Japan’s housing starts for January 2025 decreased by 4.6% year-on-year, which is worse than the anticipated decline of 2.6% and lower than the previous month’s drop of 2.5%.

This release typically has a limited impact on the Japanese yen’s value.

As of the report, the USD/JPY exchange rate is approximately 149.75.

A sharper decline in Japan’s housing starts suggests that residential construction is slowing at a faster pace than predicted. A drop of this size may indicate growing caution among developers, possibly due to higher costs, weaker demand, or tighter financing conditions. With January’s decline exceeding both expectations and December’s reduction, the trend appears to be weakening rather than stabilising.

Historically, this data does not have an immediate or pronounced effect on the yen. However, when seen alongside other economic figures, it may help shape expectations for broader market conditions. If signs of a slowdown accumulate, investors could start reassessing their outlook for policy moves and financial stability.

At present, the yen remains relatively steady, with the dollar trading around 149.75 against it. Given that exchange rate movements often stem from multiple influences rather than a single report, this stability suggests that traders are prioritising other factors, such as interest rate expectations or global risk sentiment.

Looking ahead, keeping an eye on upcoming data releases and any policy signals will be essential. If weaker trends persist, speculation may intensify around any potential responses from policymakers. Meanwhile, fluctuations in US yields or broader currency trends could also shape short-term movements, even if domestic housing data remains a secondary concern for most participants.

In February, the Consumer Price Index (CPI) in Hesse, Germany, recorded a year-on-year increase of 2.3%. This figure is a decrease from the previous month’s rate of 2.5%.

The latest Consumer Price Index (CPI) numbers from Hesse suggest inflation is slowing, though only slightly. A drop from 2.5% to 2.3% isn’t massive, but it does indicate that prices are rising at a gentler pace than before. For those watching financial markets, particularly derivatives traders, this isn’t something to ignore. Inflation data like this shapes expectations about interest rates, and expectations about interest rates move markets.

If prices continue rising more slowly, the European Central Bank (ECB) may have reason to hold off on tightening monetary policy further. This is particularly relevant given that central banks across the world are weighing up how much more action is needed to keep inflation in check. While a small change in one state’s inflation rate isn’t enough to dictate overall policy, Hesse’s data will feed into broader calculations.

We are watching a period where traders need to remain on their toes. It won’t be enough to glance at the headline figures; understanding the forces behind them will be just as important. Are energy costs falling? Is consumer demand softening? If this trend of cooling inflation continues, bond yields could shift, equity markets could react, and pricing in the derivatives space could adjust accordingly.

This means strategy will be key in the weeks ahead. Keeping an eye on upcoming releases from the wider eurozone will help assess whether this German state’s inflation slowdown is part of a wider movement or an isolated case. If broader inflation figures follow the same trajectory, rate expectations could shift, altering market dynamics.

For now, traders should position themselves with awareness of these economic shifts. It’s best not to assume that inflation will decline in a straight line—unexpected data can always prompt volatility. Those who stay informed and agile will be in a better position to navigate the coming weeks.

Japan’s Prime Minister Ishiba has revised the FY25/26 Budget plan, setting it at JPY 115.2 trillion, a reduction of JPY 343.7 billion. The changes will also affect planned bond issuance.

The updated budget will feature increased household subsidies aimed at ensuring free education for children. Additionally, a higher threshold for tax-free income will lead to a decrease in tax revenue of JPY 621 billion.

To address higher expenditure and reduced tax income, the government will utilise a reserve fund and other unallocated resources.

These budget adjustments reflect the administration’s response to fiscal pressures while attempting to balance social support policies. By reallocating funds and adjusting taxation, Ishiba is working to maintain stability without escalating public debt unnecessarily. This decision is not without consequences. The revised bond issuance plan will shift expectations in the debt market, influencing yields and investor sentiment.

The increase in household subsidies, particularly the emphasis on free education, follows ongoing government efforts to ease financial burdens on families. While this is likely to stimulate domestic consumption, it also raises questions about long-term fiscal sustainability. The reduction in tax revenue, stemming from more lenient income tax thresholds, introduces another variable. A shortfall of JPY 621 billion means a greater reliance on reserves, which, although effective in the short term, cannot be replenished quickly.

Given the decision to draw from these pools of capital, markets should prepare for adjustments in liquidity conditions. Short-duration debt instruments may see increased demand if investors anticipate further shifts in issuance strategy. Longer-term bonds could face alterations in pricing as participants assess the government’s capacity to service future obligations under these revised conditions.

We recognise that immediate market reaction will depend on a combination of domestic and international sentiment. Japan’s budget decisions rarely operate in isolation. Foreign exchange markets, particularly those monitoring the yen, will react to any perceived weaknesses in fiscal discipline. If confidence wanes, volatility may increase, influencing positioning in currency pairs against the yen.

The response from policymakers beyond Japan will also shape expectations. If central banks elsewhere continue their current trajectory on interest rates, demand for Japanese bonds could fluctuate. A lower issuance volume, if confirmed in the coming weeks, may tighten supply, impacting yields across multiple maturities. Market participants will need to assess whether this shift aligns with global trends or introduces divergence that alters capital flows.

As more details emerge on how reserve funds will be allocated, further refinements in strategy will become necessary. The balance between supporting households and maintaining fiscal discipline remains delicate, and any deviation from stated plans may introduce additional uncertainty.

In February, the Consumer Price Index (CPI) in Saxony, Germany, increased from -0.4% to 0.3%. This change indicates a rise in inflation rates within the region.

EUR/USD remains steady around 1.0400 as market participants await inflation data from Germany and the US. Meanwhile, GBP/USD trades near 1.2600, impacted by tariff uncertainties from the US.

The US core Personal Consumption Expenditures (PCE) Price Index for January is projected to rise by 0.3%. Gold prices decline towards a two-week low amid a stronger US dollar, as traders anticipate the upcoming PCE data.

Saxony’s inflation shift from -0.4% to 0.3% in February shows a turnaround in pricing pressure. An increase like this suggests that consumer prices are no longer falling and may be starting to climb. If this trend continues in other German states, broader inflation expectations could change. That, in turn, might prompt shifts in European Central Bank policy discussions.

At the same time, the euro holds steady around 1.0400 ahead of incoming inflation reports from both Germany and the US. A lack of movement often signals that traders are waiting for fresh data before making any large bets. On the other hand, sterling sits near 1.2600, with traders factoring in tariff concerns raised by the US. Such policies can influence the demand for goods and services, which affects the pound’s valuation relative to other currencies.

We are also looking at the US core PCE Price Index, which is predicted to climb by 0.3% for January. This figure is a preferred inflation measure for the Federal Reserve. When such data aligns with or surpasses forecasts, markets usually adjust expectations for future interest rate moves.

Meanwhile, gold prices have slipped towards a two-week low, weighed down by a stronger US dollar as traders prepare for the PCE release. A stronger dollar makes gold more expensive for international buyers, reducing demand. If the inflation data meets or exceeds market expectations, this could put further pressure on gold, at least in the short term.

For derivative traders, the focus remains on inflation numbers and the potential impact on central bank decisions. Fast reactions to any surprises will likely define market movements in the next few weeks.

The US dollar continued its upward trend, resulting in declines for the AUD, NZD, gold, GBP, and EUR. Bitcoin briefly fell below US$80,000, marking over a 25% drop since its peak on January 20.

Japan’s inflation data was a key focus, showing a slight decrease compared to the previous month, yet remained near the Bank of Japan’s target. Following the release, USD/JPY initially rose above 150.10 before falling to around 149.11, before stabilising at approximately 149.60.

Chinese stock markets declined after the announcement of a 10% tax on imports from China.

The recent strengthening of the US dollar has put downward pressure on multiple currencies and assets. A stronger dollar often makes commodities like gold, as well as riskier investments, less attractive. This partly explains why gold has lost ground and why Bitcoin dipped below US$80,000. The drop in the largest cryptocurrency by market cap has been sharp, considering it was peaking just a few weeks ago. Some traders had expected support at higher levels, yet the sustained selling suggests there could be further volatility.

In Japan, inflation data came in slightly lower than the previous month but remained near the Bank of Japan’s preferred level. Inflation figures like these are closely monitored, as they influence expectations around monetary policy shifts. When the data was released, the reaction in USD/JPY was immediate. The currency pair initially jumped to 150.10, only to reverse towards 149.11 before settling near 149.60. This kind of movement reflects how traders were likely reassessing their positions in light of the data. Some saw reasons to favour the yen, while others continued to bet on dollar strength.

Meanwhile, market sentiment in China took a hit following newly introduced import taxes. A 10% tariff on Chinese imports is a notable development, as it adds cost pressure on trade. Traders offloaded stocks, expecting this policy change to have a dampening effect on economic activity. Chinese equities had already been struggling with broader concerns, so this additional headwind only worsened the selling.

What this means going forward is that careful attention must be paid to how these trends continue developing. The US dollar remains dominant for the time being, while other currencies and assets adjust accordingly. Japan’s inflation dynamics could shift expectations on interest rates, impacting the yen’s trajectory. In China, the reaction to trade policy changes could extend beyond equities, influencing broader market flows. Every piece of new information has the potential to shift sentiment once again. The past few weeks have been defined by sharp movements, and nothing suggests that will change in the very near future.

The core Personal Consumption Expenditures (PCE) Price Index is anticipated to increase by 0.3% month-on-month and 2.6% year-on-year for January. Annual PCE inflation is expected to slightly decrease to 2.5% from 2.6% in December.

The Bureau of Economic Analysis will release the PCE data on Friday at 13:30 GMT. The Federal Reserve’s interest rate policy is expected to remain unchanged in the coming months, with little likelihood of a cut in March.

Core PCE inflation, which excludes food and energy prices, is projected to drop to 2.5% annually. Personal spending is also expected to decline for the first time since March.

Market reactions to the PCE data may vary. A monthly increase of 0.4% or more could strengthen the US Dollar, while a decrease below 0.2% may weaken it.

Current predictions suggest there is a 98% likelihood of the Fed maintaining its interest rate policy in March. It may require multiple soft readings of PCE inflation for market sentiment to shift towards a rate cut in May.

The upcoming PCE inflation data, if aligned with expectations, would indicate a slight easing in price pressures, though not enough to shift the Federal Reserve’s policy stance in the near term. The year-on-year figure dipping to 2.5% would continue the broader trend of disinflation, but a 0.3% monthly rise suggests that progress remains gradual rather than decisive. With inflation data being a core input for Fed decision-making, traders will want to assess whether this release supports the market’s current rate expectations or introduces new concerns.

The figures will be published at 13:30 GMT on Friday, a release that will be closely monitored by market participants. Given the Fed’s well-telegraphed position, there’s little reason to expect sudden shifts in rate policy ahead of the March meeting. The prospect of cuts is currently seen as a discussion for later months, provided inflation continues to cool at a steady pace.

Core PCE, which strips out the more volatile food and energy components, is anticipated to cool slightly to 2.5% on an annual basis. This would place it closer to the Fed’s 2% target, but not convincingly enough to warrant a policy shift just yet. Personal spending, which has remained relatively resilient in recent months, is expected to decline for the first time since last March. If confirmed, this could signal emerging softness in consumer demand, something policymakers are likely watching closely.

Reactions in financial markets will hinge on the exact readings. Should the monthly core number rise to 0.4% or higher, it could provide the US Dollar with a boost, reinforcing expectations that the Fed will keep rates elevated for longer. Conversely, if the reading comes in below 0.2%, markets may reassess rate-cut probabilities, weighing on the currency instead.

At present, futures markets see virtually no chance of a rate reduction in March, with odds of a standstill at 98%. For sentiment to evolve towards a potential May cut, traders will likely need to see a series of tame PCE readings, reinforcing the case that inflation is tracking towards the Fed’s objective without further intervention.

UK Energy Secretary Ed Miliband is set to travel to China on March 17. The purpose of the visit is to revitalise discussions on energy cooperation under the UK-China Energy Dialogue.

During his trip, he will also engage with Chinese investors. This visit aims to strengthen ties and facilitate collaborative efforts between the UK and China in the energy sector.

Ed’s upcoming visit is expected to bring fresh momentum into energy discussions between the UK and China. The talks will likely cover ongoing investment projects, supply chain concerns, and long-term policy goals. Given that both countries have made extensive commitments to decarbonisation, there is an opportunity to assess current agreements and determine whether any adjustments are needed to accommodate recent shifts in global energy markets.

We also anticipate that Ed will use this trip to gauge China’s willingness to expand its financial involvement in UK energy infrastructure. British officials have previously expressed both optimism and caution regarding foreign direct investment in sectors deemed essential to national security. Any new agreements reached during these discussions could influence investor sentiment in the coming months.

Meanwhile, concerns about energy security linger. With continued volatility in international gas prices and growing demand for renewable alternatives, maintaining steady investment flows into clean energy projects is more important than ever. Discussions may touch on supply chain resilience and whether the UK can benefit from China’s established manufacturing capacity in this area.

Back home, reactions to Ed’s trip will be mixed. Some policymakers will view stronger ties with Beijing as necessary, while others may raise concerns about dependency risks. Investors should pay close attention to any updates from these meetings, as they could hint at future regulatory changes or potential shifts in trade policies.

Timing will also play a role. With global markets already navigating numerous challenges, any fresh commitments announced during this visit could influence short-term sentiment. If discussions lead to agreements on joint energy ventures or supply chain solutions, market participants will need to assess the wider implications.

One of the biggest myths in the world of trading is that some might think “more trades mean more profits.” However, like the concept of supply and demand, you don’t simply increase profits by increasing the amount you sell.

Some market participants believe they need to be active every single day to stay sharp and profitable–as if taking a break would make their entire profit strategy fall apart. 

What if the key to making more money wasn’t trading more–but less?

In this article, we’ll explore why taking a step back away from the charts and trading selectively can make you a smarter, more profitable and happier trader.

Why Trading Everyday Could Be Hurting your Profits

Many traders fall into the trap of thinking that the more they trade, the more they earn. However, overtrading often leads to unnecessary losses, increased fees, and a lack of discipline. Taking every opportunity that presents itself means exposing yourself to low-quality setups that don’t align with a strong strategy.

A well-placed trade on a high-probability setup beats any amount of rushed trades with no real edge. The best traders understand that waiting for the right moment is a strategy in itself.

Constant Trading and its Emotional Toll 

Trading is a mental game, and market fatigue is real. Staring at charts all day and reacting to every price movement can lead to emotional exhaustion and decision paralysis. This often results in impulsive trades, revenge trading, or second-guessing strategies. 

Taking a step back from the charts and giving yourself time to process setups objectively can make you a sharper, more confident trader.

Not Every Day is a Good Day to Trade

Markets don’t move in clear patterns every single day. Some days, price action is choppy, unpredictable, and filled with false signals. Traders who force trades on these low-quality days often experience frustration and losses.

Understanding when not to trade is just as valuable as knowing when to enter the market. Being selective gives you an edge by ensuring that every trade is backed by solid reasoning.

Introducing the Power of Selective Trading 

Successful traders operate with a high conviction, low-frequency approach. Instead of chasing every minor market fluctuation, they focus on setups that offer clear signals, strong confluence, and manageable risk. Every trade should have a purpose. If you can’t confidently justify why you’re entering a position, you probably shouldn’t be taking it.

Less Trading: Lower Costs and Smarter Risk Management

Frequent trading racks up spreads, commissions, and slippage, quietly eating into your profits. By reducing the number of trades, you preserve capital and increase profitability over time. Additionally, when traders take fewer but higher-quality trades, they can afford to be more patient with their entries and exits, rather than making emotional decisions under pressure.

Patience Pays Off 

Inexperienced traders fear missing out on opportunities, but experienced traders wait for the market to come to them.

They know that the best setups don’t happen every hour or even every day, but when they do, they’re worth the wait. Patience isn’t just a virtue—it’s a strategy that separates successful traders from the rest.

How to Start Integrating Selective Trading

First, start by creating a strict trade entry checklist–setting non-negotiable conditions that must be met before you place your trades. 

For example;

• A strong trend confirmation
• Key support or alignment of resistance
• Clear risk-to-reward ratio
• Market conditions that match your personal trading strategy 

Don’t hard force any trades that don’t meet all your criteria–another will come your way.

You can also use an economic calendar to pick the right days to trade. High-impact news events like NFP, interest rate decisions, and CPI reports create volatility that can present both opportunities and risks. Having a plan for when to trade around these events helps you avoid unnecessary noise in the market.

Finally, another good tactic would be to set ‘no-trade’ days for yourself. Traders often feel pressured to be in the market every day. But what if you intentionally took days off from trading to review setups, refine your strategy, or just step away from the screens?

Final Thoughts

Selective trading allows you to:

• Focus on quality setups over random entries
• Avoid mental burnout and trades ruled primarily by emotion
• Rude unnecessary trading costs
• Increase long-term profitability

By shifting the mindset from “trade more” to “trade better,” you’ll not only improve your performance but also experience a more disciplined and stress-free trading journey.

The next time you’re about to place a trade, ask yourself—does it truly meet your criteria? If not, maybe the best trade is no trade at all.

At VT Markets, we provide the tools to help you trade smarter, not harder–spot market opportunities and seize them effortlessly today.

Emini S&P March dropped from resistance at 6010/6015, reaching a range of 5873 to 6014. A break below 5975 suggested a decline towards support levels at 5925/5915, allowing for potential profits of up to 1000 points on shorts.

Emini Nasdaq March fell below 21000 for a sell signal, with last session levels between 20583 and 21386. A short-term buying opportunity appears at 20450/350, with stops advised below 20250.

Emini Dow Jones March saw a successful trade at resistance 43750/850, collapsing to near the target at 43100/43000. Longs need to set stops below 42850 while resistance remains at 43750/850.

Key Support And Resistance Levels

The S&P’s retracement from the upper level of 6010/6015 was in line with expectations, as sellers capitalised on weakness, driving prices down towards a well-established lower boundary. The dip under 5975 provided confirmation of a bearish bias in the short term, offering those positioned correctly the chance to secure sizeable gains. The area between 5925 and 5915 continues to attract attention as a potential floor, though further declines cannot be ruled out if momentum remains.

In the Nasdaq, the breakdown below 21000 gave sellers control, leading to price action contained between 20583 and 21386. The suggestion that 20450/350 presents a buying setup means that some traders will be preparing for a potential reversal, though there’s little room for complacency with protective stops recommended under 20250. Those looking to engage here will need to balance the opportunity with the potential for selling pressure to extend lower.

The Dow adhered to the outlined resistance levels near 43750/850, with sellers taking full advantage to drag the price down to the anticipated 43100/43000 zone. For those considering buy positions, stops must be kept tight beneath 42850 to manage risk properly. The resistance at 43750/850 remains decisive, and unless buyers can push through, more downside moves remain a possibility.

Trading Strategies And Considerations

For traders focused on derivatives, the recent price movements reinforce the importance of recognising when levels hold and when they break. The market continues to react to predefined technical areas, and adjusting position sizes and stop levels accordingly will be key heading into the next sessions. Each index has shown responsiveness to key levels, and the ability to adapt as momentum shifts will dictate short-term success.

Create your live VT Markets account and start trading now.

China’s National Bureau of Statistics (NBS) will release the February PMIs over the weekend, with expectations for improvements in both manufacturing and services. Manufacturing PMI is anticipated to enter expansion territory after a contraction in January, influenced by the Lunar New Year holiday.

Recent data shows fluctuations in manufacturing activity, with the PMI rising to 50.3 in November 2024 before dropping to 49.1 in January 2025. The non-manufacturing PMI experienced similar trends, dipping to 50.2 in January 2025 after a recovery in December.

The NBS and Caixin/S&P Global PMIs differ in scope and methodology. The NBS PMI focuses on large state-owned enterprises, reflecting government priorities, whereas the Caixin PMI covers small to medium enterprises, offering insights into private sector performance.

Both indices provide valuable perspectives on China’s economy. The NBS PMI represents the broader economic landscape influenced by state policies, while the Caixin PMI highlights the more responsive and volatile private sector.

We expect the upcoming PMI data to shed light on the strength of China’s economic momentum following the New Year holiday. A reading above 50 for manufacturing would indicate a return to expansion, reinforcing recent sentiment that economic conditions are stabilising. The services sector, which has been hovering just above contraction territory, is also being watched closely for signs of continued growth.

The divergence between the official and private-sector PMIs will be particularly relevant. The former, reflecting trends in larger state-owned businesses, will show whether government-driven measures aimed at revitalising industrial activity are yielding results. The latter, with its emphasis on small- and mid-sized firms, should give a sense of how private businesses are coping with domestic demand and external pressures. If both point in the same direction, confidence in that trajectory strengthens. If not, it adds an extra layer of uncertainty.

Markets have been reacting sensitively to any signs of weakness in China, and these numbers will influence sentiment in broader risk assets. A return to expansion in manufacturing could lift spirits and reduce concerns about sluggish industrial output. On the other hand, if the numbers fail to break past contractionary territory, it could revive discussions about the need for additional policy support.

Looking beyond just the headline figures, we will also be paying attention to sub-indices such as new orders and employment. These provide context beyond the overall reading and help determine whether any improvement is sustainable. A rebound driven purely by short-term factors lacks the durability needed to shift expectations longer-term.

In the coming weeks, markets will also be digesting how policymakers interpret the data. Stronger PMIs may lead to a more measured approach from authorities when it comes to further support, while weaker prints would make additional intervention appear more likely. As attention remains on policy direction, any surprises in this data set will set the tone for expectations.