rise in geopolitical risk which could explain the rally to end the week.

Add to this the pivot away from US stocks and NVIDIA selloff post what was a rather upbeat earnings outlook, markets appear to have found the needed catalyst for bullish momentum to prevail.

Given that the weekend is ahead, any move by the US on Iran could lead to significant haven demand and thus Gold could open with a significant gap after the weekend.

This is definitely worth monitoring if you are holding trades heading into the weekend.

The week ahead - ISM, NFP in focus

The week ahead brings high impact US data releases, which together with the Geopolitical risk angle could have a massive impact on the US Dollar which remains under pressure as the DXY remains below the 98.00 handle.

The ISM Manufacturing and Services report will be a major data release next week.

The ISM showed significant strength in January, more recent regional Federal Reserve surveys indicate a slight softening in economic activity for February. Despite this cooling trend, "prices paid" components are expected to remain high, driven by rising oil prices and a heightened risk premium resulting from escalating tensions between Iran and the US.

On the labor front, the Friday jobs report is expected to reveal a steady but narrow expansion.

Current estimates suggest the economy is adding approximately 50,000 jobs per month; however, the lack of broad-based growth remains a concern. Roughly 70% of all employment gains over the last three years have been concentrated in the private education and healthcare sectors.

Following a surprise drop in the previous month, the unemployment rate is projected to tick back up to 4.4%.

Ultimately, these combined factors, a lukewarm job breadth and elevated price pressures are unlikely to prompt immediate action from the Federal Reserve.

Given this data, a rate cut is not anticipated until at least June. Will we get a surprise?

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

Technical Analysis - Gold (XAU/USD)

From a technical standpoint, Gold is currently maintaining a bullish trajectory.

A weekly candle close above the $5200/oz handle will ensure the bullish momentum remains strong heading into next week.

The next xhallenge will be a break above the $5249/oz handle before the $5300 mark comes into focus.

Of course, a US attack on Iran could see these levels smashed as the new week starts with further resistance ahead at $5337 before the $5400 handle comes into fcous.

Downside support rests at $5,150/oz. If that level fails to hold, the price may slide further toward the February 24 low of $5,093/oz.

Gold (XAU/USD) Four-Hour Chart, February 27, 2026

Source: TradingView (click to enlarge)

• Investors reduce Fed cut bets ahead of NFP and ISM PMI data.
• Eurozone CPI and ECB minutes in focus amid strong euro concerns.
• Will Japan’s employment numbers allow the BoJ to hike rates in April?
• Australian GDP and Switzerland’s inflation numbers also in focus.

Dollar fragile even as investors scale back Fed cut bets

The US dollar remained on the back foot against most of its major counterparts this week, gaining notable ground only against the Japanese yen. Strangely, this has been the case even after investors scaled back their rate cut bets to price in 55bps worth of rate cuts.

In early February, they were expecting around 65bps, which translates into two quarter-point reductions and a more-than-50% chance of a third. However, following the blockbuster NFP report for January, some Fed officials showed little willingness to further loosen monetary policy immediately. Even the minutes of the latest FOMC decision, which took place before the jobs data revealed a divided Committee, with several members open to rate hikes if inflation remains elevated and others leaning towards more rate cuts should inflation further cool down.

Maybe the dollar stayed on the back foot as, even with 55bps worth of expected rate cuts, the Fed remains the most dovish major central bank, keeping the divergence with some others, like the RBA, very wide. The greenback may have also been sold following the latest saga between US President Trump and the Supreme Court. After the court ruled some of Trump’s tariffs as illegal, the US President announced a 15% duty on global goods, using a law that does not fall under the court’s decision.

NFP and ISM PMI data take center stage

With all that in mind, next week, dollar traders are likely to lock their gaze on the US employment report for February, but before the NFP release, the ISM manufacturing and services PMIs on Monday and Wednesday may also attract special attention. The Atlanta Fed GDPNow model is pointing to a rebound in economic growth from 1.4% in Q4 to 3.1% in Q1, and should this be confirmed by the ISM numbers, the dollar is likely to strengthen as investors become more convinced that the Fed does not need to rush into further lowering borrowing costs.

However, given the Fed’s dual mandate of full employment and stable inflation at 2%, investors may put some emphasis on the employment and prices subindices of the ISM surveys. The ADP private employment report on Wednesday could also be monitored ahead of Friday’s non-farm payrolls.

Although the Bureau of Labor Statistics (BLS) announced strong jobs data for January, the ADP reported sluggish growth in private employment during the month, while the JOLTS job openings dropped to their lowest since September 2020 in December. This means that more improvement in labor market data may be needed for investors to further scale back their rate cut bets. That said, for the dollar to stage a meaningful and lasting recovery, rate cut expectations may need to start reflecting less than 50bps worth of rate cuts. In other words, traders may need to start questioning a second quarter-point reduction for 2026.

Will the EZ CPI data raise speculation of lower ECB rates?

The euro held onto its gains, with euro/dollar aided by the divergence in monetary policy expectations between the ECB and the Fed. Although at their prior gathering, ECB officials appeared worried about the latest strength of the euro, they later clarified that they see no need for an imminent policy change, allowing market participants to price in a small 25% chance of a rate cut by December.

That said, with the nominal effective exchange rate (NEER) of the euro against the currencies of 41 of Eurozone’s biggest trading partners still hovering near record highs, the preliminary CPI data for February on Tuesday could enter the spotlight.

In January, the headline CPI slowed to 1.7% y/y from 1.9%, and the core rate, which excludes the volatile items of food, energy, alcohol and tobacco, ticked down to 2.2% from 2.3%. Further slowdown in the Eurozone’s consumer prices may spark some concerns about whether a strong euro could eventually harm the broader economy, thereby prompting participants to add to the likelihood of a contingency rate cut by the ECB at some point in the foreseeable future.

This could weigh on the euro, especially if the minutes of the latest ECB gathering, due out on Thursday, reveal that there were members discussing the option of additional reductions in interest rates due to a stubbornly strong euro. Eurozone’s retail sales for January, will also be released on Thursday.

Japan’s jobs data on tap amid BoJ hike confusion

The yen saw its wounds deepening this week as focus on PM Takaichi’s plans of aggressive fiscal spending returned, with headlines hitting the wires that she expressed concerns about additional BoJ rate hikes during a meeting with Governor Ueda on February 17. She went a step further earlier this week and appointed two dovish-leaning policymakers to join the Bank’s Board.

That said, after BoJ hawk Takata insisted that more hikes are needed due to “heated” inflation, the probability of a 25bps rate hike in April rose to around 55%. A quarter-point increase is nearly fully priced in for June. Overall, market expectations suggest that the BoJ will wait for the outcome of the spring wage negotiations before deciding to press the hike button again.

On that note, Japan’s employment report for January will be released on Tuesday and signs of further improvement could add to the notion that the BoJ may consider raising rates again in coming months and thereby support somewhat the yen. The opposite may be true in case of weak data, but further declines in the yen could trigger fresh intervention warnings by finance minister Katayama. Thus, the broader picture of dollar/yen may continue pointing to a trendless phase with volatile swings.

Aussie GDP and Swiss inflation data also on the agenda

The aussie continued benefitting from the divergence in monetary policy expectations between the RBA and the Fed, with Australia’s sticky CPI data this week keeping the probability of a back-to-back rate hike on March 17 at a low but decent 20%. Therefore, should Wednesday’s Australian GDP for Q4 and the Chinese PMIs for February come in on the strong side, the commodity-linked currency may extend its uptrend as investors become more convinced about additional RBA rate increases. Australia’s trade data will be released on Thursday.

Switzerland’s CPI data will also be released amid increased concerns about how the SNB could stop further advances in the all-mighty franc and thereby prevent the economy from falling into deflation.

The tools available for the central bank are negative interest rates and intervention, but SNB President Schlegel recently noted that the bar for adopting a negative-rate policy again is very high. Intervention may be the more likely choice, although it does not come without risks. So, should the CPI reveal that indeed prices in Switzerland stagnated or even dropped in January, concerns about potential SNB intervention may increase and the Swiss franc may be sold.

Amid all the geopolitical, trade policy and AI concerns, the past week ended up being perhaps less eventful than expected. But a sense of unease is still lingering in the markets, with bond yields trading lower, jittery moves in main equity indices and implied oil volatility at elevated levels.

Donald Trump announced that he would replace the now-illegal IEEPA tariffs with a universal 15% Section 122 tariff for the next 150 days - but for now, only a lower 10% rate has been enacted. Before the Supreme Court's ruling we estimated that the pre-substitution average tariff rate was hovering close to 16%, so for now, businesses get to enjoy at least a temporary window of cheaper imports.

US Trade Representative Jamieson Greer mapped the path forward, flagging that the rate could rise to 15% or higher for 'some countries' (but maybe not all of them?). Looking beyond the 150-day period, the long-term tariff mix will include a combination of country-specific section 301 tariffs and product-specific section 232 measures, both of which the president and USTR can impose without congressional approval after an investigation. Greer noted the administration is looking to start the said investigations soon but did not yet specify which economies would be targeted first. Check our base case assumptions and implications from Reading the Markets USD - Tariff ruling not a game changer for macro outlook, 24 February.

US and Iran have continued talks in Geneva. Omani Foreign Minister Badr Albusaidi, who is mediating the talks, said the two sides had made 'significant progress' yet concrete results seem elusive. Earlier in the week, US Secretary of State Marco Rubio demanded that Iran should be willing to address not just its nuclear, but also its ballistic missile program. But the latest sources suggest the US is now focusing on just the former issue and pushing Iran to destroying its three main nuclear sites while transferring all its remaining enriched uranium to the US, which Iran opposes. Last week, Trump said the world would find out over 10-15 days whether the US would resort to military action. The vague deadline lands on early March, but at least in his State of Union Speech Trump still highlighted preference for a diplomatic solution instead. Talks will continue next week in Vienna.

Next week, the most important data release out of the euro area will be the February Flash HICP. At the time of writing, country-specific data has been mixed, with inflation ticking up to 1.0% y/y in France (cons. 0.8%), 2.3% y/y in Spain (cons. 2.2%), but down in German regional figures. We forecast euro area headline inflation accelerating slightly to 1.8% (from 1.7%) and core steady at 2.2%.

In the US, the focus will be on the long list of labour market releases. Early high-frequency indicators, like jobless claims, ADP's weekly private sector employment estimate and Indeed Hiring Lab's daily online job postings have generally signalled improving labour market conditions into February. We still expect a modest slowdown in NFP growth to +70k and unemployment rate steady at 4.3%.

In the UK, the spring budget will be presented on Tuesday. While we do not expect any meaningful changes to the fiscal outlook, we note that UK markets continue to be particularly sensitive to political uncertainty.

Full report in PDF. 

Markets

ECB President Lagarde elaborated yesterday in her regular testimony before European parliament on the divergence between actual and perceived inflation. Inflation perceptions matter because they also influence inflation expectations. BoE governor Bailey earlier this week made a similar remark. By doing so, today’s monthly ECB Consumer Expectations Survey (January) drew some extra attention. On the positive side: both perceived inflation over the previous 12 months and expectations for the next 12 months decreased by 0.2 ppt to respectively 3% and 2.6%. Both obviously remain more sticky above the central bank’s 2% target than actual (core) inflation numbers. Expectations for inflation 3-years ahead remain unchanged though at 2.6%, matching the highest level since March 2023. News on the actual inflation front was mixed. The day started with higher-than-expected February readings for both France (0.8% M/M & 1.1% Y/Y vs 0.5% & 0.8% expected) and Spain (0.4% M/M & 2.5% Y/Y vs 0.3% & 2.3% expected) but German numbers offered some counterweight (0.4% M/M & 2% Y/Y vs 0.5% & 2.1% expected). Aggregate numbers for the euro zone are scheduled for next Tuesday. Consensus expects a 0.4% M/M pick-up with the headline number still leveling at 1.7% Y/Y because of (energy-related) base effects. Risks are slightly tilted to the upside of expectations. The euro made a very small attempt to gain on the first higher national inflation numbers (EUR/USD 1.18 to 1.1820), but the move rapidly fizzled out. In the US, producer prices were the economic highlight. Both headline and core PPI rose faster than expected (0.5% M/M & 0.8% M/M) in January with annual readings coming in at 2.9% (from 3%) and 3.6% (from 3.3%) respectively. On a positive note, goods price deflation went from -0.1% M/M in December to -0.3% M/M in January. The Fed has been very attentive to this metric as it is linked to the US trade agenda. Services price inflation accelerated to 0.8% M/M though, in what are mixed signals though for the US central bank. Markets ignored the numbers as they were overshadowed by geopolitical risk aversion. The US Embassy in Jerusalem authorized the departure of non-emergency US government personnel and their family members for their US mission in Israel due to safety risks. The warning comes after a third round of (deadlocked) nuclear talks between the US and Iran in Geneva yesterday. Earlier, the US announced that it was pulling personnel from Lebanon. Markets are on high alert on possible US military action and err on the side of caution going into the weekend. Brent crude prices set a new short-term high at $73/b. Core bonds gain ground with German and US yields dipping between 1-4 bps across the curve. For the US that means a test of key support at 3.4% for the 2-yr and 4% for the 10-yr. In FX space, the trade-weighted dollar keeps bumping into the 98 resistance area. Risks of a break rise in closing, upward, triangle pattern. The Swiss franc outperforms (see below). The combination of risk off and another political blow to the Labour government (losing Manchester area by-election to Greens) pushes EUR/GBP through 0.8750 resistance.

News & Views

The monthly economic barometer on the Swiss economy from the KOF Economic Institute again improved in February to 104.2 after a slight decrease in January (103.3).KOF analyzes that the barometer “continues its upward movements of the previous months and remains above its medium-term average”. It concludes that the positive outlook for the Swiss economy is reinforced. The improvement is mainly visible in demand side indicator bundles for the likes of consumption and foreign demand. Indicators on the production side are painting a more mixed picture. Manufacturing even showed a setback. Within manufacturing, particularly the sub-indicators for the metal industry and for paper and printing products are experiencing a setback. A more favourable outlook is exhibited by the sub-indicators for the electrical industry as well as for the textile industry. Aside from the KOF indictor, the Swiss State Secretariate for Economic affairs also released Q4 GDP data. GDP growth, adjusted for sporting events, grew by 0.2%, coming on the back of a 0.4% quarterly decline in the previous quarter. Activity was mainly supported by domestic demand. Private consumption rose a solid 0.4%. Construction investment (+1%) and investment in equipment also recorded significant growth. Goods exports rose 0.6%. Imports were 2.7% higher. The Swiss franc jumped again sharply higher today with EUR/CHF falling below the 0.91 big figure, a historic strong level except for the early 2015 spike. However, this move was probably mainly due to safe haven flows due to tensions in the Middle East rather than Swiss eco data.

The Canadian economy contracted by 0.6% (quarter/quarter, annualized) in Q4, below the Bank of Canada's projections for a flat reading  and consensus forecast for a more muted decline of -0.2% q/q. For 2025 as a whole, the Canadian economy grew 1.7%, a step down from 2024's 2% pace.

The contraction in output was driven entirely by an inventory drawdown, which subtracted 4.2 percentage points from headline GDP growth. Underlying domestic demand held up much better, rising by 2.4% q/q.

Consumer spending rebounded in Q4, rising 1.7% q/q (annualized), following a 0.8% contraction in Q3. The recovery was driven primarily by services spending (+3.6% q/q), while durable goods outlays continued to decline (-2.8%). That pulled overall goods spending down to -0.9%, marking a second consecutive quarterly decline.

Residential investment declined by 4.4% q/q, after two strong quarters. Weaker ownership transfer costs and renovations, alongside continued softness in new construction, weighed on the aggregate.

Non-residential structures investment also declined (-3.2% q/q). Encouragingly, however, business investment in machinery and equipment and intellectual property products rebounded, signalling a renewed momentum in productive investment after a prolonged period of hesitation from the business sector.

Government spending was strong, rising 3.1% q/q. The increase was driven by a pick up in investment accelerated to 20.4% q/q, up from upwardly revised 16.5% in Q3, supported by higher government investment in weapons systems.

Net trade added roughly 1.5 percentage points to overall GDP growth. Export growth accelerated 6.1% q/q, up from an upwardly revised reading of 3.8% q/q in Q3. Imports also recovered, rising 1.1% q/q after posting one of the largest quarterly contractions in the prior quarter.

The monthly GDP by industry data was also released, where output expanded 0.2% m/m in December, a tick higher than consensus expectations. Statistics Canada's advanced guidance for January points to flat growth, suggesting Canada's economy entered the new year with softer momentum.

Key Implications

Canada ended the year on a weaker footing as businesses drew down inventories, weighing on headline growth.  For 2025 as a whole, the economy slowed to a 1.7%, primarily due to lower exports to the United States. That said, domestic demand grew at a better 2.3% pace, supported by stronger government spending. The rebound in consumption and the return of non-residential investment in the fourth quarter provide some reassurance that underlying demand is stabilizing.

Still, today's report is weaker than the Bank of Canada's January projections for a flat reading, reinforcing their view that momentum remains limited. There is still evidence of labour market slack and inflation gradually moderating. Taken together, these dynamics suggest that the Bank of Canada will remain on the sidelines, and the policy rate at 2.25%.

Daily Pivots: (S1) 1.1773; (P) 1.1801; (R1) 1.1828; More….

No change in EUR/USD's outlook as sideway trading continues. Intraday bias remains neutral. Near term risk will remain on the downside as long as 1.1928 resistance holds. Below 1.1740 temporary low will target 1.1576 support next. Firm break there should confirm rejection by 1.2 key psychological level and turn near term outlook bearish. However, break of 1.1928 argue that fall from 1.2081 has completed as a correction, and revive near term bullishness. Retest of 1.2081 should then be seen next.

In the bigger picture, as long as 55 W EMA (now at 1.1494) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will add to the case of long term bullish trend reversal. Next medium term target will be 138.2% projection of 0.9534 to 1.1274 from 1.0176 at 1.2581. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 0.7716; (P) 0.7735; (R1) 0.7759; More….

USD/CHF falls notably today but remains bounded in established range. Intraday bias remains neutral for now. In case of another rise, upside should be limited by 55 D EMA (now at 0.7824) to complete the pattern. On the downside, below 0.7627 will bring retest of 0.7603. Firm break there will resume larger down trend, and target 0.7382 projection level next. However, sustained break of 55 D EMA will indicate that a larger scale corrective bounce in underway and target 0.8039 resistance next.

In the bigger picture, down trend from 1.0342 (2017 high) is still in progress. 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 0.8123 resistance holds.

Daily Pivots: (S1) 155.71; (P) 156.13; (R1) 156.55; More...

Intraday bias in USD/JPY remains neutral and more consolidations could be seen below 156.81. On the upside, above 156.81 will resume the rally from 152.25 to 157.65 resistance first. Firm break there will target a retest on 159.44. high. On the downside, however, break of 153.90 will bring deeper fall to 152.25 support. Overall, with 38.2% retracement of 139.87 to 159.44 at 151.96 intact, price actions from 159.44 are seen as a corrective pattern. Also, rise from 139.87 is expected to resume through 159.44 at a later stage.

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 151.93) 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) 1.3426; (P) 1.3501; (R1) 1.3556; More...

GBP/USD is still holding above 1.3432 support and intraday bias remains neutral for the moment. On the downside, below 1.3432 will resume the fall from 1.3867 to 1.3342 support. Firm break there should confirm that it's already correcting the whole rise from 1.2099. However, break of 1.3574 resistance will argue that the decline has completed as a near term correction, and turn bias back to the upside for retesting 1.3867.

In the bigger picture, as long as 1.3008 support holds, rise from 1.3051 (2022 low) should still be in progress for 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. However, firm break of 1.3008 will raise the chance of medium term bearish reversal and target 1.2099 support next.

Stronger-than-expected US PPI data has unsettled financial markets, shifting sentiment toward a more defensive footing. The persistence of upstream inflation pressures reinforces the view that the Fed will remain cautious and resist calls for rapid rate cuts. Although US President Donald Trump and senior White House officials have continued to advocate for lower rates, the data argue for restraint. Inflation at the producer level suggests cost pressures from tariffs have not fully dissipated, making premature easing a risk.

Equity markets reacted swiftly. DOW futures slid more than -500 points after the release, signaling a weaker open. The move reflects renewed anxiety that monetary policy may stay restrictive for longer than previously hoped. At the same time, Treasury markets rallied. 10-year yield fell below the 4% psychological level on safe-haven flows, signaling that bond investors are increasingly concerned about growth risks even as inflation remains elevated. Gold and Silver rallied strongly alongside falling yields, reflecting demand for protection against both macro uncertainty and policy volatility.

For the Dollar, the picture is mixed. On one hand, risk-off sentiment should be supportive. On the other, falling yields weigh on rate differentials. As a result, Dollar gains remain tentative, with the opposing forces largely offsetting each other.

Elsewhere, Sterling remains under broad-based pressure for a different reason. The Green Party delivered a landmark victory in the Gorton and Denton by-election, taking a seat long considered safe for Labour. The outcome represents a significant political setback for Prime Minister Keir Starmer. The defeat intensifies scrutiny over Starmer’s leadership and could complicate the government’s fiscal and economic agenda.

Yen has staged a mild recovery, aided by comments from Japan’s Finance Minister Satsuki Katayama. She emphasized that authorities are closely monitoring currency developments and signaled urgency over recent weakness. Still, verbal intervention can only go so far without concrete policy action. Markets remain cautious, and follow-through buying has been limited.

For the week, Yen remains the worst performer despite today’s bounce. Sterling and Kiwi follow behind. Swiss Franc stands out as the strongest currency, with Aussie and Euro also firm. Dollar and Loonie are positioned mid-table.

In Europe, at the time of writing, FTSE is up 0.38%. DAX is down -0.10%. CAC is down -0.43%. UK 10-year yield is down -0.03 at 4.246. Germany 10-year yield is down -0.017 at 2.682. Earlier in Asia, Nikkei rose 0.16%. Hong Kong HSI rose 0.95%. China Shanghai SSE rose 0.39%. Singapore Strait Times rose 0.62%. Japan 10-year JGB yield fell -0.045 to 2.112.

US PPI rises 0.5% mom in January as services drive monthly jump

US producer prices rose more than expected in January, with headline PPI climbing 0.5% mom against forecasts of 0.3%. The increase was largely driven by a sharp 0.8% gain in final demand services, while prices for final demand goods declined -0.3%.

On an annual basis, PPI eased slightly from 3.0% yoy to 2.9% yoy, but above expectations of 2.6%. The moderation in the yearly rate does little to offset the firm monthly momentum, particularly as underlying measures continue to trend higher.

Core PPI excluding foods, energy, and trade services rose 0.3% mom, marking the ninth consecutive monthly increase. Over the past 12 months, this core gauge advanced 3.4%, suggesting persistent pipeline price pressures.

Canada GDP beats in December with 0.2% mom growth, but fragile start to 2026,

Canada’s economy closed 2025 on a slightly firmer note, with GDP rising 0.2% mom in December, above expectations of 0.1%. The expansion was driven by gains in both services-producing and goods-producing industries, suggesting a modest rebound in activity toward year-end.

Services industries led the monthly increase, rising 0.2%, supported by wholesale trade, the public sector, and transportation and warehousing. Meanwhile, goods-producing sectors also expanded 0.2%, partially reversing back-to-back declines in October and November, with manufacturing and utilities contributing to the recovery. In total, 11 of 20 industrial sectors recorded growth in December.

Advance estimates suggest real GDP was essentially unchanged in January, pointing to a fragile start to 2026.

The quarterly picture was less encouraging. GDP by industry edged down -0.1% in Q4 following a solid 0.6% expansion in Q3. Manufacturing was the main drag, contracting -1.5% in the quarter—its third decline of 2025 and fourth in the past five quarters—highlighting persistent weakness in the sector.

Swiss GDP returns to modest 0.1% qoq growth, domestic demand stabilizes Q4

Switzerland’s economy returned to modest growth in Q4, with GDP expanding 0.1% qoq. While slightly below expectations of 0.2%, the reading marks a rebound from the -0.4% contraction recorded in Q3. According to the State Secretariat for Economic Affairs, performance varied across sectors, with domestic demand providing the main source of support.

The chemical and pharmaceutical industry, a key pillar of the Swiss economy, grew 1.9% after a sharp decline in the previous quarter, aided by pickup in exports. However, the rest of manufacturing contracted by -1.3% amid subdued sales and weaker export performance. Overall, industrial value added stagnated, though goods exports edged up 0.6% following two quarters of decline.

Domestic final demand rose 0.5% and helped stabilize the broader economy. Private consumption expanded 0.4%, while construction investment increased 1.0% on stronger building activity. Retail activity surged 2.0%, supporting a 1.7% rise in trade value added.

Swiss KOF barometer strengthens to 104.2, demand outlook improves

Switzerland’s economic outlook brightened in February as the KOF Economic Barometer rose from 103.3 to 104.2, beating expectations of 103.1. The increase resumes the upward trend seen in recent months after a brief dip in January and leaves the gauge comfortably above its medium-term average of 100.

According to KOF, the improvement reinforces a positive outlook for the Swiss economy, with strength concentrated on the demand side. Indicator bundles linked to consumption and foreign demand both point to favorable momentum.

However, the production side presents a more "mixed" picture. While some sectors remain stable, manufacturing is experiencing a setback, signaling that industrial momentum has yet to fully align with the broader demand recovery.

Subsidy effect pulls Tokyo core CPI down to 1.8%, but underlying inflation firms

Inflation in Tokyo eased further in February, with core CPI (ex-fresh food) falling to 1.8% yoy from 2.0% yoy. While slightly above market expectations of 1.7% yoy, the reading marks the third straight monthly slowdown and the lowest level since October 2024, slipping back under the BoJ’s 2% target.

The primary driver was a sharp drop in energy prices, which declined -9.2% yoy as the government’s temporary utility subsidies began to take effect. The program has mechanically dampened readings and was broadly expected to weigh on inflation for several months.

Beneath the surface, however, price dynamics remain more persistent. Core-core inflation (excluding fresh food and energy) rose to 2.5% yoy from 2.4% yoy, suggesting domestic demand conditions and wage-driven pricing remain intact. Headline CPI also ticked up modestly from 1.5% yoy to 1.6% yoy.

Japan's industrial production rose 2.2% mom on auto strength, but forward signals soft

Japan’s industrial production rose 2.2% mom in January, marking the first increase in three months, though falling well short of expectations for a 5.5%. .

Production expanded in 13 of 15 sectors, with automakers posting a notable 9.1% gain amid solid demand for passenger vehicles both domestically and overseas. However, weakness persisted in production machinery, where output declined on softer demand for semiconductor-manufacturing equipment.

The Ministry of Economy, Trade and Industry maintained its assessment that industrial production “fluctuates indecisively”. Officials noted that companies remain wary of US tariff policy developments and the Chinese growth outlook, even if no direct impact was evident in the latest data.

Looking ahead, manufacturers expect output to dip -0.5% in February and -2.6% in March.

In contrast, retail sales surprised to the upside, rising 1.8% yoy against expectations of just 0.2%.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3426; (P) 1.3501; (R1) 1.3556; More...

GBP/USD is still holding above 1.3432 support and intraday bias remains neutral for the moment. On the downside, below 1.3432 will resume the fall from 1.3867 to 1.3342 support. Firm break there should confirm that it's already correcting the whole rise from 1.2099. However, break of 1.3574 resistance will argue that the decline has completed as a near term correction, and turn bias back to the upside for retesting 1.3867.

In the bigger picture, as long as 1.3008 support holds, rise from 1.3051 (2022 low) should still be in progress for 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. However, firm break of 1.3008 will raise the chance of medium term bearish reversal and target 1.2099 support next.