USD/CAD has declined slightly following the US PCE inflation data for January and Canadian GDP data for Q4 and December. The US core PCE inflation rate decreased to 2.6% from 2.8% in December, while the Canadian economy grew at an annualised rate of 2.6%.

Despite the slight drop, the USD/CAD pair remains around 1.4430 during North American trading hours. The US core PCE inflation, which omits food and energy costs, revealed a monthly increase of 0.3%, up from 0.2% previously.

The Canadian GDP results were mixed, with a growth rate of 2.6%, surpassing the 2.2% growth in the previous quarter and higher than the expected 1.9%. In December, growth was reported at 0.2%, matching November’s decline, and below the anticipated 0.3%.

Overall, the outlook for the Canadian Dollar remains weak, especially after the announcement of 25% tariffs by US President Donald Trump on Canada and Mexico, set to take effect on March 4.

This minor weakening in the exchange rate suggests that traders are responding more to the inflation data from the United States than to Canada’s mixed GDP figures. A 0.3% monthly increase in core PCE inflation, while not drastic, indicates a steady rise in prices. That contributes to expectations regarding Federal Reserve policy, particularly in relation to interest rates.

The 2.6% annualised GDP growth in Canada, though better than estimates, attaches a few added layers to market sentiment. A stronger-than-expected expansion would usually support the local currency. However, December’s flat performance underlines a lack of consistent economic momentum. That could mean investors will be hesitant before assuming any broad strength in the Canadian Dollar.

Moreover, tariffs announced by Donald put additional pressure on market positioning. A 25% levy on Canadian and Mexican goods entering the United States will likely drive concerns over trade and economic performance in both countries. Even though there’s no immediate reaction in foreign exchange markets, it is something participants will need to factor in, particularly if trade tensions escalate further past March.

For traders involved in derivatives that hinge on the movement of this pair, it’s worth keeping a close watch on whether the upward trajectory in US inflation remains steady in the next release. If upcoming data reinforces higher price pressures, adjustments in forward-looking rate predictions may lead to fluctuations in the pair. We would also monitor how market sentiment evolves regarding Canadian GDP in the next couple of months. A weaker Canadian Dollar might persist if economic data remains inconsistent and trade concerns intensify.

At present, with the exchange rate hanging around 1.4430, it’s evident that neither side is making a decisive move. The next shifts will depend on whether traders place greater weight on inflation trends in the United States or on Canada’s economic trajectory. Given that previous GDP outcomes have been mixed, it will be just as necessary to examine domestic indicators in Canada, including employment data, before assuming any lasting movement in the pair.

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The Pound Sterling (GBP) remains steady around 1.2600 against the US Dollar (USD) as the latter loses some of its earlier gains. The US Dollar Index (DXY) stabilises near 107.40, with core Personal Consumption Expenditure (PCE) inflation showing a year-on-year decline to 2.6% for January.

The core PCE data indicates a potential delay in interest rate adjustments by the Federal Reserve, which could adversely affect the US Dollar. New tariff measures proposed by US President Donald Trump may limit further declines in USD as he announced increased levies on goods from China, Canada, and Mexico.

The GBP is responding cautiously amidst a moderate expected easing cycle from the Bank of England (BoE). Traders have accounted for two interest rate cuts, while other central banks, such as the European Central Bank (ECB), are expected to implement more cuts.

Average earnings in the UK increased to 5.9%, suggesting stronger wage growth than anticipated. BoE Deputy Governor Dave Ramsden acknowledged this growth while maintaining confidence in ongoing disinflation.

Negotiations for a trade deal between the UK and US did not reach a conclusion, although Trump expressed optimism for a swift agreement. The GBP currently faces resistance near 1.2765, with support around the 1.2333 low from February 11.

Core inflation, excluding volatile sectors, plays a key role in monetary policy, with central banks generally targeting around 2%. Data indicates that increases in inflation can lead to higher interest rates, boosting currency values, while lower inflation often has the opposite effect.

With Sterling holding near 1.2600, traders face a balancing act as US monetary policy decisions remain uncertain. The US Dollar has softened after personal consumption expenditure data revealed inflation pressures easing. At 2.6% year-on-year for January, the core measure suggests the Federal Reserve might delay adjusting rates, which in turn makes the Dollar less attractive for yield-seeking investors. Still, new trade restrictions, including those aimed at key US trading partners, may provide a counterweight to further losses.

On the UK side, expectations of two rate reductions by the Bank of England this year are already factored into market pricing. Compared to the ECB, which is likely to take a more aggressive approach to cutting rates, the BoE may take a more measured stance. Dave, who serves as Deputy Governor, pointed out that wage growth has pulled higher at 5.9%, reinforcing the view that inflationary pressures are softening, despite some resilience in earnings data.

With no breakthrough on a UK-US trade pact, uncertainty lingers over the Pound’s longer-term momentum. While Trump remains upbeat about reaching common ground, there’s little to suggest an immediate resolution. For traders navigating GBP/USD movements, resistance remains intact around 1.2765, while downside support is closer to the February low of 1.2333.

Markets continue to assess inflation trends, given their influence on rate decisions. When price pressures rise beyond central bank targets, hikes in borrowing costs tend to follow, strengthening a currency. By contrast, central banks lower rates when inflation slows, reducing appeal for investors holding that currency. Traders should keep an eye on coming data releases, particularly inflation and employment figures, as these will determine how aggressively policymakers adjust their stance in the weeks ahead.

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US stocks are expected to open with modest gains despite further selling of Nvidia shares. Nvidia’s stock has decreased by 2% in pre-market trading after an 8% decline following its earnings report.

The S&P 500 futures are up by 9 points today, although they were previously up 30 points before ending down nearly 100 points yesterday. Currently, Nvidia is trading at $117, down from $136 at the open yesterday, and the S&P 500 has seen nearly all its gains lost since the US election.

This movement shows that investors remain cautious despite signs of stability in futures markets. The selling of Nvidia shares appears to be continuing, and the broader market is struggling to regain lost ground. The drop in its stock suggests that traders are reassessing long-term growth expectations after the company’s earnings report. Some might have been expecting stronger guidance, while others are likely taking profits after a strong rally earlier in the year.

With the S&P 500 futures showing a modest rise, there is a hint of resilience, but yesterday’s reversal highlights how fragile sentiment remains. A gain of 30 points earlier in the session suggested buyers were stepping in, yet that optimism faded as the day progressed. Now, with futures up by just 9 points, confidence appears measured. The broad index has now wiped out almost all advances seen since the US election, reinforcing that sellers continue to dominate in the short term.

The levels Nvidia is trading at now indicate how quickly sentiment can shift after earnings. A drop from $136 at yesterday’s open to $117 today highlights how swift corrections can be when expectations run too high. The momentum behind the decline will likely influence positioning going forward, particularly among short-term traders who react quickly to such adjustments.

As we’ve observed before, the balancing act between growth expectations and profit-taking plays a key role after major earnings announcements. When a stock has run up significantly before a report, even decent results can trigger selling if they fall short of the most optimistic forecasts. The current price action suggests that many are taking a step back to reassess Nvidia’s valuation in light of new information.

For those positioning themselves in the coming weeks, the focus should be on how broader market sentiment develops. If selling pressure persists in leading stocks, it could weigh on overall index performance. At the same time, any shift towards buying in beaten-down names could signal a stabilisation effort. It will be important to watch trade volumes and whether losses accelerate or begin to slow.

Additionally, attention should be given to how other large-cap technology stocks respond. If declines are isolated, it may indicate this is specific to Nvidia. However, if weakness extends to other key players, it could suggest a larger shift in sentiment towards the sector. Given recent market movements, each session will provide fresh insight into whether this is a contained adjustment or part of a broader retreat.

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EUR/USD has increased to around 1.0410 during the North American trading session. The rise follows the release of US PCE data for January, showing core PCE inflation steady at 2.6% year-on-year and a month-on-month increase of 0.3%.

Earlier, the US Dollar experienced gains due to new tariff threats from President Trump, including 25% tariffs on Canada and Mexico. The Philadelphia Fed Bank President supports maintaining current interest rates, anticipating these tariffs could impact US economic growth.

German HICP data showed a year-on-year increase of 2.8% in February, which exceeded expectations. Market forecasts predict the European Central Bank will cut its Deposit Facility rate to 2.5% in the upcoming meeting.

German Retail Sales rose by 0.2% in January, contrary to expectations of no change, and 2.9% on a yearly basis. This follows a contraction of 1.6% in December, suggesting resilient consumer spending trends.

EUR/USD faces selling pressure after breaking out of its recent consolidation range. The next support level is marked at 1.0285, while the resistance level is at 1.0530.

In currency comparisons, the Euro performed well against major currencies today, particularly the Japanese Yen.

The move to 1.0410 comes as traders digest inflation data from the US that, at least for now, suggests price pressures remain stable. A core PCE increase of 2.6% year-on-year was exactly what economists had forecast, and a monthly uptick of 0.3% aligned with expectations. No surprises there, which may explain the relatively muted reaction from markets.

Earlier in the day, the US Dollar briefly strengthened after comments from the former President about raising tariffs. A 25% tariff on goods from Canada and Mexico would, if implemented, throw a wrench into trade relations. These kinds of developments usually push investors to buy up safe-haven currencies like the US Dollar, but with the Federal Reserve likely to hold interest rates steady for now, the rally quickly fizzled out. Even Patrick, who runs the Philadelphia Fed, has made it clear that he sees no need to change rates at the moment. If tariffs slow economic growth, there will be even less urgency to adjust policy.

Economic releases in Europe have added another layer of complexity. Germany’s inflation came in at 2.8% for February, surpassing estimates. Markets have already priced in an interest rate cut from the European Central Bank, with expectations that policymakers will lower the Deposit Facility rate to 2.5% at the next meeting. However, inflation readings like this could lead to some hesitation among ECB officials. If prices keep rising beyond forecasts, the timeline for a rate cut might shift further out.

Retail data out of Germany also painted a slightly different picture from what analysts had predicted. Consumer spending edged up 0.2% in January after a hefty drop in December, signalling that households are still spending despite uncertain economic conditions. Compared with a year ago, sales jumped 2.9%, reinforcing the argument that demand is holding up better than feared.

For those trading EUR/USD, the recent breakout turned into selling pressure rather quickly. The currency pair has resistance around 1.0530, while support sits near 1.0285. If the exchange rate drifts lower, that support zone could be an area where buyers step in again.

Outside of this specific exchange rate, the Euro has performed better today against other major currencies, especially when matched up against the Yen. That suggests Europe’s currency still has a degree of strength, at least for now, even as it faces headwinds from policy expectations and shifting economic data.

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US advance wholesale inventories rose by 0.7%, contrasting with a predicted drop of 0.5%.

The previous figure was adjusted from a decline of 0.5% to a decline of 0.4%.

There are concerns that these changes may be linked to stockpiling in anticipation of upcoming tariffs.

An increase in wholesale inventories of this scale suggests businesses are holding onto more goods than expected. This could indicate confidence in future demand, supply chain inefficiencies, or preparations for external risks such as trade policy changes. The adjustment to the prior data, though minor, reinforces that stock levels were not shrinking as quickly as originally thought.

If this build-up is tied to expected tariffs, firms might be accelerating purchases to avoid increased costs later. This could mean higher near-term activity, followed by slower periods once the excess supply is worked through. If demand doesn’t keep pace with this accumulation, businesses could face pressure to offload inventory at lower margins, which would have broader pricing implications.

For traders focusing on derivatives, shifts like these can affect expectations for inflation, interest rate policy, and overall market sentiment. If stockpiling leads to temporary boosts in economic activity, it may support stronger short-term figures, potentially influencing how policymakers approach monetary decisions. However, if inventory levels stay elevated without a corresponding increase in sales, it could signal a drag on future production and investment.

Gregory is scheduled to speak later this week, and any reference to trade policy or supply chains will be closely analysed. A shift in rhetoric could either reinforce current market positioning or force adjustments. The timing of these developments, alongside broader economic releases, suggests heightened volatility in the coming sessions.

At the same time, Madison’s latest comments have emphasised the necessity of monitoring demand trends to assess how sustainable this stockpiling might be. If firms expect strong sales, recent inventory movements may not create long-term distortions. However, if purchases slow while warehouses remain full, that would imply a different set of risks.

With multiple data points in play, markets will be paying close attention to signals that clarify whether this inventory build represents a short-term strategy or something that might impact broader conditions for a longer period.

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Annual inflation in the United States decreased to 2.5% in January, down from 2.6% in December, according to the US Bureau of Economic Analysis. The core Personal Consumption Expenditures (PCE) Price Index rose by 2.6% on a yearly basis, decreasing from 2.9% in the previous month.

Monthly, both the PCE and core PCE Price Index saw a rise of 0.3%. Personal Income grew by 0.9% while Personal Spending fell by 0.2%.

At the time of reporting, the US Dollar Index rose by 0.04% to 107.33. The USD showed the strongest performance against the New Zealand Dollar.

Monthly changes in currency values indicated various fluctuations, with the USD experiencing a 2.46% increase against the NZD, while different currencies saw varied performances against each other.

Anticipated readings had projected core PCE to rise 0.3% MoM and 2.6% YoY in January, while annual PCE inflation was expected to drop to 2.5%. Central bank policy during March and May is anticipated to remain unchanged.

Higher inflation typically leads central banks to raise interest rates, impacting currency values, while lower inflation can have the opposite effect.

These figures give us a clear indication of where inflation and currency movements are heading. The dip in annual inflation to 2.5% and the decline in core PCE to 2.6% confirm what markets were expecting. A monthly rise of 0.3% for both measures, while not alarming, suggests pressures haven’t evaporated completely.

Personal Income climbing 0.9% sounds encouraging, but the 0.2% drop in Personal Spending throws up some questions. Are consumers pulling back because they feel uncertain, or is this just a temporary adjustment? It’s too early to say, but this will be something to watch, especially with wage growth in focus.

As we saw, the dollar edged up ever so slightly, but its strength over the past month was most evident against the New Zealand Dollar, with a 2.46% gain. That tells us risk sentiment may be shifting, or the Reserve Bank of New Zealand’s own policy stance may have played a part. Elsewhere, currency movements varied, reflecting local factors rather than a single global trend.

The market had already priced in these inflation numbers, and with expectations aligning with reality, there’s little reason to think the Federal Reserve will deviate from its projected path in March or May. Central bank decisions often hinge on inflation levels—when prices rise too fast, interest rates tend to follow suit. A slowdown, on the other hand, makes room for easing later on.

In the coming weeks, volatility in currency and derivative markets will rely heavily on fresh economic data. With Personal Spending dipping and inflation cooling, we need to keep an eye on whether demand slows further or picks back up. For now, the prevailing sentiment appears to be one of cautious waiting.

In January, the US advance goods trade balance reported a deficit of $153.26 billion, an increase from $122.0 billion in December. This marks the largest trade deficit recorded, attributed to a surge in imports driven by fears of potential tariffs.

The Census Bureau’s data shows exports rose to $172.2 billion, up by $3.3 billion, while imports escalated to $325.4 billion, an increase of $34.6 billion.

Additionally, advance wholesale inventories reached $905.2 billion, rising 0.7% from December. Meanwhile, advance retail inventories stood at $821.3 billion, decreasing 0.1% from December but increasing 4.9% from the previous year.

A widening trade deficit often reflects robust domestic demand as businesses and consumers increase their purchases from abroad. This particular jump, however, appears to be fuelled not only by economic strength but also by expectations of policy changes. Companies accelerating imports ahead of potential tariff adjustments may have inflated the figures, creating an artificial spike that could ease later in the year. Any reversal could soften import demand, influencing price movements across multiple asset classes.

Exports climbing at a slower pace than imports narrows the scope of trade-driven economic growth. While outbound shipments saw an improvement, the disparity in gains suggests that external demand has not kept pace with the growing appetite for overseas goods in the United States. If this pattern persists, currency fluctuations may become more pronounced, particularly as trade imbalances factor into exchange rate expectations.

Inventory movements provide another layer of insight. The rise in wholesale inventories indicates that businesses are stocking up, either preparing for supply chain uncertainties or anticipating stronger sales. In contrast, the small decline in retail inventories implies that sales have kept pace with stock levels, though the yearly increase signals a larger build-up over time. Any shift in consumer behaviour could alter these dynamics, impacting both supply chains and pricing strategies.

For those navigating price movements in the coming weeks, these figures highlight areas that could drive volatility. Import-heavy sectors may experience changing cost pressures if trade policies adjust. Meanwhile, inventory trends offer clues about upcoming demand shifts, as businesses react to both current conditions and future expectations. With these factors in play, watching for adjustments in global trade policies and domestic demand indicators will be necessary.

Gold’s price (XAU/USD) has dropped by 3%, trading at $2,860, following a recent peak at $2,956. This decline comes after US President Donald Trump announced new tariffs on imports from Mexico, Canada, and China.

January’s US Personal Consumption Expenditures (PCE) figures show a monthly core PCE increase from 0.2% to 0.3%, with the headline PCE unchanged at 0.3%.

In China, Gold ETFs are gaining popularity, boosting holdings by 17.7 tons in February. Asian indices faced multiple percentage losses, while European markets showed over 1% losses.

The odds for a June interest rate cut have risen to 71.8%, influencing market sentiment. Gold’s weekly performance reflects a near 3% drop, with support levels at $2,790 and tactical resistance near $2,888.

Interest rates play a role in currency strength, with higher rates typically benefiting the local currency and impacting Gold prices unfavourably. The Fed funds rate is crucial for markets, shaping expectations around future economic conditions.

This recent drop in gold’s price follows a sharp rally that saw it reaching highs of $2,956 before pulling back. The downturn stems from new trade tariffs introduced by Donald Trump, which have injected fresh uncertainty into global markets. While gold is often considered a safe haven during such periods, elevated interest rate expectations and shifting economic data have put downward pressure on the metal.

January’s core PCE reading moving higher to 0.3% signals that inflation remains slightly sticky. Although the headline figure holding firm suggests a lack of major shifts in underlying inflation trends, markets may interpret this as the Federal Reserve having less urgency to cut rates in the immediate term. A stronger-than-expected cost environment can dampen rate-cut enthusiasm, affecting gold’s appeal as a non-yielding asset.

China’s gold ETFs pulling in nearly 18 tons in February highlights an ongoing appetite for bullion in the region. This demand, especially from institutional buyers, could support prices over time. However, Asian stocks suffering notable drops while European equities declined more than 1% points to a broader unease among investors. Such turbulence often drives capital into defensive assets, yet gold’s retreat suggests traders may be adjusting to shifting monetary expectations.

With traders now placing a 71.8% probability on a rate cut by June, sentiment remains tilted towards looser monetary policy. This should, in theory, offer gold a tailwind. However, shifting expectations can be volatile, particularly as policymakers gauge incoming data. While recent declines have erased a week’s worth of gains, the $2,790 level remains a key point for buyers to defend. Resistance at $2,888 will likely determine whether short-term momentum can shift back upwards.

The ongoing relationship between interest rates and gold remains clear. A push towards higher Fed rates strengthens the US dollar, which can weigh on gold’s price performance. The federal funds rate continues to be a central driver, shaping inflation outlooks and broader market conditions alike. Understanding how rate forecasts shift will be essential in gauging momentum in the weeks ahead.

Canada’s GDP for the fourth quarter of 2024 increased due to household spending, exports, and fixed capital formation. Year-on-year growth is at 2.6%, surpassing the 1.8% estimate, while month-on-month growth stands at 0.2%, slightly below the predicted 0.3%.

Household spending recorded a rise of 1.4% in Q4, the highest since Q2 2022, primarily due to new vehicles and financial services. Residential construction grew by 3.9%, the strongest since Q1 2021, supported by ownership transfer costs and new projects.

Business investment rose by 0.7%, with a notable 4.2% increase in machinery and equipment investment. The GDP deflator for Q4 was 0.9%, influenced by rising energy export prices, while the annual deflator for 2024 reached 3.0%.

Wage growth for Q4 rose by 1.0%, linked to expansion in the service sector. Annual wage growth was recorded at 5.9%, marking the slowest rate observed since 2020.

These figures illustrate a higher-than-anticipated expansion in overall economic activity, driven by stronger household consumption, exports, and business investment. While the economy demonstrated resilience, expectations had varied slightly, particularly in regard to short-term growth estimates.

The steady rise in consumer spending, particularly on vehicles and financial services, indicates that households maintained purchasing power despite concerns about borrowing costs. Property investment also played a role, with residential construction growth reaching its highest pace in almost three years. This was supported by new property developments and transaction-related costs, which suggest that housing demand remained healthy.

On the corporate side, the increase in machinery and equipment investment points to confidence among businesses, as firms expanded their asset bases to support production and efficiency. A positive shift in capital expenditures can lead to higher productivity in the long run, reinforcing future output growth.

Rising energy export prices contributed to the GDP deflator, indicating that trade conditions were affecting broader price levels. Inflation-linked growth in nominal output remains an element to watch, as it feeds into revenue expectations.

Wage growth data, while still indicating expansion, has slowed compared to prior years. A 1.0% rise in Q4 earnings reflects strength in certain industries, particularly services, yet the annualised pace of 5.9% marks the slowest increase since 2020. This suggests that while the labour market remains robust, momentum is moderating, which could affect disposable income levels in future quarters.

For those analysing short-term market movements, these figures provide useful insight into key economic drivers over the coming weeks. With consumer activity maintaining strength, businesses investing in growth, and wage increases slowing, economic signals appear mixed but lean towards resilience. Tracking these developments will be necessary when assessing expectations around policy decisions and market positioning.

The goods trade balance in the United States for January was $-153.3 billion, falling short of anticipated $-114.7 billion. This represents a wider deficit than expected.

In related updates, EUR/USD is stabilising around the 1.0400 mark after the release of PCE inflation data. Gold has reached a low point of below $2,840, influenced by ongoing uncertainties regarding trade policies.

GBP/USD retains a positive trend just above 1.2600 following the inflation data. The upcoming week will focus on US payroll statistics, the ECB’s rate meeting, and ITV’s results amidst renewed concerns about tariffs from the Trump administration.

The larger-than-expected trade deficit in the United States suggests that imports surpassed exports by a greater margin than analysts had predicted. This often puts downward pressure on the dollar, as more capital is flowing out of the country. However, the market does not always react immediately, and we must consider whether this widening deficit will push policymakers towards structural adjustments.

Meanwhile, the euro is holding steady around 1.0400, which indicates that traders have largely priced in the latest core PCE inflation reading. Given that this measure of inflation is one the Federal Reserve watches closely, its impact on rate expectations is key. If inflation remains persistent, it strengthens the case for tighter monetary policy, potentially affecting dollar strength. For now, the market appears to be digesting the numbers rather than reacting forcefully.

Gold has dipped below $2,840, weighed down by concerns over trade policy. The precious metal has long been a hedge during uncertain periods, and traders clearly remain unsettled by the direction of global trade discussions. If further restrictions or tariffs materialise, gold could see renewed buying, but in the immediate term, sentiment seems to be leaning towards caution rather than panic.

Sterling remains slightly above 1.2600, reflecting continued optimism after the latest inflation figures. The upcoming week will be key in determining whether this momentum holds. With US payroll data on the horizon, we are likely to see some shifts in dollar positioning. Additionally, the ECB is set to discuss interest rates, which could impact euro crosses, indirectly influencing GBP trends as well. Traders would do well to stay alert to any policy signals that diverge from expectations.

On the corporate front, ITV’s earnings report will be closely watched. Beyond the numbers themselves, the broader discussion around advertising revenue and economic outlooks will be telling. At the same time, renewed import restrictions proposed by the Trump camp could unsettle broader markets, especially if they hint at widespread protectionist measures. These elements combined mean traders should brace for potential volatility across multiple asset classes in the days ahead.