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• We expect the Bank of England to keep the Bank Rate at 3.75%. Through the past couple of weeks, this has also been priced in by markets and become consensus.
• The war in the Middle East implies huge uncertainty on the outlook from here, but for now our base case remains a cut in April and another one in November.
• We will look closely at MPC members’ views on what the right policy response is, if energy prices remain elevated.
• We see risk of the significant repricing of the BoE to revert, opening up for a move higher in EUR/GBP.

At the February meeting, the BoE took a dovish turn as new analysis showed wagesetting is not the threat to inflationary pressures, the BoE previously thought it was and only a slim majority voted to keep rates unchanged.

Data released since February have been mixed with some key dovish details. PMI data have suggested the economy has picked up speed in Q1. However, January GDP data disappointed as m/m growth hit 0. January inflation was close to expectations, but wage growth is declining and unemployment has edged higher. However, the war in the Middle East has turned market pricing upside down. Ahead of the war, two rate cuts were priced in by investors this year. At the time of writing, markets are leaning towards one hike.

Given the very uncertain situation in energy markets, the most likely outcome is probably that the more centrist leaning doves, Breeden and Ramsden, flip their votes to hold for now. It will be interesting to see the different MPC members’ views on what the right policy response is, if energy prices remain elevated. Worth noticing, 5/9 MPC members are new compared to the start of the previous hiking cycle in early 2022, when the BoE was clearly behind the curve. A majority of the MPC is then likely not to make the mistake of “fighting the previous war” and hiking rates too early. Thursday, ahead of the rate decision, a fresh jobs report will be published. While it is not likely to question the decision on Thursday, it will be interesting to see if the recent trends in the labour market continue.

BoE call. We stick to our expectation of an April rate cut followed by a final one in November, leaving the Bank Rate at 3.25%. We also appreciate that the risk is, the final path of the cutting cycle will drag out.

Market reaction. EUR/GBP has gradually edged lower following the escalations in the Middle East. While the UK is still a net-energy importer akin to the euro area, the energy mix in the UK slightly favours a relatively stronger GBP vs EUR. This poses a risk to our call of a weaker GBP the coming year combined with GBP performing in a USD positive environment. However, we highlight that the UK economy remains fragile and that we see scope for the significant repricing of the BoE to revert in a larger extent than for the ECB, opening up for a move higher in EUR/GBP.

• We expect the ECB to leave the deposit rate unchanged at 2.00% on Thursday 19 March in line with consensus and market pricing. All focus is on signals.
• Lagarde to communicate a full commitment to price stability and readiness to act to upward price pressures but at the same acknowledge highted uncertainty and that it is too early to draw firm conclusions.
• The baseline staff projections will not incorporate higher commodity prices so attention will be on the scenarios, where we expect the ECB to communicate upside inflation risks and downside growth risks.
• Our baseline is unchanged ECB rates in 2026 and 2027 but with upside risk.

We expect the ECB to leave the deposit rate unchanged at 2.00% on Thursday 19 March in line with market pricing and consensus. The ECB is faced with a drastically changed economic outlook due to the war in Iran. Inflation expectations have risen sharply with markets now expecting inflation to average 2.9% y/y for the rest of the year. This has led to significant repricing of the ECB with a total of 45bp worth of hikes priced in by YE 2026 with the first full 25bp hike in September. The communication from Governing Council members the past week has shown a divergence in views. ECB’s Kazimir gave a string of hawkish comments noting that "a reaction by the ECB is potentially closer than many people think" and Schnabel called for “vigilance”. “Vigilance” was in the period from 2005 to 2011 a synonym for a hawkish stance that led to a subsequent policy rate hike. More dovish members have signalled a wait and see approach with Guindos saying, "we need to keep a cool head and not overreact," and Cipollone "it's far too early to have a full assessment". We expect Lagarde to strike a balance between the camps by stating that ECB is fully commitment to price stability and ready to act to upward price pressures, but at the same acknowledge highted uncertainty and that it is too early to draw firm conclusions.

The meeting will include a new set of staff projections. Because the cut-off date for the technical assumptions on energy prices was prior to the war in Iran, the baseline scenario will not fully reflect the rise in energy prices and is therefore of smaller interest. Attention will instead focus on the published alternative scenarios that incorporate higher commodity price assumptions. The upside energy price scenario will provide important insight into how the ECB staff views higher energy prices’ impact on the euro area economy, thereby offering a signal for the rate path. We pay special attention to mentioning of medium-term inflation risks since market-based measures have risen above 2% (1y1y inflation at 2.20%, 2y2y at 2.13%, and 5y5y at 2.20%). If Lagarde explicitly mentions that risks to medium-term inflation have shifted upwards, we would interpret this as a clear hawkish signal.

In December 2023 ECB staff modelled a similar Middle East war scenario with a partial closure of the Strait of Hormuz and a lift of the oil price to USD 130/bbl and natural gas at EUR 83/Mwh. This led to 0.85pp higher euro area HICP inflation in the first year and 0.6pp lower GDP growth compared to the baseline. We therefore expect ECB to highlight that the risk assessment on inflation is tilted to the upside while the growth risks are tilted to the downside.

Our baseline is unchanged ECB rates but with a clear upside risk

In our base case we expect the rising energy prices to have a temporary effect on the price level, but we expect only small changes to medium-term inflation due to limited pass-through to core. We note that in the past six months the ECB has been focused on core inflation amid headline being projected below 2% in 2026/27. As the 2025 strategy review also acknowledged, the flexibility in the medium-term inflation target should allow larger short-term deviations due to more frequent supply shocks. We therefore expect the ECB to “look through” the Iran shock as growth is also negatively affected, and subsequently we do not expect the ECB to raise policy rates in 2026 nor 2027. However, the scars from the latest inflation crisis have likely lowered the threshold for when the ECB will act to upward price pressures even though the textbook reaction would be to “look through” the shock. Central banks tend to fight their last wars (too hawkish ahead of GFC in 2008, too dovish ahead of 2022 inflation crisis). Combined with energy prices and risks of second round effects, this constitutes an upside risk to our ECB call even though the economic situation is significantly different compared to 2021/2022.

• Geopolitics and oil price dominate market sentiment
• Equity weakness could persist as cryptos unexpectedly benefit
• Dollar strength could linger if Middle East conflict escalates; could gold follow suit?
• Seven central banks meet next week; the RBA is closest to a rate hike
• Fed and ECB to remain cautious; SNB could surprise with negative rates

Middle East conflict remains in the driver’s seat

More than ten days after the start of the US-Israel-Iran hostilities, geopolitics remain the main market driving force. Investors are almost entirely focused on the duration of the current conflict and the damage to the real economy.

Notably, the second week of the conflict has revealed cracks in the US-Israel alliance. The Israeli side appears determined to see the conflict through to the end, aiming for regime change in Iran, and pursuing a ground offensive in Lebanon, while the US officials are already thinking ahead to the impact on midterm elections.

There have been conflicting messages from US President Trump and government officials regarding how close to “victory” the alliance currently is, with a period of four to five weeks being touted as the most likely duration of hostilities. Additionally, there are concerns within Republican ranks that rising petrol prices, and a plunging stock market could dent the party’s chances of maintaining a majority in Congress in November.

Meanwhile, Trump has put tariffs in the spotlight once again. The US administration has opened a Section 301 investigation into manufacturing practices of China, the EU, Mexico, Japan and another 12 major trading partners, aiming to replace the tariffs deemed illegal by the US Supreme Court. The universal 15% tariffs imposed after the Court’s decision can only last six months and Trump’s team wants to be ready for the next step.

Oil remains the barometer for risk appetite

Iran continues to control the Strait of Hormuz, severely reducing the flow of oil and gas, while attacking oil installations in fellow Arab countries in retaliation for Israeli attacks on Iranian oil depots. The newly elected spiritual leader quickly confirmed his hardline credentials, opening the door to a protracted conflict.

As long as passage through the Strait of Hormuz remains risky, with only a handful of ships making the round trip since the start of the conflict, oil prices will remain elevated, with the occasional jump higher when hostilities and the rhetoric intensify.

Should there be light at the end of the tunnel with a possible ceasefire – which seems extremely unlikely at this stage – oil might not return to previous low levels, as the current developments have highlighted how easy it is for Iran to disrupt oil and gas supply flows should it wish to do so again.

Cryptos outperform equities since the start of the conflict

Equity indices have been under only modest pressure so far this week. One could say that investors are potentially too optimistic about the US’s ability to secure the Strait of Hormuz, restoring the supply of oil. Surprisingly, cryptocurrencies have been faring better than equities since the start of the Middle East conflict. Bitcoin is up 9.3% since February 27, while the S&P 500 index is down 3% in the same period.

Another risk-off reaction is clearly on the cards upon a genuine escalation of hostilities. That could take the form of Iran targeting non-military targets, hitting the US navy, an Israeli attempt to remove the newly elected supreme leader, and/or preparing a ground offensive against Iranian nuclear installations.

Such a series of events might finally boost demand for safe haven assets, most of which have been disappointing so far. Gold has failed to rally above $5,200, ignoring data suggesting that the People’s Bank of China remains a steady driving force of demand for gold, while the yen has been a victim of the dollar’s exceptional performance.

Central bank meeting in the spotlight

Amidst ballooning concerns for a repeat of the post-COVID inflation surge choking most economies, seven central banks will hold their respective policy meetings next week. Some are expected to alter rates, others to prove less exciting than anticipated, but all have been experiencing sharp adjustments in market rate expectations.

Rate hikes from the RBA and the BoJ next week?

Both the RBA (Tuesday, 03:30 GMT) and the BoJ (Thursday, 03:30 GMT) are seen closer to announcing a rate hike next week compared to the rest of the group.

The RBA hiked in January and has been hawkish since then, with RBA Deputy Governor Andrew Hauser warning about “an oil price shock posing upside risks to inflation”, and hence further supporting rate hike expectations. The aussie has been resisting the dollar’s strength and a rate hike announcement could push this pair towards the mid-2022 highs.

BoJ rate hike expectations have been stable throughout this period, as the Middle East developments have added another layer of complexity to the BoJ. However, a successful Shunto round, with sizeable wage increases agreed, should unlock the April rate move, provided the US-Israel-Iran conflict does not escalate further. This means that a likely hawkish tilt on Thursday might put a temporary stop to the recent rally in dollar/yen, though Japanese authorities are on high alert to intervene if the pair climbs towards 160, even ahead of the BoJ meeting.

Could the SNB, the BoE or the BoC surprise on Thursday?

The first SNB meeting of 2026 comes at a crucial time. The Swiss franc is already up 2.8% this year against the euro, with decent gains versus both the dollar and the pound. The appreciation has not been consistent throughout this year, with the latest geopolitical developments adding to demand for the franc.

The SNB has allegedly already intervened to stem the franc rally, but this has proven ineffective. A dovish tilt, or a return to negative rates on Thursday (08:30 GMT) might prove insufficient to change franc’s fate, leaving aggressive intervention as the only option.

Ahead of the Middle East conflict, the 5-4 vote at the February meeting, dovish rhetoric and weakening data had beefed up the chances of a March BoE rate cut to 80%. This has completely reversed, with the market pricing out rate cuts for 2026. The pound has benefited from this reversal, significantly outperforming the euro, but this move might look exaggerated given the BoE’s dovish pedigree. The probable lack of a hawkish message on Thursday (12:00 GMT) could open the way to a reversal of this pound rally.

Similarly, Bank of Canada officials will probably be torn between the positive impact from the increased oil prices and weakening domestic economy, which is once again targeted by US tariffs. The loonie has been surprisingly resisting the dollar strength, but that might change on Wednesday as a balanced BoC rhetoric might upset expectations of a gradual tightening later in the year.

Could the Fed and the ECB meetings prove less exciting?

The latest developments have completely altered the rate outlook for the two heavyweights. The ECB – being more price conscious compared to the Fed at this juncture – is seen tightening its monetary policy stance by 44bps in 2026, up from just 4bps at the start of the year. This repricing looks exaggerated and has offered little assistance to the euro, which is down 2.6% this month against the dollar, the strongest monthly drop since November 2024.

Few surprises are expected on Thursday (13:15 GMT), as President Lagarde is poised to repeatedly highlight and emphasize the ECB’s readiness to quelch any likely prices increased from becoming entrenched, but will most likely stay short of signalling a hawkish shift.

Finally, the dollar has been outperforming its main counterparts so far in 2026, with euro/dollar dropping by around five big figures below its late January peak of 1.2081 and getting close to the lower boundary of the recent rectangle. Wednesday’s meeting (18:00 GMT) will be the penultimate one for Chair Powell, and hence a balanced and cautious tone is expected to dominate. That said, all eyes will be on the Summary of Economic Projections (SEP) and the dot plot as expectations for two rate cuts have diminished following the current oil price surge.

Cryptocurrencies may have finally seen their dawn after a catastrophic performance throughout the past 6 months.

October 2025 saw new all-time highs for Bitcoin, Ethereum, XRP, and a few others, while the rest of the altcoin Market remained muted.

However, having woken towards their weak tops right ahead of a winter of sentiment and economic data, Cryptocurrencies saw their own seasonal rejection. That came after a historic year-long run in Bitcoin that took it above $100,000 for the first time.

The digital asset markets have been subject to considerable mockery, having performed the least well among the major asset classes in 2025. Still, Markets are playing the long-term game, and rotation flows can shift the narrative quickly. And that would also undermine their stellar runs since 2024.

Oil is retracing from its previous session's $96 highs after a 10% run. That spike had a significant impact on the entire Market, as it scared investors by the prospect of higher inflation due to rising energy prices, which in turn affected production costs – but Cryptos seem to be living at their own pace.

Since the conflict, while Global Stock Markets have struggled, Bitcoin and Ethereum formed a double bottom and remained relatively protected from the general deleveraging wave seen elsewhere.

The 20 Millionth Bitcoin was mined on March 10 – and most of us (most probably) won't be there to see the last Bitcoin mined – Supply peaks at 21 Million – sometime in about 120 years.

Bitcoin halving schedule towards 2050 – Source: CoinGecko

For those who didn't know, Bitcoin's halving rate halves the reward per mined block as more supply is being mined. This creates a sense of scarcity over time, and it has already had its greatest effect

Ethereum is also seeing its largest on-chain activity, now above its 2021 peak. This hasn't yet fully shown up in Crypto prices, as general sentiment remains relatively weak, but it is certainly helping the case at least withstand further selling pressure.

Let's dive right into the intraday Charts with technical levels for Bitcoin (BTC) and Ethereum (ETH).

Current Session in Cryptos – March 13, 2026 (9:10). Source: FInviz

Bitcoin (BTC) 4H Chart and Technical Levels

Bitcoin (BTC) 4H Chart, March 13, 2026 – Source: TradingView

Bitcoin is now evolving within a strong intermediate Bull channel, having also broken its 4H 50 and 200-period Moving Averages.

This shouts a persistent rebound in the Crypto, particularly after the recent double bottom, currently breaking $73,000.

• On the short-run, bulls will want to break the early March $74,077 highs and close above
  • The top of the intermediate Channel is at $78,000
• On the longer run, it will be interesting to see what happens at $82,000, when Bitcoin tests the upper bound of its October descending channel – Breaking above could relaunch a Bull-trend.

Levels of interest for BTC trading:

Support Levels:

• $70,000 Short-term momentum Pivot (50 and 200-4H MA)
• $60,000 to $63,000 Main 2024 support (recent double bottom)
• $59,935 February Lows
• $52,000 to $58,000 Next support and 200-Week MA ($55,000 Mid-point)
• $40,000 Mid-2024 breakout support

Resistance Levels:

• March 4 Highs $74,077 (Bulls need to break!)
• $75,000 Key long-term Pivot (acting as resistance)
• $80,000 to $83,000 mini-resistance (50-Day MA)
• $90,000 to $95,000 Pivotal Resistance
• Current ATH Resistance $124,000 to $126,000

Ethereum (ETH) 4H Chart and Technical Levels

Ethereum (ETH) 4H Chart, March 13, 2026– Source: TradingView

Ethereum is also bouncing in a more progressive upward channel since its end-February double bottom.

Similarly as BTC, bulls will want to mark a clean break above $2,200 (and session close optimally) to relaunch the Bull-momentum even further.

• Above $2,300, the short-term will be bullish for Ethereum.
• The longer-run bounce will be confirmed only above $2,600.
• Watch out for some slightly overbought RSI conditions and keep a close eye on overall Market sentiment (and Oil prices)

Levels of interest for ETH trading:

Support Levels:

• 4H 200 MA $2,118
• Channel lows $2,000
• $1,700 to $1,800 Pre-Bounce 2025 Key Support (testing)
• $1,744 February 6 lows
• $1,380 to $1,500 2025 Support
• 2025 Lows $1,384

Resistance Levels:

• March 4 Highs $2,201 (testing)
• $2,100 to $2,300 June War support now Key Pivot
• $2,500 to $2,700 June 2025 Key Support now Resistance (Channel Highs)
• $3,000 to $3,200 Major momentum Pivot (Test of the $3,000)
• $4,950 Current new All-time highs

Daily Pivots: (S1) 1.1488; (P) 1.1533; (R1) 1.1556; More….

Intraday bias in EUR/USD stays on the downside as fall from 1.2081 is in progress. Deeper decline should be seen to 38.2% retracement of 1.0176 to 1.2081 at 1.1353 next. Overall, near term outlook will stay cautiously bearish as long as 1.1666 resistance holds, in case of another recovery.

In the bigger picture, a medium term top should be in place at 1.2081 on bearish divergence condition in D MACD. Sustained trading below 55 W EMA (now at 1.1500) should confirm rejection by 1.2 key cluster resistance level. That would also raise the chance that whole up trend from 0.9534 (2022 low) has completed as a three wave corrective bounce too. For now, medium term outlook is neutral at best as long as 1.2081 holds, even in case of rebound.

Daily Pivots: (S1) 1.3392; (P) 1.3438; (R1) 1.3463; More...

Intraday bias in GBP/USD is back on the downside with breach of 1.3252 support. Fall from 1.3867 is resuming, and should target 1.3008 structural support. For now, risk will stay on the downside as long as 1.3482 resistance holds, in case of recovery.

In the bigger picture, considering bearish divergence condition in both D and W MACD, a medium term top should be in place from 1.3867. Firm break of 1.3008 support will argue that fall from 1.3867 is at least corrective the whole rise from 1.0351 (2022 low) with risk of bearish reversal. That would open up further decline to 38.2% retracement of 1.0351 to 1.3867 at 1.2524. For now, medium term outlook will be neutral at best as long as 1.3867 resistance holds, or under further development.

Daily Pivots: (S1) 0.7815; (P) 0.7840; (R1) 0.7886; More….

USD/CHF's rebound from 0.7603 is resuming by breaking 0.7877 resistance. Intraday bias is back on the upside and further rise should be seen to 0.8039 resistance next. On the downside, though, break of 0.7746 support will turn bias back to the downside for retesting 0.7603 low instead.

In the bigger picture, a medium term bottom could be in place at 0.7603 on bullish convergence condition in D MACD, Firm break of 0.8039 resistance will argue that it's at least correcting the down trend from 0.9002. Stronger rebound would then be seen to 38.2% retracement of 0.9200 to 0.7603 at 0.8213. However, break of 0.7603 will resume the down trend to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382.

Canada's economy lost 84k jobs in February (-0.4% month/month), far below consensus expectations for a 10k increase. Total employment is now essentially unchanged from September (+0.1%) having reversed most of last fall's gains. The details painted a similarly downbeat picture with the number of full-time workers down 108k, and the number of private sector workers down 73k for the month.

The unemployment rate rose to 6.7% from 6.5% in January. The rise in the unemployment rate came despite another 27k people leaving the labour force. The decline took the labour force participation rate down another 0.1 percentage points (p.p.) to 64.9%. StatCan noted that the unemployment rate for both youth (+1.3 p.p.) and core working aged men (+0.3 p.p) rose in the month.

Job losses were spread across both goods (-28k) and services producing industries (-56k), with wholesale and retail trade (-18k), "other services" (-14k), construction (-12k) and manufacturing (-9.2k) bearing the brunt of the declines.

Wage growth was up in February, with average hourly wages up 3.9% versus a year ago (3.3% in January).

Key Implications

This was a decidedly weak report. Not only did employment decline, but the labour force contracted for a second consecutive month. Even looking through some of the noise in the top-line jobs figures, the unemployment rate rose again, reversing most of last month's improvements. Undoubtedly, the report was weaker than expected, but looking through the noise shows an economy that has struggled to gain traction. Something that was to be expected given the structural changes Canada is facing.

Looking forward, we are expecting the labour market to tread water in 2026, as a rapid slowdown in population growth drags on labour supply, and soft economic momentum limits hiring. The wildcard to all of this is how big the inflation shock from the ongoing conflict in the Middle East will be. The duration of the supply disruption remains highly uncertain, but its length will impact inflation and, thereafter, consumer spending and the economy at large.

Daily Pivots: (S1) 158.81; (P) 159.12; (R1) 159.67; More...

Intraday bias in USD/JPY remains on the upside at this point. rise from 139.87 is resuming and should target a retest on 161.94 high. Firm break there will confirm larger up trend resumption. Next target is 61.8% projection of 139.87 to 159.44 from 152.25 at 164.34. On the downside, below 158.55 minor support will turn intraday bias neutral first.

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 152.16) holds. Firm break of 161.94 will pave the way to 61.8% projection of 102.58 to 161.94 from 139.87 at 176.75.

Market sentiment showed tentative signs of stabilization today as Brent crude slipped back below the psychological $100 per barrel level. The modest pullback in energy prices helped European equities recover from earlier losses while U.S. futures also moved back into positive territory.

However, the shift appears to reflect stabilization rather than a genuine improvement in risk appetite. The underlying geopolitical backdrop remains tense, with no clear end in sight for the Iran war, leaving markets reluctant to fully embrace risk.

Comments from U.S. President Donald Trump reinforced that uncertainty. In a social media post, Trump said the US has “unparalleled firepower, unlimited ammunition, and plenty of time.” Rather than calming markets, the message was interpreted by some investors as a signal that the conflict could drag on for an extended period.

Against this uncertain backdrop, Yen has emerged as the strongest performer in currency markets today. Yet the rally is being driven by a complex set of forces rather than a straightforward safe-haven move. One key factor supporting the yen is rising intervention risk as USD/JPY approaches the psychologically important 160 level, widely seen by markets as a potential line in the sand for Japanese authorities.

Japan’s Finance Minister Satsuki Katayama said today that the government is in “closer contact with U.S. authorities,” while also highlighting the impact of rising crude oil prices on household finances. Such language is typically interpreted as Tokyo seeking tacit approval from Washington for currency intervention.

At the same time, speculation is growing that the Bank of Japan could accelerate its policy normalization path. According to a Reuters report citing sources familiar with the central bank’s thinking, the inflationary impact of Middle East supply shocks may increase the likelihood of another rate hike as soon as April.

Despite Yen’s strength, Dollar is also attracting strong demand. Risk aversion tied to the ongoing Middle East conflict is supporting safe-haven flows into U.S. assets, while fading expectations for Fed rate cuts are further underpinning the greenback.

These opposing forces have effectively trapped USD/JPY in a narrow range. Intervention fears prevent the pair from moving significantly higher, while Dollar strength keeps it from falling decisively. As a result, traders are expressing Yen demand through cross instead. The market is actively selling currencies such as Euro and Pound against Yen, creating a steep decline in Yen crosses even while USD/JPY remains largely unchanged.

Sterling is particularly under pressure following disappointing UK economic data released earlier today. January GDP showed no growth on the month, missing expectations for a 0.2% expansion and reinforcing concerns that the UK economy entered 2026 with limited momentum. For the BoE, with oil prices elevated due to the Iran conflict, the risk of a stagflation scenario—sluggish growth combined with rising energy-driven inflation—has become a central concern for policymakers.

Loonie is also underperforming after a sharply weaker labor market report. Employment plunged by -83.9k in February, far worse than expectations for a modest increase, while the unemployment rate rose to 6.7%. The sudden deterioration in employment conditions raises questions about the underlying strength of the Canadian economy. The BoC is widely expected to remain on hold next week, but today’s data increases the risk that policymakers may eventually need to consider additional support if labor market weakness persists.

In Europe, at the time of writing, FTSE is up 0.24%. DAX is up 0.20%. CAC is up 0.02%. UK 10-year yield is up 0.003 at 4.716. Germany 10-year yield is down -0.010 at 2.951. Earlier in Asia, Nikkei fell -1.16%. Hong Kong HSI fell -0.98%. China Shanghai SSE fell -0.82%. Singapore Strait Times fell -0.27%. Japan 10-year JGB yield rose 0.057 to 2.245.

US core PCE rises 0.4% mom in January as consumer spending stays strong

US inflation data for January presented a mixed picture, with price pressures remaining firm even as the headline annual pace eased slightly. The headline PCE price index rose 0.3%om, while the core measure—which excludes food and energy—increased by 0.4% min. Both readings matched market expectations and indicate that underlying inflation remains somewhat sticky.

On an annual basis, headline PCE inflation slowed modestly from 2.9% to 2.8%, coming in slightly below forecasts. However, core inflation edged higher from 3.0% to 3.1% year-on-year, highlighting persistent price pressures in the broader economy and reinforcing the view that the disinflation process remains uneven.

Consumer demand remained resilient during the month. Personal spending increased by USD 81.1B, or 0.4% mom, exceeding expectations of 0.3% mom. Meanwhile, personal income rose by USD 113.8B, also translating into a 0.4% monthly gain but falling slightly short of 0.5% mom forecasts.

Canada jobs plunge -83.9k in February as unemployment rate climbs to 6.7%

Canada’s labor market suffered a sharp setback in February, with employment plunging by -83.9k, far worse than expectations for a modest gain of around 10k. The decline marks a significant deterioration in labor conditions.

The drop in employment was broad-based across sectors. Services-producing industries shed around -56k jobs, while goods-producing sectors lost roughly -28k positions. The deterioration pushed the unemployment rate higher to 6.7% from 6.5%, while the participation rate edged down slightly to 64.9%.

Despite the sharp decline in employment, wage growth accelerated noticeably. Average hourly wages rose 3.9% yoy in February, up from 3.3% in January.

Eurozone industrial production drops -1.5% mom as manufacturing weakness deepens

Eurozone industrial production fell sharply in January, highlighting renewed weakness in the region’s manufacturing sector. Output declined by -1.5% month-on-month, well below expectations for a 0.7% increase, suggesting that industrial momentum at the start of 2026 was significantly weaker than anticipated.

The decline was broad-based across most categories. Production of intermediate goods dropped by -1.9%, while capital goods output fell by -2.3%. Durable consumer goods production also declined by -1.9%, and non-durable consumer goods saw the steepest fall with a -6.0% drop. Energy output was the only bright spot, rising by 4.7% during the month and partially cushioning the overall decline.

Across the broader European Union, industrial production fell by -1.6% month-on-month. Ireland recorded the largest contraction with a -9.8% drop, followed by Luxembourg (-4.3%) and Sweden (-4.1%). In contrast, a few smaller economies posted gains, with Portugal leading the increases at +4.2%, followed by Latvia (+3.3%) and Lithuania (+2.7%).

UK GDP flat in January as services stall, production contracts

UK economic growth stalled at the start of the year, with GDP showing no expansion in January, falling short of expectations for a modest 0.2% mom rise. Sector data showed a mixed picture beneath the headline reading. Services output, which accounts for the largest share of the UK economy, was flat during the month. Production declined slightly by -0.1%

Construction posted 0.2% mom growth, but the sector remains under sustained pressure following a prolonged period of contraction driven by high borrowing costs and subdued investment.

Looking at the broader trend, the UK economy still managed a modest expansion of 0.2% in the three months to January, an improvement from the 0.1% growth recorded in the three months to December. Services output rose by 0.2% over the period, while production delivered stronger growth of 1.3%. However, construction was a significant drag, contracting by -2.0% over the same period.

New Zealand BNZ manufacturing holds firm at 55 in February

New Zealand’s manufacturing sector continued to expand in February, with BusinessNZ Performance of Manufacturing Index edging slightly lower from 55.1 to 55.0. While the headline reading dipped marginally, the index remains comfortably above the 50 breakeven level, signaling ongoing growth in the sector.

Underlying components showed mixed but generally positive trends. Production rose modestly from 56.5 to 56.7, while new orders strengthened from 56.6 to 57.6, indicating improving demand conditions. Employment, on the other hand, fell notably from 52.6 to 50.4.

Survey responses pointed to improving business sentiment, with the share of positive comments rising to 55.5% in February from 47.7% in January. Manufacturers reported stronger orders, enquiries, and sales, helped by firmer export demand and improving conditions across certain sectors.

BNZ Senior Economist Doug Steel noted that while geopolitical tensions in the Middle East are dominating market attention, February’s PMI reading provides a solid starting point for the manufacturing sector heading into an uncertain global environment.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 158.81; (P) 159.12; (R1) 159.67; More...

Intraday bias in USD/JPY remains on the upside at this point. rise from 139.87 is resuming and should target a retest on 161.94 high. Firm break there will confirm larger up trend resumption. Next target is 61.8% projection of 139.87 to 159.44 from 152.25 at 164.34. On the downside, below 158.55 minor support will turn intraday bias neutral first.

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 152.16) holds. Firm break of 161.94 will pave the way to 61.8% projection of 102.58 to 161.94 from 139.87 at 176.75.