Sample Category Title

Forex markets remain largely subdued today, with Canadian Dollar being the exception as volatility rises ahead of the implementation of US tariffs tomorrow. Canada is reportedly well prepared to respond with retaliatory measures on US imports worth up to CAD 150B. This comes at a time when Canada’s economy is already under pressure, with November’s GDP data showing a larger-than-expected contraction. However, despite the looming economic strain, Loonie’s selloff remains contained for now, as traders assess the full impact of trade retaliation.

Meanwhile, Dollar shrugged off the latest PCE inflation data, which showed an uptick in the headline rate while core inflation remained at elevated levels. Fed Governor Michelle Bowman noted at an event that while rate cuts are still expected, their timing will depend on incoming data, given persistent inflation risks. The latest data reinforces Fed’s cautious approach, suggesting that policymakers are unlikely to act at least until Q2.

For the week, the broader currency market picture remains unchanged. Yen continues to lead as the strongest performer, followed by Dollar and Swiss Franc. Aussie remains the weakest, followed by Kiwi and Euro. British Pound and Loonie sit in the middle.

Technically, as Gold is extending its record run, Silver is also picking up momentum. Immediate focus is now on 32.30 resistance in Silver. Firm break there should confirm that corrective fall from 34.84 has completed with three waves down to 28.74. While it may be early to confirm larger up trend resumption, in this case, further rally should at least be seen to retest 34.84 high.

US PCE inflation rises to 2.6% in Dec, core PCE unchanged at 2.8%

In December in the US, headline PCE price index rose 0.3% mom while core PCE price index rose 0.2% mom, both matched expectations.

In the 12-month period, PCE price index accelerated from 2.4% yoy to 2.6% yoy. Core PCE price index (Excluding food and energy) was unchanged at 2.8% yoy. Both matched expectations.

Personal income rose 0.4% mom or USD 92.0B, matched expectations. Personal spending rose 0.7% mom or USD 133.6B, stronger than expected 0.5% mom.

Canada’s GDP contracts -0.2% mom in Nov, but Dec outlook improves

Canada’s economy shrank by -0.2% mom in November, marking the largest contraction since December 2023 and coming in weaker than expectations of -0.1% mom decline. The downturn was broad-based, with 13 of 20 sectors reporting declines, underscoring underlying weakness across multiple industries.

Goods-producing industries led the slowdown, contracting by -0.6% after a strong 0.9% expansion in October. Services sector, which had posted steady gains in previous months, also slipped by -0.1%, marking its first decline in six months.

Advance estimates suggest that real GDP expanded by 0.2% mom in December, pointing to a rebound. Growth was driven by gains in retail trade, manufacturing, and construction, though this was partially offset by weakness in transportation, real estate, and wholesale trade.

Tokyo inflation accelerates, keeping BoJ hikes alive

Japan’s inflationary pressures picked up in January, with Tokyo’s core CPI (excluding fresh food) rising to 2.5% yoy from 2.4%, marking its fastest pace in nearly a year. Core-core measure (excluding food and energy) also edged higher to 1.9% from 1.8%. Meanwhile, headline CPI surged to 3.4% from 3.0%, its highest level in nearly two years, largely driven by rising prices for vegetables and rice.

The data reinforces expectations that inflation in Japan could continue rising toward 3% in the coming months, as persistently weak yen drives up import costs. Some analysts see room for one or two more rate hikes by BoJ this year, particularly if inflation remains sticky and real wage growth improves. However, with Tokyo services inflation slowing to 0.6% yoy from 1.0% yoy, concerns remain about the sustainability of domestic price pressures.

On the production side, industrial output rose 0.3% mom in December, matching forecasts. The Ministry of Economy retained its cautious assessment, stating that production "fluctuates indecisively," though manufacturers expect a 1.0% rise in January and a further 1.2% increase in February.

Retail sales, however, showed resilience, climbing 3.7% yoy, exceeding expectations of 2.9%. This suggests that consumer demand remains strong despite higher living costs.

BoJ’s Ueda reaffirms support for economy while keeping rate hikes on the table

BoJ Governor Kazuo Ueda reiterated the central bank’s is aiming for "gradual pickup" in prices, supported by a "solid increase in wages." He emphasized that maintaining easy monetary conditions remains necessary to "support economic activity" and ensure that underlying inflation continues rising toward the 2% target.

However, he also made it clear that BoJ’s stance remains unchanged, noting that it will "continue raising interest rates" and adjust monetary support if the economy and prices "move in line with our forecasts."

At the same parliamentary session, Prime Minister Shigeru reinforced the government’s priority of achieving sustainable inflation alongside wage growth. He highlighted that while stable price increases are important, "we must aim for wage growth higher than inflation while prices rise stably." He also warned against the perception that falling prices are beneficial, arguing that such views prolonged Japan’s deflationary struggles in the past.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9069; (P) 0.9087; (R1) 0.9114; More…

Intraday bias in USD/CHF stays mildly on the upside for the moment. Correction from 0.9200 could have completed at 0.8964 already. Further rise should be seen to retest 0.9200 and then 0.9223 key resistance. On the downside, below 0.9058 minor support will turn intraday bias neutral first. Further break of 0.8964 will resume the fall from 0.9200 to 38.2% retracement of 0.8374 to 0.9200 at 0.8884 next.

In the bigger picture, as long as 0.9223 resistance holds, price actions from 0.8332 (2023 low) are seen as a medium term corrective pattern. That is, long term down trend is in favor to resume through 0.8332 at a later stage. However, sustained break of 0.9223 will be an important sign of bullish trend reversal.

In December in the US, headline PCE price index rose 0.3% mom while core PCE price index rose 0.2% mom, both matched expectations.

In the 12-month period, PCE price index accelerated from 2.4% yoy to 2.6% yoy. core PCE price index (Excluding food and energy) was unchanged at 2.8% yoy. Both matched expectations.

Personal income rose 0.4% mom or USD 92.0B, matched expectations. Personal spending rose 0.7% mom or USD 133.6B, stronger than expected 0.5% mom.

Full US personal income and outlays release here.

Canada’s economy shrank by -0.2% mom in November, marking the largest contraction since December 2023 and coming in weaker than expectations of -0.1% mom decline. The downturn was broad-based, with 13 of 20 sectors reporting declines, underscoring underlying weakness across multiple industries.

Goods-producing industries led the slowdown, contracting by -0.6% after a strong 0.9% expansion in October. Services sector, which had posted steady gains in previous months, also slipped by -0.1%, marking its first decline in six months.

Advance estimates suggest that real GDP expanded by 0.2% mom in December, pointing to a rebound. Growth was driven by gains in retail trade, manufacturing, and construction, though this was partially offset by weakness in transportation, real estate, and wholesale trade.

Full Canada GDP release here.

Gold price posted new record high on Friday, following a probe through psychological $2800 barrier, in extension of Thursday’s 1.3% advance.

The bullion benefited from fresh safe haven demand on renewed tariff threats from President Trump that the US would impose 25% duty on imports from Canada and Mexico, while still considering tariffs on imports of goods from China.

Weaker than expected US economic growth in the last three months of 2024 and elevated inflation, also contribute to increased demand, along with rising demand for physical gold, mainly from the central banks.

Technical picture remains bullish on all larger timeframes and underpins the action, with clear break of $2800 trigger to open way towards projected targets at $2850, $2890 and $2946 and unmask psychological $3000 barrier, which I pointed as a target in my comments last year.

Gold is on track for a monthly gain of over 6% in January (the biggest monthly advance since March 2024) and would also register the fifth consecutive bullish weekly close.

However, $2800 marks significant resistance and accompanied by overbought conditions, may keep the price in extended and likely shallow consolidation, before larger bulls resume.

Former top at $2790 marks immediate support, followed by $2770 (5DMA) and $2758 (rising 10DMA) which should contain potential deeper dips.

Res: 2801; 2850; 2890; 2946.
Sup: 2790; 2785; 2770; 2758.

The Japanese yen has reversed directions on Friday and has edged lower. In the European session, USD/JPY is trading at 154.73, up 0.28% on the day.

Tokyo core CPI rises 2.5%

Japan’s Tokyo’s core inflation rate accelerated to 2.5% y/y in January, up from 2.4% in December and in line with market expectations. This marked the highest level since February 2024 and reflects rising inflationary pressure. Tokyo CPI jumped to 3.4% y/y, its highest in almost two years, as food prices rose sharply.

Tokyo core CPI is closely monitored by Bank of Japan policymakers and supports last week’s central bank decision to raise interest rates by a quarter point to 0.50%. The current cash rate is far below other central banks but is the highest in Japan since the global financial crisis in 2008.

At the meeting, the BoJ revised higher its inflation forecasts and also hinted at further rate hikes. Deputy Governor Himino echoed this stance earlier this week, stating that the BoJ would consider further hikes if economic and inflation data continued to move in accordance with the Bank’s projection. This flurry of hints about rate hikes is unusual for the BoJ, which tends to reveal little and keep speculators in the dark about its rate plans.

This secretive approach often results in sharp volatility from the yen after BoJ meetings, and Bank policymakers may be looking to avoid further sharp swings from the yen. It seems clear that further rate hikes are a question of time as the BoJ moves forward, albeit cautiously, towards normalization. The BoJ meets next on March 19 and investors will be looking for more clues about a possible rate hike at that time.

USD/JPY Technical

• USD/JPY has pushed above resistance at 154.48. Next, there is resistance at 155.16
• 153.59 and 152.91 are the next support levels

Market Picture

The crypto market has increased by 0.4% to $3.57 trillion over the last 24 hours but is still 1.4% below last week’s levels. Cryptocurrencies are slowly and rather erratically climbing out of the dip they fell into on Monday. The market remains sensitive to negative news but is recovering cautiously, avoiding excessive optimism.

The sentiment index on Friday reached 76 (extreme greed)—the highest level in the last two and a half weeks. Although the absence of clearly expressed FOMO may not please the bulls, who were hoping for a quick profit like previous bullish cycles, such an ascent is often more sustainable in traditional markets.

On Thursday, Bitcoin exceeded the level of $106,000, but by Friday, it once again rolled back closer to $104,000. This decline indicates the caution of players approaching historical highs. It seems that many prefer to fix profits near the peaks over the last few weeks.

News Background

BTC was pressured by miners selling 20,000 BTC (~$2 billion) in mid-January. Holders sold about 75,000 BTC (~$7.5 billion) over the past week, according to Martinez.

Glassnode notes a slowdown in BTC sales by long-term investors. CryptoQuant notes that leverage in bitcoin derivatives has not reached the extreme values observed during the 2021 rally.

According to Bitwise, following historical patterns, Bitcoin is expected to exceed $200,000 in 2025 due to demand for BTC-ETF and asset purchases by corporations and governments of certain countries.

At the end of the fourth quarter of last year, Tesla made a “paper” profit of $589 million from retained bitcoins. As a result, the net profit for the period amounted to $2.3 billion and $7.1 billion for 2024 overall. According to Arkham Intelligence, Tesla holds 11,509 BTC (~$1.21 billion).

The Salvadoran parliament quickly approved a bill to amend the country’s bitcoin strategy, according to agreements with the IMF, from which El Salvador will receive a $1.4 billion loan. Currently, the country holds 6,049 BTC ($635 million).

Daily Pivots: (S1) 190.87; (P) 192.10; (R1) 192.78; More...

Intraday bias in GBP/JPY remains mildly on the downside for 189.31 support. Firm break there will suggest that corrective pattern from 180.00 has completed. But before that, the pattern could still extend. Break of 194.73 will bring stronger rebound instead.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Daily Pivots: (S1) 159.75; (P) 160.78; (R1) 161.36; More...

EUR/JPY's fall from 164.07 is in progress and intraday bias stays neutral. Firm break of 159.74 will target 156.16 support next. On the upside, above 161.82 minor resistance will turn intraday bias neutral again. Overall, price actions from 154.40 are seen as a corrective pattern, which might still extend further.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Daily Pivots: (S1) 0.8357; (P) 0.8373; (R1) 0.8387; More...

EUR/GBP's fall from 0.8472 is in progress and intraday bias stays on the downside. Sustained break of 55 D EMA (now at 0.8355) will argue that whole rebound from 0.8221 has completed at 0.8472 as a corrective move. Nevertheless, strong bounce from the 55 D EMA, followed by break of 0.8397 minor resistance, will argue that the pull back has completed and bring retest of 0.8472.

In the bigger picture, a medium term bottom should be in place at 0.8221, just ahead of 0.8201 key support (2022 low). Sustained trading above 55 W EMA (now at 0.8442) will pave the way to 0.8624 cluster zone (38.2% retracement of 0.9267 to 0.8221 at 0.8621), even just as a correction to the down trend from 0.9267 (2022 high). But still, medium term outlook will be neutral at best as long as 0.8621/4 holds.

Daily Pivots: (S1) 1.6690; (P) 1.6735; (R1) 1.6782; More...

EUR/AUD failed to break through 1.6800 resistance and retreated. Intraday bias remains neutral for the moment. In case of another dip, strong support is expected from 38.2% retracement of 1.5963 to 1.6800 at 1.6480 to contain downside. On the upside, firm break of 1.6800 will resume the rally from 1.5963. However, sustained break of 1.6480 will bring deeper correction 61.8% retracement at 1.6283 instead.

In the bigger picture, EUR/AUD is holding on to 1.5996 key support (2024 low) despite brief breach. Larger up trend from 1.4281 (2022 low) is still in favor to resume through 1.7180 at a later stage. Nevertheless, sustained break of 1.5996 will indicate that such up trend has completed and deeper decline would be seen.