Sample Category Title

UK labor market data showed further signs of cooling in February, with wage growth easing and employment momentum weakening. Payrolled employees rose modestly by 20k on the month to 30.3 million, but were still down -49k compared to a year earlier, highlighting a gradual loss of underlying strength. Wage pressures moderated, with median monthly pay growth slowing from 4.4% yoy to 4.1% yoy. The claimant count rose by 24.7k in February, slightly below forecasts of 25.8k.

In the three months to January, average earnings excluding bonuses eased from 4.1% yoy to 3.8% yoy, undershooting expectations 4.0% yoy. Earnings including bonuses slowed from 4.2% yoy to 3.9% yoy, matched expectations. The trend points to a gradual easing in pay-driven inflation pressures.

Despite the softer wage backdrop, the labour market remains relatively resilient on the surface. The unemployment rate held steady at 5.2%, in line with expectations.

Full UK labor market overview release here.

The relief in Oil markets on news that Iraq would resume exports via Turkey didn’t last long. News that another important Iranian official has been killed and Iranian energy facilities attacked turned the market upside down, as Iran threatened the Gulf countries with fierce retaliation, highlighting that their energy facilities have now become ‘a legitimate target’. Qatar already reported extensive damage to one of the world’s largest LNG export plant.

So, Oil and Gas prices rebounded, wiping out the early optimism across stock markets. The war is escalating rather than showing signs of easing. And risks in oil prices remain tilted to the upside. That ultimately means that risks to equities remain to the downside as:

1. Rising energy prices increase costs and weigh on earnings.
2. The Federal Reserve (Fed) and other major central banks will remain cautious – possibly hawkish – in the coming months to ensure that inflation doesn’t spiral out of control.

Released yesterday, the US PPI update wasn’t encouraging. Producer prices accelerated more than expected in February: core PPI rose to 3.9% y-o-y from 3.5% a month earlier, above the 3.7% expected by analysts. Meanwhile, US gasoline prices have risen nearly 40% since the beginning of March. Diesel has crossed $5 per gallon, also marking a nearly 40% increase since the start of the month.

Still, the Fed kept its calm at this week’s meeting, maintaining rates unchanged as widely expected, while the dot plot pointed to one rate cut this year, though the distribution shifted toward fewer cuts. Inflation expectations were revised higher, but Jerome Powell said that it’s ‘too soon’ to assess the impact of higher oil prices and that ‘no one knows’ what the impact will be. He noted that if this is a textbook energy shock, they have the option to look through it, but continued to insist that tariffs are a potential risk to inflation.

He said that it’s ‘important to keep policy either mildly restrictive or close to that, but not too restrictive given the downside risks in the labour market. We are balancing these two goals.’

The decision and the accompanying statement were perceived as relatively hawkish by markets: the 2-year yield rose and equities fell. I personally found Powell’s remarks rather balanced. He even said that if there is progress on inflation by mid-year, we could see a rate cut. But in fine: no one knows.

Overall, the market reaction was hawkish.

Beyond the US, the Bank of Canada (BoC) and the Bank of Japan (BoJ) also left their policy rate unchanged, while citing heightened risks due to the Middle East war. Canada is a net energy exporter, placing it on the ‘right side’ of the table. The same is not true for Japan and Europe.

Europe today is a net importer of energy and more importantly, the continent has been relying heavily on US and Middle Eastern supplies since turning its back on Russia following the war in Ukraine. Today, the situation is becoming critical. Energy prices are rising and, combined with a stronger US dollar, are pushing inflation expectations higher. This, in turn, is leading investors to adopt a more hawkish stance on central bank policy.

Today, the European Central Bank (ECB), the Bank of England (BoE) and the Swiss National Bank (SNB) will announce their policy decisions. Even though all three are expected to keep rates unchanged, the recent rise in energy prices and its impact on inflation expectations will likely lead to cautious — and possibly hawkish — statements. How hawkish? We will see.

It’s true that central banks tend to place less emphasis on food and energy prices because they are volatile. But time is not your friend in a war, and Europe has learned this the hard way. The energy crisis triggered by the war in Ukraine is a stark reminder that prolonged disruptions in energy supply can lead to sustained price pressures and must be addressed accordingly. European policymakers have recently stressed their desire to avoid repeating the same mistakes made during that crisis.

As a result, the ECB’s statement will likely be hawkish, possibly hinting at tighter policy later this year, depending on the duration of the Middle East conflict and its medium-term impact on oil prices.

Across the Channel, the BoE will likely shelve the rate cut it had been preparing to deliver. Even though growth remains anaemic and calls for support, the British economy is highly sensitive to energy prices. The 10-year gilt yield has risen by as much as 50bp since the February 27 low.

There is not much MPC members can say today — no one has a crystal ball, and no one knows how long the war will last. But the longer it lasts, and the higher energy prices climb, the further away the dream of a BoE cut drifts.

In both cases, rate hikes from the ECB and the BoE are unlikely to support the euro and sterling if energy becomes expensive. Tighter monetary policy driven by a supply shock tends to slow growth, which is ultimately negative for currencies. As such, both the euro and sterling are likely to remain under pressure from a stronger US dollar as long as the Middle East conflict persists and keeps oil prices elevated.

In Switzerland, the situation is slightly different. Switzerland is also a net energy importer, but the strength of the franc helps cushion the economy against rising oil prices to some extent. The SNB will likely prefer to wait and see.

In focus today

Today, we expect the ECB to leave the deposit rate unchanged at 2.00% in line with consensus and market pricing. We expect Lagarde to communicate a full commitment to price stability and readiness to act to upward price pressures but at the same time acknowledge heightened uncertainty and that it is too early to draw firm conclusions. Our baseline is unchanged ECB rates in 2026 and 2027 but with a clear upside risk. Read more in: ECB Preview - Hot war, cool heads?, 13 March.

In England, we expect the Bank of England to keep the Bank Rate unchanged at 3.75%. The war in the Middle East has pushed the pause button on further cuts for now. Ahead of the meeting, a fresh jobs report is released with higher unemployment becoming an increasing worry recently. Read more in: Bank of England Preview - Cutting cycle on pause, 13 March.

In Sweden, we and markets expect the Riksbank to keep the policy rate at 1.75%. We expect the main message will be a cautious "wait and see", without any significant adjustments to the near-term rate path. In terms of forecasts and guidance, however, the current environment is highly uncertain.

Also in Sweden, Origo inflation expectations will be published today and given recent events, it is reasonable to expect them to rise somewhat. However, it is worth noting that the responses were collected approximately 10 days ago.

We expect the Swiss National Bank (SNB) to keep rates unchanged at 0%. We are attentive to any comments on the recent strengthening of the Swiss Franc, which provides a tricky backdrop for the SNB which struggles with low inflation.

In Norway, Norges Bank's (NB) regional survey report is released. Growth has developed as expected, so we expect respondents to signal 0.3-0.4% q/q growth in both Q1 and Q2, consistent with NB's forecast. However, with elevated inflation and a tighter-than-expected labour market, capacity utilization will be the most important piece of information. A significant increase could make it necessary for NB to tighten monetary policy to anchor inflation expectations.

Overnight, China releases Loan Prime Rates, which we expect to be unchanged again as the leading 7-day reverse repo rate has not moved for some time.

Economic and market news

What happened overnight

In Japan, with an 8-1 vote split, the Bank of Japan (BoJ) kept rates unchanged this morning at 0.75%, as widely expected. Markets have taken the decision very calmly. While acknowledging risks from increased tension over the situation in the Middle East, the BoJ expects underlying inflation to increase gradually, and it will thus "continue to raise the policy interest rate and adjust the degree of monetary accommodation". We expect the next rate hike from the BoJ in April, but much hinges on spring wage negotiations and of course energy prices.

What happened yesterday

In the conflict in the Middle East, tensions escalated as Israeli strikes hit Iran's Pars gas field, a critical part of the world's largest natural gas deposit. Iranian media reported that the strikes hit gas tanks and sections of a refinery, marking the first attack on energy production facilities since the war began. In retaliation, Iran launched a ballistic missile and hit the world's largest liquefied natural gas facility in Qatar later in the evening, causing extensive damage. Earlier in the day, Iran had issued a warning, labelling regional oil and gas infrastructure in Saudi Arabia, the UAE, and Qatar as "direct and legitimate targets," significantly heightening risks to global energy supplies.

Oil and gas prices rose sharply as big gas facilities in Iran and Qatar were hit and facilities in UAE were attacked. Oil price rose above USD 110/bbl overnight and nears the top from Monday last week. If big energy installations continue to be drawn into the war, energy prices will likely rise much further as production over the medium term is hit.

The gold price fell sharply and firmly below USD 5,000/oz yesterday. The gold price has dropped since the war started which might be caused by higher bond yields and the stronger USD.

In the US at the FOMC meeting, the Fed kept rates on hold in the 3.5-3.75% target, as expected. Powell refrained from strong forward guidance but appeared more concerned about inflation than downside risks to growth. He highlighted uncertainty from higher energy prices and reiterated the Fed's readiness to adjust policy rates as needed.

Also in the US, February PPI surprised to the upside for the second month in a row coming in at +0.7% m/m SA (cons. +0.3%). However, compared to January, the pick-up in price pressures seems more broad-based this time around as both core services and core goods inflation seem to be picking up. For core goods specifically, this was the highest m/m SA reading (+0.8%) since April 2022, suggesting that tariff-related costs pressures could still be increasing.

In Canada, the Bank of Canada (BoC) kept its policy rate unchanged at 2.25%, as expected. BoC highlighted downside growth risks, while inflation risks have increased due to higher energy prices. The BoC noted that it is "too early to assess the impact of the conflict in the Middle East on growth in Canada," which complicates sending clear policy signals. The central bank did state that they will look through the immediate impact on inflation of the war but nevertheless stands ready to respond if needed.

In the eurozone, final February inflation figures confirmed flash estimates ahead of the ECB rate decision today, with headline at 1.9% y/y and core at 2.4% y/y.

Equities: Equities ended sharply lower yesterday after opening in positive territory in early European trading. Markets faded throughout the session as geopolitical escalation around Iran intensified, with equity performance showing an almost perfect negative correlation with the move higher in energy prices.

Unsurprisingly, the energy sector outperformed in this environment. More notably, however, defensive consumer sectors led the downside. This suggests an increasing investor focus on the implicit tax on consumption, initially via higher tariffs, and now increasingly through the rapid rise in energy prices. In that sense, the price action points to growing concern around the pressure on real disposable income.

Asian equities are trading in negative territory this morning. European futures are lower, while US futures are broadly unchanged.

FI and FX: Oil and gas prices rose sharply as gas facilities in Iran and Qatar were hit and facilities in the UAE were attacked. The oil price rose above USD 110 per barrel overnight and is nearing the top from Monday last week. As widely expected, the Fed and BoJ kept policy rates unchanged, while their communication highlighted the uncertainty from the war in the Middle East. Today, we look forward to a string of central bank meetings (Riksbank, SNB, BoE and ECB), all expected to stay on hold. While not our base case, a hawkish Lagarde/ECB could naturally temporarily calm down the decline in EUR/USD today. In general, we emphasize that rising global energy prices and tighter global financial conditions would both be supportive factors for the broad USD. We still like our tactical short EUR/USD idea with a target of 1.12. As for the Riksbank, our baseline is that a wait-and-see approach will not rock the boat for the SEK in an environment where macro factors are taking the backseat and geopolitical developments set the scene for FX.

Daily Pivots: (S1) 0.7867; (P) 0.7903; (R1) 0.7967; More….

USD/CHF's rise from 0.7603 resumed by breaking through 0.7921 temporary top. Intraday bias is back on the upside. The current rally is seen as correcting whole down trend from 0.9200. Next target is 38.2% retracement of 0.9200 to 0.7603 at 0.8213. On the downside, below 0.7842 support will turn intraday bias neutral first.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8091) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage.

Risk aversion deepened across global markets as the combination of escalating energy conflict and a more inflation-focused Federal Reserve weighed on sentiment. While the initial selloff in US equities overnight was triggered by a sharp spike in oil prices, the late-session decline pointed to a second driver—markets reacting to the Fed’s message that inflation risks heightened due to geopolitical uncertainty.

The escalation in the Iran conflict has moved into a more dangerous phase, with both sides targeting critical energy infrastructure. Reports that Israel struck Iran’s South Pars gas field were followed by retaliatory attacks on facilities in Saudi Arabia, the UAE, and Qatar, including the Ras Laffan LNG hub. This shift toward targeting core supply nodes signals a structural increase in energy risk premium.

Importantly, the nature of these attacks suggests that the disruption is strategic rather than temporary. By targeting alternative supply hubs, Iran appears to be attempting to “equalize the pain,” ensuring that global supply remains constrained even if its own exports are curtailed. This dynamic implies that elevated oil prices may persist even in the absence of continuous escalation.

Against this backdrop, the Fed’s latest decision and projections added further pressure on markets. While rates were left unchanged, the upward revision in inflation forecasts—particularly the rise in 2026 PCE to 2.7%—signaled that policymakers see a more persistent inflation path than previously expected.

Chair Jerome Powell reinforced this message, noting that inflation progress would continue but “not as much as we had hoped.” More importantly, he made clear that rate cuts remain conditional, stating that “if we don’t see that progress, then you won’t see the rate cut.” This underscores that the Fed is not prepared to ease policy in the face of rising inflation risks.

At the same time, Powell appeared to temper concerns about growth. While acknowledging that higher energy prices would exert “downward pressure on spending and employment,” he emphasized that the US’s position as a net energy exporter could offset these effects through increased production and investment.

The result is a policy framework that places greater weight on inflation risks than on potential growth headwinds. With inflation already trending higher before the onset of the Iran conflict, the additional energy shock is seen as compounding an existing problem.

Fed fund futures pricing reinforces this interpretation. Markets now assign over 90% probability that rates will remain unchanged at 3.50–3.75% through the first half of the year, with only a marginal chance of a hike. This reflects growing acceptance that the Fed is in no rush to ease policy.

Market reaction reflects this recalibration. US equities extended losses into the close, and the selloff carried into Asian trading, indicating a broad reassessment of risk. However, the response in FX markets has been notably contained, with major pairs largely confined within recent ranges.

Meanwhile, currency performance suggests positioning rather than panic. Aussie led gains, followed by Kiwi and Euro, while Swiss Franc underperformed despite the risk-off tone. Dollar also failed to dominate, reflecting the absence of a clear flight-to-safety dynamic and reinforcing the view that markets are grappling more with inflation repricing than systemic stress.

With SNB, BoE, and ECB decisions ahead, attention now turns to whether other central banks will validate or push back against the emerging inflation narrative. For now, markets remain in a phase of controlled risk aversion, driven less by immediate crisis and more by the realization that inflation risks may persist longer than previously anticipated.

In Asia, Nikkei fell -3.50%. Hong Kong HSI is down -1.82%. China Shanghai SSE is down -1.15%. Singapore Strait Times is down -0.68%. Japan 10-year JGB yield is up 0.045 at 2.263. Overnight, DOW fell -1.63%. S&P 500 fell -1.36%. NASDAQ fell -1.46%. 10-year yield rose 0.057 to 4.259.

SNB, BoE, ECB set to hold as BoE votes and ECB guidance drive volatility

Rates are expected to stay unchanged, but BoE vote split and ECB policy signals could trigger FX moves as markets weigh inflation and growth risks. Read more.

BoJ holds rates, signals further hikes despite temporary inflation dip

BoJ kept rates at 0.75% and reaffirmed tightening bias, looking through a near-term inflation dip as wage growth and rising oil prices support outlook. Read more.

Mixed Australia employment data: Hiring strong, but job quality slips

Employment jumped 48.9k in February, but unemployment rose to 4.3% as full-time jobs fell and labour supply increased. Underlying softness tempers the strong headline. Read more.

NZ GDP disappoints at 0.2% as momentum fades into year-end

New Zealand GDP rose just 0.2% qoq in Q4, missing expectations and slowing sharply from Q3. Weak construction and flat per capita growth highlight a fragile recovery. Read more.

USD/CHF Daily Outlook

Daily Pivots: (S1) 0.7867; (P) 0.7903; (R1) 0.7967; More….

USD/CHF's rise from 0.7603 resumed by breaking through 0.7921 temporary top. Intraday bias is back on the upside. The current rally is seen as correcting whole down trend from 0.9200. Next target is 38.2% retracement of 0.9200 to 0.7603 at 0.8213. On the downside, below 0.7842 support will turn intraday bias neutral first.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8091) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage.

Three major central bank decisions are due, with Swiss National Bank, Bank of England, and European Central Bank all widely expected to leave policy unchanged. Markets are therefore less focused on the decisions themselves and more on the signals embedded in communication, particularly around inflation risks and policy direction amid the ongoing energy shock.

At SNB, policy is expected to remain at 0.00%, with little change in the broader outlook. A recent upward revision in inflation forecasts by SECO, to 0.4% for 2026, offers some room for policymakers, but the central issue remains currency strength. SNB is likely to reiterate that the Swiss franc remains highly valued and maintain a Firm stance on intervention, aiming to prevent further appreciation from tightening financial conditions.

At BoE, attention will center on the vote split rather than the rate decision itself. A hold at 3.75% is expected, but the anticipated 7–2 split could still surprise. Any deviation—either a more hawkish or dovish tilt—would likely trigger immediate moves in Sterling. With inflation still elevated and no clear consensus on the rate path, BoE remains a key source of short-term volatility.

ECB is likely to be the main driver of broader market direction. While a hold at 2.00% is widely expected, the key question is whether policymakers validate or push back against market pricing for rate hikes. Interest rate futures are currently pricing a hike by July and a significant probability of another by year-end, creating a clear gap between market expectations and economist forecasts.

New projections will also be critical. Growth forecasts are likely to be revised lower, reflecting stagnation risks, while inflation projections may be pushed higher due to rising energy prices. This combination raises the risk of a stagflationary backdrop, complicating policy communication and limiting the upside for Euro even in the event of a hawkish tone.

Overall, while policy decisions are largely priced in, divergence in messaging is set to drive market moves. BoE’s vote split could trigger sharp but short-lived volatility, while ECB’s guidance and projections carry greater weight for sustained direction, particularly for EUR.

Bank of Japan left its policy rate unchanged at around 0.75% as widely expected, and maintained a clear tightening bias, signaling that further rate hikes remain on the table. The decision was passed by an 8–1 vote, with Hajime Takata dissenting in favor of an immediate hike to 1%.

The statement emphasized that “if the outlook for economic activity and prices… will be realized, the Bank… will continue to raise the policy interest rate,” reinforcing that the direction of policy remains upward. While near-term inflation is expected to dip below 2% due to fading food price effects and government measures, BoJ made clear it views this as temporary rather than a shift in underlying dynamics.

Looking ahead, policymakers expect inflation to come under renewed upward pressure, driven in part by rising crude oil prices and a sustained wage-price cycle. With labor shortages likely to intensify and inflation expectations gradually rising, BoJ appears comfortable continuing its gradual tightening path, even as it monitors global risks, including Middle East tensions and their impact on energy markets.

Full BoJ statement here.

Australia’s labor market delivered a strong headline in February, with employment rising by 48.9k, well above expectations of 20k. However, the details painted a softer picture, as the unemployment rate jumped from 4.1% to 4.3%, exceeding forecasts.

The composition of employment highlights a deterioration in job quality. Full-time positions fell by -30.5k, while part-time employment surged by 79.4k, suggesting that much of the hiring was concentrated in less stable roles. At the same time, the number of unemployed increased by 35k, reflecting a mismatch between job creation and labor supply.

Participation also rose from 66.7% to 66.9%, contributing to the higher unemployment rate. Monthly hours worked declined by -0.2% mom, reinforcing signs of slightly softer labor demand. Taken together, the data suggests that while headline employment remains strong, underlying conditions could be easing a little bit.

Full Australia employment release here.

New Zealand’s economy expanded by just 0.2% qoq in Q4, missing expectations of 0.4% qoq and slowing sharply from Q3’s 0.9% qoq pace. On an annual basis, GDP rose 0.2% yoy, marking the first year-on-year expansion since the year ended September 2024, but the weak quarterly print highlights fading momentum into the end of the year.

The details show a mixed picture across sectors. Growth was supported by services, with rental, hiring, and real estate activity leading the increase at 0.8% qoq. Other contributors included retail trade and accommodation (+1.3%), financial and insurance services (+1.5%), information media and telecommunications (+1.9%), and arts and recreation (+2.0%). These gains suggest domestic demand held up in parts of the services economy.

However, the broader picture remains soft. GDP per capita was flat, underscoring limited improvement in underlying living standards. Construction fell -1.4% qoq, acting as the largest drag on growth.

Full NZ GDP release here.

Key Highlights

• GBP/USD extended losses and traded below 1.3300.
• A key bearish trend line is forming with resistance at 1.3380 on the 4-hour chart.
• EUR/USD seems to be facing resistance near 1.1550 and 1.1565.
• Gold prices declined heavily from $5,050 and traded below $5,000.

GBP/USD Technical Analysis

The British Pound failed to stay above 1.3380 against the US Dollar. GBP/USD declined further and traded below 1.3350 to enter a bearish zone.

Looking at the 4-hour chart, the pair is struggling below the 1.3580 resistance, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). There is also a key bearish trend line forming with resistance at 1.3380.

The pair traded as low as 1.3219 and is currently consolidating losses. On the upside, the pair is now facing sellers near 1.3380, the 61.8% Fib retracement level of the downward move from the 1.3483 swing high to the 1.3219 low, the 100 simple moving average (red, 4-hour), and the same trend line.

The first major resistance sits at 1.3420. A close above 1.3420 could open the doors for gains above 1.3450. In the stated case, the bulls could aim for a move to 1.3500. Any more gain might open the doors for a test of 1.3550.

If there is no upside break above the trend line, the pair might start a fresh decline. Immediate support is seen near 1.3280. The first key support sits at 1.3250. A close below 1.3250 might call for heavy losses. In the stated case, it could even revisit 1.3120 in the coming days.

Looking at Gold, the price failed to settle above $5,120, resulting in a strong bearish reaction below $5,020.

Upcoming Key Economic Events:

• UK Claimant Count Change for Feb 2026 – Forecast 25.8K, versus 28.6K previous.
• UK ILO Unemployment Rate for Jan 2026 (3M) – Forecast 5.3%, versus 5.2% previous.
• BoE Interest Rate Decision - Forecast 3.75%, versus 3.75% previous.
• US Initial Jobless Claims - Forecast 215K, versus 213K previous.