France’s preliminary Consumer Price Index (CPI) for February rose by 0.8%, below the anticipated 1.0% year-on-year. This data was released by INSEE on 28 February 2025, with the previous CPI reading at 1.7%.

The Harmonised Index of Consumer Prices (HICP) showed an increase of 0.9%, compared to the expected 1.2%, and a decline from 1.8% in the previous month. The slowdown in price growth has been largely influenced by adjustments in energy prices, particularly the substantial rise in electricity costs in February 2024.

Additionally, inflation in the service sector reduced from 2.5% in January to 2.1% in February.

The latest figures indicate that inflationary pressures in France have eased more than expected, with both the standard CPI and the HICP showing a slower rate of growth. A key factor in this softer inflation reading is the movement in energy costs, which previously fuelled rising prices. While electricity costs increased substantially a year ago, broader price pressures appear to have lost momentum. A notable slowdown in service sector inflation further supports this observation, reflecting reduced price hikes in areas such as transport and hospitality.

For those closely monitoring price trends, this softer inflation print raises questions about future monetary policy moves. A weaker rise in consumer prices may strengthen the case for adjustments in interest rates, particularly if further data points in the same direction. With inflation trending lower, policymakers might weigh the risk of tightening financial conditions too much.

Market expectations will likely shift in response, particularly for derivatives linked to inflation or interest rates. Lower-than-expected inflation figures can impact bond yields, while traders positioned for higher price growth may need to reassess their stance. If service sector inflation continues to slow, it could further influence forward-looking pricing models.

Beyond headline inflation, sector-specific developments should not be overlooked. The decline in service price growth suggests changing consumer demand dynamics, while energy prices remain a key variable. Labour costs and wage growth trends will be essential to watch, as persistent wage increases could alter inflation expectations going forward.

Further data releases in the coming weeks will either reinforce or challenge this trend. If subsequent figures confirm the same direction, adjustments in expectations across financial markets may become more pronounced. Conversely, any unexpected increases may lead to sharper market reactions, requiring swift recalibration.

India’s infrastructure output rose by 4.6% year-on-year in January, exceeding the previous figure of 4%. Meanwhile, the US Department of Commerce reported a PCE inflation rate of 2.5% for January, with core PCE inflation slightly higher at 2.6%.

Following the release of PCE inflation data, EUR/USD managed to recover to around the 1.0400 region. Simultaneously, gold prices remained low at approximately $2,850 per ounce, as US yields showed a slight bearish trend.

The US labour market displayed resilience despite a slowdown in hiring in January. Additionally, President Trump confirmed that 25% tariffs on Canada and Mexico will take effect on March 4, along with a new 10% tariff on Chinese imports.

India’s infrastructure output posted a 4.6% rise in January compared to the same period last year, a slight improvement from December’s 4% expansion. This suggests that key industrial sectors, including energy and construction materials, are maintaining momentum despite broader global uncertainties. Healthy infrastructure growth often signals sustained domestic demand, which can influence commodities and raw material pricing in the medium term.

Over in the US, the Department of Commerce reported that personal consumption expenditures (PCE) inflation for January stood at 2.5%, with the core measure – which excludes volatile food and energy components – coming in slightly higher at 2.6%. These figures indicate that inflation remains moderate but persistent, reinforcing expectations that monetary policy will stay tight for longer than previously anticipated. This is particularly relevant for those navigating interest rate-sensitive assets, as market pricing of future rate decisions could shift in response.

Following the PCE data release, the euro made up some lost ground against the dollar, rising towards 1.0400. This suggests that traders reassessed the inflation figures in relation to Federal Reserve policy, temporarily boosting risk appetite in currency markets. Meanwhile, gold prices failed to attract demand, staying around $2,850 per ounce. The combination of steady inflation and slightly weaker US yields appears to have kept traders from aggressively buying into safe-haven assets.

The US labour market continues to demonstrate resilience, even as hiring slowed in January. A strong labour market can keep wage growth stable, potentially sustaining inflation at current levels. For those tracking employment data, sustained strength may delay rate cuts, particularly if upcoming reports reinforce this stability.

On the trade policy front, Donald Trump confirmed that 25% tariffs on imports from Canada and Mexico will take effect on 4th March. Additionally, a new 10% tariff on Chinese imports was announced. Market participants will need to assess how businesses respond to these measures, particularly in sectors reliant on global supply chains. With potential knock-on effects on currency valuations and corporate earnings, the fallout from these trade policies may well shape price action in the coming weeks.

Data from INSEE on 28 February 2025 indicates that France’s GDP for the fourth quarter remained unchanged at -0.1% compared to the preliminary estimate. The slight contraction at the end of the year is attributed to changes in inventory and trade.

Overall, the French economy recorded a growth rate of 1.1% for the full year of 2024, which is consistent with the growth reported in 2023.

That the economy shrank slightly in the last three months of the year and yet matched the previous year’s growth overall tells us something about how different sectors moved in opposite directions. Businesses adjusted their stock levels, and trade activity slowed, both of which were enough to keep the final numbers in negative territory for that period. But this did not derail the yearly figure, which remained steady at 1.1%.

Household spending edged up by 0.3% in the fourth quarter, which helped soften the weakness in trade. But this was the slowest rise since the start of the year. Meanwhile, investment fell. These details confirm that consumers still supported demand, though not as much as before, and businesses were more cautious about expanding. That pattern leaves little in the way of surprises—but it sets up expectations that cannot be ignored.

Export numbers weakened, falling by 0.4%, while imports declined further, down 1.2% after a sharper drop of 2.4% in the previous quarter. That gap between exports and imports actually helped prevent the economy from shrinking more. But it raises another question: if trade continues on this path, how much longer can it support growth before becoming a drag instead?

Fabien, the head economist at Banque de France, pointed out that lower demand in key export markets weighed on French trade. At the same time, domestic demand is still playing its part, though not as strongly as before. If investment remains weak and exports do not recover, we may not see much improvement in the quarters ahead.

Another factor is inflation. Consumer prices rose at a slower pace in recent months, which gave households some relief, but businesses are still facing higher costs. Gilles at INSEE noted that lower energy prices helped keep overall inflation in check, yet core inflation—excluding energy and food—has not eased as much. If that trend holds, the squeeze on corporate margins may continue, shaping how firms set prices and wages in the near future.

Meanwhile, the European Central Bank has signalled it is watching inflation closely, but it has not moved to cut rates yet. That means financing conditions remain tight. For firms and individuals relying on credit, borrowing remains expensive, which feeds back into investment and spending decisions. We cannot ignore what this means in the short term, especially if the ECB holds back on cutting rates for longer than markets expect.

Across the labour market, hiring has slowed but not reversed. Wage growth remains above inflation, supporting spending power for now. But if companies start seeing sustained pressure on profits and demand softens further, recruitment decisions could change. That remains a risk heading into the coming months.

With these shifts in trade, inflation, and rates shaping how businesses and consumers act, the next round of economic data will likely confirm or challenge what we have seen so far. If policymakers respond with adjustments of their own, that could alter expectations yet again. We are watching closely.

The AUD/USD pair dropped to a three-week low near 0.6200, reflecting a six-day decline attributed to US President Trump’s proposed 10% tariffs on China. These tariffs are expected to exert additional pressure on the Australian economy, which relies heavily on exports to China.

Trump’s recent tweet also confirmed the implementation of 25% tariffs on Canada and Mexico starting March 4. The imposition of these tariffs is likely to further challenge Chinese economic growth, indirectly impacting the Australian Dollar.

Reserve Bank of Australia’s Deputy Governor indicated no imminent interest rate cuts are expected, pending positive inflation data. Meanwhile, market attention is focused on the US Personal Consumption Expenditure Price Index data set to be released.

Australia’s economic health is influenced by interest rates, the status of the Chinese economy, and commodity prices, primarily iron ore. The Trade Balance also plays a critical role in determining the value of the Australian Dollar, as a positive balance typically strengthens the currency.

The continued weakening of the Australian Dollar against the US Dollar is not just about tariffs and trade disputes. While Trump’s plans to introduce 10% tariffs on China and to proceed with hefty duties on Canada and Mexico grab headlines, they also send ripples through global markets. Given that Australia’s economy is closely linked to China’s performance, any slowdown there has consequences. With Chinese exports weakening, demand for Australian commodities could fall further, putting exporters under strain.

We also heard from the Reserve Bank of Australia’s Deputy Governor, who stated that interest rate cuts are off the table for now. Instead, they are watching inflation figures closely. If the data shows stronger-than-expected inflation, monetary policy could remain unchanged. But if price increases lag behind expectations, pressure might mount for a policy shift. It’s a waiting game, and traders should take note.

Another upcoming event that could shake things up is the US Personal Consumption Expenditure Price Index release. This is the Federal Reserve’s preferred inflation measure, and any surprises in the data could change expectations about future US interest rate decisions. If inflation comes in higher than analysts predict, the Federal Reserve might hold rates higher for longer, making the USD more attractive. If the opposite happens, expectations could shift towards rate cuts. Either scenario will have ripple effects on AUD/USD positioning.

Beyond macroeconomic policies, Australia’s dollar depends on iron ore prices and trade balances. A positive trade balance generally supports the currency as more foreign buyers purchase Australian goods and convert their money into AUD. If trade figures disappoint, however, that support fades. Given how much Australia exports to China, any further deterioration in the Chinese economy could weaken the AUD further in the coming weeks.

With several moving parts at play, traders should be prepared for volatility. The next wave of inflation and trade data from both the US and Australia could determine whether the AUD/USD extends its downward trend or finds some footing. We will be watching these developments closely.

Banks in China have been instructed by the People’s Bank of China (PBOC) to reduce dollar deposit rates in recent weeks. This action aims to discourage dollar holdings and promote conversions into the yuan, with regulators expressing concern over the amount of cash held onshore in dollars.

Many banks, regardless of size, have received guidance to lower these rates, and some have already taken this step. The low yuan rates have led to carry trades, where individuals opt for dollar deposits instead. This method of capital control is common in Chinese banking, reflecting Beijing’s current stance on the economic situation.

Lowering dollar deposit rates is a move designed to nudge both businesses and individuals towards holding more yuan rather than foreign currency. Keeping too much capital in dollars means less liquidity flows through the domestic financial system in the way policymakers intend. The authorities are not using direct capital controls in this instance, but instead, they are making dollar holdings less attractive in comparison.

This effort comes as part of broader objectives. The yuan remains under pressure, influenced by interest rate differences with other major economies as well as broader capital flow patterns. With lower rates on dollar deposits, the appeal of holding onto these funds diminishes, which in theory should prompt movement back into local currency. If momentum builds, it can provide reinforcement to the yuan at a time when external factors have added volatility to exchange rates.

There is also an impact on borrowing costs. When fewer dollar deposits sit within Chinese banks, the availability of dollar lending within the country declines. This naturally translates to higher dollar funding costs domestically, something that policymakers are likely comfortable with if it deters more capital from sitting idle in foreign currency. The authorities are not closing off dollar access outright, but they are shifting incentives in a manner that aligns with exchange rate management.

For those engaged in markets where rates, liquidity, and currency fluctuations play a fundamental role, this move feeds into changing cost structures. Depending on positioning, some may find pressures increasing, particularly where funding in offshore dollars has been relied upon. Meanwhile, those holding yuan may find fewer distortions in rates.

In the weeks ahead, attention will likely remain on whether further adjustments occur. If policymakers push rates lower again, it would reflect a continued effort to bring more capital back into domestic circulation. On the other hand, if conversion levels rise sufficiently, the need for further interventions might wane. Economic momentum remains a focal point, particularly given wider global interest rate conditions.

Those assessing exposures in this environment would do well to consider how adjustments in policy may shape broader market movements. The influence of capital controls—whether explicit or indirect—has long been a feature of financial conditions in China, and this episode serves as another example of that dynamic at play.

In February 2025, Italy’s consumer price index increased by 0.2% on a monthly basis, meeting expectations. This data reflects the country’s inflationary trends and economic environment.

The EUR/USD pair remained steady around 1.0400, influenced by heightened demand for the US Dollar amid tariffs and geopolitical issues. Despite positive German retail sales, the Euro faced challenges amidst ongoing inflation concerns.

Looking ahead, the US Bureau of Economic Analysis is set to publish the January core Personal Consumption Expenditures price index data, projected to show a 0.3% monthly increase. Meanwhile, GBP/USD traded near 1.2600, reacting to uncertainty over US tariffs and upcoming inflation data.

The recent inflation figure from Italy shows that price increases are moving as expected. This suggests that inflation is neither speeding up nor slowing down unexpectedly, which helps traders anticipate central bank decisions. Since inflation is one of the biggest factors in shaping interest rate expectations, this stabilisation reassures markets for now.

At the same time, the Euro has struggled to gain traction, and we have noticed that it remains under pressure, particularly against the Dollar. While positive German retail sales might have usually helped the currency, broader concerns over inflation and global trade tensions have outweighed these gains. The fact that the pair has stayed near 1.0400 tells us that traders are prioritising the safety of the Dollar in the current environment. The ongoing geopolitical concerns and tariff discussions appear to be strengthening this sentiment.

A great deal of attention now shifts to inflation data from the United States. The upcoming core PCE report is likely to influence expectations around monetary policy. If the monthly rise comes in at 0.3% as anticipated, it reinforces the view that the Federal Reserve has little reason to adjust its stance in the immediate future. However, if this number surprises in either direction, we would likely see movements across Dollar-based pairs.

Sterling, on the other hand, has been holding around 1.2600. This reflects the careful positioning of traders as they await further developments on both tariffs and inflation data. With the next wave of economic releases approaching, we are preparing for possible changes in market sentiment that could affect trading strategies.

In the coming weeks, traders should remain alert to new data releases, particularly those that could alter interest rate expectations. Inflation numbers have dominated decision-making in recent months, and that seems unlikely to change given current conditions. As always, closely watching economic data and market reactions will be key.

Gold prices have declined over 2% this week, breaking an eight-week streak of gains. This decline is influenced by recent increases in the dollar and external pressures from tariffs.

Technical analysis suggests a potential deeper decline towards the 100-day moving average at $2,720. Currently, the market appears overdue for a correction after a long period of stability.

The 4-hour chart indicates a shift in momentum, particularly with the 100-bar moving average breaking. Key levels to monitor include the 23.6 Fib retracement at $2,868, the 200-bar moving average at $2,830, and the 38.2 Fib level at $2,814.

While there is downward momentum in gold, identifying opportunities for dip buyers is essential. Central banks remain bullish on gold, with China increasing its gold reserves.

The seasonal advantage from December to January has ended, suggesting a market correction is underway, allowing potential opportunities for buyers.

Gold’s recent pullback has brought an end to its consistent rise, and the reasons behind it are not hard to identify. A stronger dollar has applied pressure, making the metal less attractive to international buyers. New tariff developments have only added to the headwinds. Given this backdrop, attention has now turned to whether this is merely a short-term cooling or the beginning of a deeper slide. The technical picture does not rule out further losses in the days ahead.

The break below key moving averages on shorter timeframes suggests that sentiment has weakened. If momentum continues in this direction, the 100-day moving average near $2,720 could be tested, bringing the most recent rally firmly into question. However, gold has had a habit of finding strong support after declines. Traders looking for a return to strength will want to see a recovery above resistance levels. The first hurdle sits at $2,868, aligning with the 23.6% Fibonacci retracement. Should prices push beyond that, the next critical test will be at $2,830, where the 200-bar moving average currently stands. Further down, $2,814 marks another level of interest, as buyers may step in around the 38.2% retracement.

Beyond charts and technicals, gold’s broader support remains intact. Central banks continue accumulating reserves, with China extending its purchases. This strengthens confidence in the long-term case for holding the metal, even as pressures from currency fluctuations and policy decisions create volatility. While the December-to-January seasonal boost has now faded, history suggests that corrections often open doors for those with a longer-term perspective.

The next several weeks will require a careful approach. The recent breakdown demands respect, but the fundamental factors that underpinned gold’s multi-month rise have not vanished. Whether fresh buyers emerge or further weakness takes hold will depend on how prices behave around the identified levels.

In February 2025, Italy’s Consumer Price Index (EU Norm, year-on-year) recorded a growth rate of 1.7%, which was below market expectations of 1.8%. This figure reflects a slower rate of inflation compared to what analysts had anticipated.

A lower-than-expected inflation figure from Italy suggests that prices are rising at a slightly slower pace than the market had forecast. This could mean less pressure on the European Central Bank to act aggressively with interest rates. If inflation remains at this level or slows further, policymakers may feel less urgency to tighten monetary policy. For traders, this data might indicate a potential shift in market sentiment, particularly in areas sensitive to inflation expectations.

Markets typically react when data comes in different from what was predicted. The fact that inflation is slightly below forecast could shift bond yields, currency movements, and expectations for future rate decisions. A softer inflation reading sometimes leads to lower bond yields, as investors adjust their positions based on the idea that rates won’t have to rise as much. Currency markets often follow, with expectations around monetary policy driving trading strategies.

In the coming weeks, traders should watch for further inflation readings from the eurozone as a whole. If other countries report similar results, it might reinforce expectations that inflation pressures are easing. On the other hand, if stronger inflation figures emerge elsewhere, views on the ECB’s next steps may shift again. Keeping an eye on energy prices, wage trends, and any central bank commentary will also be important, as these factors help shape where inflation might go next.

For those dealing in derivatives, this kind of data can affect volatility levels and pricing across various markets. If inflation surprises continue, it may create fresh trading opportunities or risks, depending on positioning. Monitoring both macroeconomic data and market reactions will be key to staying ahead of rapid adjustments in expectations.

China’s Politburo aims to adopt a more proactive macroeconomic policy as reported by state media. Plans include expanding domestic demand and stabilising both the housing and stock markets.

Additionally, efforts will be made to manage risks and external shocks in crucial sectors, alongside promoting sustained economic recovery. The commentary indicates intentions, but tangible effects remain uncertain.

Recent tariff threats from former President Trump have contributed to market unease, reflected in a 1.3% drop for the Shanghai Composite and a 2.7% decrease in the Hang Seng Index.

Policymakers in Beijing are signalling a shift towards stronger economic measures. The latest messaging from state media suggests a drive to support growth through increased domestic consumption and a steadier financial environment. While the rhetoric is clear, the true test lies in how these objectives translate into action. Given the fragility in certain markets, many will be watching closely to see what specific steps follow.

Meanwhile, external concerns weigh on sentiment. Trump’s recent statements about potential tariffs have already rippled through equities, with mainland shares falling and Hong Kong-listed stocks taking an even steeper hit. Investors have dealt with similar rhetoric in the past, but the timing and substance of these warnings add layers of uncertainty. The memory of prior trade disputes remains fresh, and economic planners in China will likely factor in these risks when crafting policy responses.

These developments do not exist in isolation. Housing and equities remain under pressure, and authorities appear intent on preventing further destabilisation. Given previous attempts to engineer stability, expectations will be set on whether the right measures are deployed this time. Over the coming weeks, data releases and any fresh government actions will likely shape the direction of sentiment.

Markets that react to policy shifts must pay attention to more than just the broad statements. While Beijing has reaffirmed economic priorities, execution will matter. Recent history suggests that direct intervention—such as supporting lending or adjusting capital requirements—could follow. Observers will need to assess whether these adjustments effectively counteract prevailing headwinds or merely buy time.

With external pressures growing alongside domestic challenges, staying reactive to new developments will be necessary. If further responses from Washington fuel uncertainty, the market reaction may extend beyond equities into other areas. The coming weeks may test assumptions about policy effectiveness, as well as the broader ability to sustain confidence in financial markets.

On 4 March, President Trump confirmed that tariffs will take effect, which has led to a stronger US Dollar (USD) against various currencies. The DXY could rise to 108, reflecting shifts in financial markets, with equity markets declining by 3% in Japan and Korea.

Crypto markets displayed volatility, with the MVDA index of the 100 largest digital assets plummeting by 20% this week. This decline may influence broader market conditions and further defensiveness in FX.

A potential decline in January’s real spending figures and the core PCE deflator could negatively impact the USD. An expected monthly trade deficit of $110-120bn serves as a reminder of the ongoing goods deficit, which was $1.2 trillion last year.

With fresh tariffs on the horizon, the USD has strengthened, and some expect the DXY to reach 108. Equity losses in Japan and Korea suggest that investors are responding to shifting trade conditions with a degree of caution. A 3% decline in these markets reflects reduced confidence, possibly tied to concerns about global supply chains.

We have also seen heightened turbulence in crypto markets, with the MVDA index suffering a steep drop of 20%. This level of movement could influence how traders position themselves across other markets, particularly in forex. When capital moves away from riskier assets, defensive positions in traditional currencies tend to increase.

However, upcoming data poses risks to the USD. If January’s real spending figures show weakness alongside softer core PCE inflation data, the strength of the currency may be tested. Lower consumer activity often leads to cooling economic momentum, which could make foreign exchange markets more reactive.

Also worth mentioning is the monthly trade deficit, which is projected to land between $110bn and $120bn. Last year’s goods deficit stood at $1.2 trillion, which means the trade gap remains large. These figures, once confirmed, could factor into expectations for long-term USD demand and market behaviour.

For those tracking derivatives, there are a few things to note. A stronger dollar typically pressures commodities and risk-sensitive currencies, while weaker spending data might push traders to reassess rate expectations. A volatile crypto environment only adds to the need for adaptability.

As new data emerges, price actions should be watched closely, particularly in areas that respond sharply to shifts in trade and inflation expectations. Traders navigating these movements should be prepared for further fluctuations in both FX and equities as the market absorbs the latest developments.