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In focus today

In Sweden, flash estimates for the Swedish January inflation will be released today. We expect a decrease in core inflation from 2.3% y/y in December to 1.9% y/y in January, which would mark the first month in four years with core inflation below the Riksbank's 2.0% target. At the same time, we foresee an increase in headline inflation due to elevated electricity prices in January with CPIF expected at 2.4% y/y (2.1% y/y in December).

Also in Sweden, the Swedish Debt Office will publish the outcome of central government payments for January. Since the latest borrowing report from November the outcomes have so far been in line with their prediction.

Note that the US Jobs Report, including nonfarm payrolls, that was up for release today has been postponed to Wednesday next week due to past weekend's government shutdown.

Economic and market news

What happened overnight

In Japan, President Trump announced his endorsement of current Prime Minister Takaichi, the first female premier, ahead of the election on Sunday. Takaichi's coalition shows strong results in opinion polls and are expected to win on Sunday.

What happened yesterday

In the euro area, the ECB decided to leave its key policy rates unchanged with the deposit facility rate at 2.00%, as widely expected by markets and consensus. Lagarde accentuated the positive factors of the economy such as low unemployment while downplaying the role of the inflation undershooting and strengthened euro. We maintain our call that the ECB will leave the deposit rate unchanged at 2.00% throughout both 2026 and 2027. For further information, see ECB Review - Accentuate the positive, 5 February.

In the UK, the Bank of England kept the interest rate unchanged at 3.75% in an unexpectedly narrow vote split of 5-4, which was a dovish surprise. In their report, they concluded that the economic outlook for the UK involves less growth and inflation than previously anticipated. This also entails that we continue to aim for the next rate cut in April but also pencil in another cut in November.

In the US, there was a big downside surprise as the JOLTs job openings came in at 6.542m in December (Cons: 7.200m, Nov: 6.928m). Hence, the US ratio of job openings to unemployed fell to just 0.87 in December. Such cooling is usually a good predictor for weakening wage growth and may be a concern for the private consumption outlook and, all else equal, supports the case for earlier cuts from the Fed.

In the US, the Challenger report also came in weaker than expected with job cuts totalling 108,435 in January. Generally, layoffs always pick up in January when seasonal holiday workers are laid off, but this was the largest number of layoffs announced for any given January since 2009. Amazon's 16k announced job cuts explained part of the uptick, but otherwise layoffs were broad-based across sectors.

Finally, the US state department has unveiled a programme to fund MAGA-aligned think-tanks and charities across Europe. The funding is expected to channel money into programs that promote American values and is connected to the 250-year celebration of American independence. The funding comes amid a general pullback of US foreign aid.

Bitcoin fell to its lowest level since October 2024 with a decline of 7% on Wednesday and a total decline so far this week of 11%. The fall comes amid higher volatility in markets and sell-off in tech stocks but could also be linked to Trump's nomination of Kevin Warsh as Fed Chair.

Equities: Global equities were markedly lower yesterday at -1.2%, with the majority of the move happening upon US open. Unlike the previous trading days this week, where one could pinpoint idiosyncratic drivers, the sell-off within equities were more like a classic risk-off with materials, consumer discretionary and IT with the biggest declines. S&P ended the day -1.2%, while Nasdaq was 1.6% lower, and Russell 2000 1.8% lower.

Overnight, Asian equities are weaker, as well as US futures. Alongside Amazon's earnings report they hiked their AI capex plans and announced a USD 200bn capex plan. Similar boost to capex was also seen from Microsoft and Alphabet when they reported. Amazon communicated that the money "predominantly" would go to its cloud services, reigniting the software vs hardware theme discussed in a previous morning espresso. Amazon dropped about 10% in the aftermarket.

FI and FX: Despite a slight softening of broad USD yesterday, the week has been characterised by a broad-based dollar rebound. EUR/USD has stabilised around 1.18 and could well remain in consolidation mode in the coming weeks. GBP had a rough session yesterday, as the Bank of England delivered an array of dovish signals at their policy meeting, although rates were left unchanged. Softer US labour market data sent US Treasury yields clearly lower yesterday, whereas European yields held mostly steady on ECB's firm hold. Scandies have had a couple of tough sessions, as the SEK suffers from the slightly dovish Riksbank minutes from earlier this week, whereas the NOK finds headwinds in global factors.

Daily Pivots: (S1) 211.35; (P) 212.95; (R1) 214.10; More...

Intraday bias in GBP/JPY remains neutral as consolidations pattern from 214.83 is extending with another leg. On the upside. firm break of 214.83 will resume larger up trend to 220.90 projection level next. Rejection by 214.83 will bring more consolidations first. But in case of another dip, downside should be contained by 55 D EMA (now at 209.79) to bring rally resumption.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. Next target is 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. On the downside, break of 205.30 resistance turned support is needed to indicate medium term topping. Otherwise, outlook will stay bullish even in case of deep pullback.

Daily Pivots: (S1) 184.54; (P) 185.02; (R1) 185.49; More...

Intraday bias in EUR/JPY remains neutral at this point. On the downside, below 183.33 will bring retest of 181.76. Sustained trading below 55 D EMA (now at 182.56) should solidify the case that fall from 186.86 medium term top is correcting whole rise from 154.77. Deeper decline should then be seen to 38.2% retracement of 154.77 to 186.86 at 174.60. Nevertheless, firm break of 186.86 will resume larger up trend.

In the bigger picture, up trend from 114.42 (2020 low) is in progress and and met 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. Considering bearish divergence condition in D MACD, upside could be capped by 186.31 on first attempt. Still, outlook will stay bullish as long as 55 W EMA (now at 173.32) holds, even in case of deep pullback. Sustained break of 186.31 will pave the way to 78.6% projection at 194.88 next.

Daily Pivots: (S1) 0.8651; (P) 0.8686; (R1) 0.8741; More…

Intraday bias in EUR/GBP remains neutral first as it's still bounded in range of 0.8611/8744. On the upside, firm break of 0.8744 will argue that fall from 0.8863 has completed as a correction. Intraday bias will be back to the upside for retesting 0.8863, with prospect of resuming larger up trend. Nevertheless, on the downside, decisive break of 0.8631 cluster support (38.2% retracement of 0.8221 to 0.8663 at 0.8618) will carry larger bearish implications.

In the bigger picture, rise from 0.8221 medium term bottom (2024 low) is seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8625) should confirm that this corrective bounce has completed. In this case, deeper fall would be seen back to 0.8201/21 key support zone. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.

Daily Pivots: (S1) 1.6896; (P) 1.6950; (R1) 1.7057; More...

Intraday bias in EUR/AUD is turned neutral first with current recovery. But risk stays on the downside with 1.7145 resistance intact. On the downside, sustained trading below 100% projection of 1.8554 to 1.7245 from 1.8160 at 1.6851 will pave the way to 138.2% projection at 1.6351 next. However, break of 1.7145 will confirm short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, fall from 1.8554 medium term top is still in progress. Sustained break of 38.2% retracement of 1.4281 to 1.8554 at 1.6922 will argue that it's already reversing whole up trend from 1.4281 (2022 low). Deeper fall would be seen to 61.8% retracement at 1.5913. For now, risk will stay on the downside as long as 55 D EMA (now at 1.7396) holds even in case of strong rebound.

Daily Pivots: (S1) 0.9146; (P) 0.9166; (R1) 0.9186; More....

Intraday bias in EUR/CHF remains neutral at this point, and consolidations could continue above 0.9141. In case of another recovery, upside should be limited by 0.9235 resistance. On the downside, decisive break of 0.9141 will extend larger down trend to 261.8% projection of 0.9394 to 0.9268 from 0.9347 at 0.9143. However, firm break of 0.9235 resistance will suggest short term bottoming and bring stronger rebound to 55 D EMA (now at 0.9263).

In the bigger picture, another rejection by 55 W EMA (now at 0.9350) keeps outlook bearish. Downtrend from 1.2004 (2018 high) is still in progress. Firm break of 0.9178 will target 61.8% projection of 1.1149 to 0.9407 from 0.9928 0.8851. Outlook will stay bearish as long as 0.9394 resistance holds, in case of recovery.

Daily Pivots: (S1) 1.1761; (P) 1.1792; (R1) 1.1808; More….

Intraday bias in EUR/USD is mildly on the downside with breach of 1.1774 temporary low. Sustained trading below 55 D EMA (now at 1.1731) will raise the chance of reversal on rejection by 1.2 psychological level, and target 1.1576 support. On the upside, above 1.1870 minor resistance will bring stronger rebound to retest 1.2081. Decisive break above 1.2 will carry larger bullish implications.

In the bigger picture, as long as 55 W EMA (now at 1.1458) 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) 1.3472; (P) 1.3575; (R1) 1.3631; More...

Intraday bias in GBP/USD remains on the downside at this point. Fall from 1.3867 is in progress for 55 D EMA (now at 1.3483). Sustained break there will raise the chance of larger scale correction, and target 1.3342 support for confirmation. On the upside, above 1.3732 minor resistance will bring retest of 1.3867. Firm break there will resume larger up trend towards 1.4284 key resistance.

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) 0.7753; (P) 0.7771; (R1) 0.7799; More….

No change in USD/CHF's outlook and intraday bias stays neutral at this point. On the upside, above 0.7816 will resume the rebound from 0.7603 short term bottom to 55 D EMA (now at 0.7896). But strong resistance should be seen there to limit upside. On the downside, below 0.7713 minor support will bring retest of 0.7603. Firm break there will resume larger down trend to 0.7382 projection level next.

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 0.8166) holds.

Daily Pivots: (S1) 156.60; (P) 156.97; (R1) 157.41; More...

Intraday bias in USD/JPY remains mildly on the upside at this point. Rise from 152.07 is seen as the second leg of the corrective pattern from 159.44. Further rebound should be seen to retest 159.44 next. On the downside, below 155.51 minor support will turn intraday bias neutral first. But overall outlook will stay bullish as long as 38.2% retracement of 139.87 to 159.44 at 151.96, in case of another dip.

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 151.59) holds. However, sustained break of 55 W EMA will argue that the pattern from 161.94 is extending with another falling leg.