Global PMI data delivered a stronger picture of economic activity, but the improvement may be vulnerable to renewed energy and trade shocks.

The main developments:

🔹 US jobless claims dropped to 187,000, the lowest level since September 1969. 🔹 Eurozone composite PMI rose to 51.9, marking the first expansion in four months. 🔹 UK composite PMI climbed to 52.1, significantly exceeding expectations. 🔹 Germany returned to growth as manufacturing activity strengthened. 🔹 Australia’s composite PMI reached 52.6, its strongest result since January.

The positive data do not remove the main risks facing markets.

The US has imposed new tariffs of 10% and 12.5% on goods from 60 trading partners. Meanwhile, Brent crude briefly settled above $100 before correcting lower, as attacks on shipping and reduced traffic through the Strait of Hormuz increased concerns about supply disruptions.

For central banks, stronger activity combined with higher energy and import costs creates an uncomfortable policy mix. Holding rates too low could intensify inflation, while additional tightening could weaken the economic recovery.

The foreign exchange market remains focused on monetary policy expectations and geopolitical developments.

Key highlights:

• The U.S. dollar strengthened against the euro and pound amid ongoing expectations of restrictive Federal Reserve policy. • Eurozone PMI data remained weak, reinforcing concerns about economic growth despite persistent inflation risks. • UK business activity disappointed, particularly in the services sector, increasing pressure on GBP. • Japan reported stronger business activity and inflation remains above the Bank of Japan’s target, supporting the yen. • Australia showed resilient economic activity ahead of important inflation data. • Oil prices declined following temporary U.S. sanctions relief for Iranian oil exports and improving shipping activity through the Strait of Hormuz.

Market participants continue to monitor inflation trends, central bank rhetoric, and geopolitical developments as key drivers of currency movements.

EUR/USD trades near 1.1800 as markets await German inflation data.

ECB messaging suggests policy stability.

GBP/USD attempts recovery amid rising expectations of Bank of England easing.

AUD/USD holds above 0.71, supported by firm CPI and a hawkish RBA stance.

USD/JPY weakens toward 155.80 as Japanese inflation and retail data strengthen the yen narrative.

XAU/USD consolidates around $5,200 as geopolitical tensions remain elevated.

Key drivers:

• Inflation trajectories

• Central bank divergence

• Trade and geopolitical uncertainty

The US dollar trades mixed as markets assess Trump’s economic agenda and evolving Fed rhetoric. Policymakers emphasize data dependence, with rate cuts still conditional on sustained disinflation.

Key themes:

• Eurozone inflation slows below target

• Pound strengthens despite possible BoE rate cut

• Yen pressured by fiscal-policy shifts

• Australian dollar rallies on firm CPI

• Oil volatile ahead of US–Iran negotiations

EUR/USD is testing 1.1800 ahead of eurozone CPI. The ECB maintains that policy is appropriately restrictive, with inflation near target.

GBP/USD advances toward 1.3520, despite elevated expectations of BoE rate cuts.

AUD/USD holds above 0.7100 following firm CPI data, supporting the RBA’s cautious tightening stance.

USD/JPY trades near 155.75 as expectations for near-term BoJ tightening diminish amid political commentary.

Gold rebounds toward $5,200, supported by geopolitical risk.

Key themes:

• Inflation remains central

• Diverging central bank paths

• Political influence on monetary policy

• Safe-haven demand returning

The U.S. dollar is gaining against the euro and yen while softening against the pound as investors position ahead of the latest Federal Reserve meeting minutes.

Fed officials delivered mixed signals. Austan Goolsbee left the door open for further rate cuts if inflation trends toward 2%, while Michael Barr and Mary Daly emphasized policy patience. Markets currently anticipate no more than two rate reductions in 2026.

Key regional highlights:

• UK inflation data reinforces expectations of a March rate cut, with probability near 90%.

• ECB leadership speculation briefly pressured the euro.

• Japan posted strong export growth, but the yen remains weak.

• Australian wage growth may push the RBA toward a more hawkish stance.

• Oil prices surged after failed Russia–Ukraine negotiations, increasing geopolitical risk premium.