Tokyo’s February headline Consumer Price Index (CPI) increased by 2.9% year-on-year, lower than the anticipated 3.2%. This figure also fell short of January’s CPI, which was recorded at 3.4%.

Excluding fresh food, the CPI rose by 2.2%, compared to expectations of 2.3% and a prior figure of 2.5%. Furthermore, the CPI excluding food and energy showed an increase of 1.9%, aligning with January’s results and slightly below the expected 2.0%.

The USD/JPY exchange rate rose in response to these inflation figures, suggesting reduced pressure for Bank of Japan rate hikes in the near term.

These inflation numbers tell us a great deal about where things may be going. Expectations had been set higher, yet actual figures failed to meet them. A lower-than-expected CPI reading implies that price pressures may not be as persistent as some had feared. That said, a decline from the previous month suggests a weakening trend, which will likely influence upcoming decisions by policymakers.

Even when filtering out fresh food, inflation remained under projections. The inflation measure that also excludes energy held steady, but it too did not reach the level many had anticipated. This data paints a picture of an economy where inflation is still present but appears to be moderating. With energy costs having played a large role in past inflation surges, it is telling that price growth does not seem to be accelerating without energy factored in.

The currency markets reacted swiftly. A weaker-than-expected inflation reading often reduces urgency for tighter monetary policy. That explains why the dollar gained against the yen—the lower likelihood that rates will be lifted reduces the appeal of the yen compared to the dollar. This aligns with market behaviour seen in the past when inflation readings came in below expectations.

Looking ahead, attention will turn towards policymakers and any signs of shifting narratives. If inflation continues to decelerate, discussions about policy changes may lose momentum, affecting sentiment across multiple markets. Since inflation is a core concern for decision-makers, softer readings may mean a delay or rethink of tightening measures previously considered inevitable.

The direction of the yen remains closely tied to these developments. Should inflation keep cooling, there is reason to believe current trends in the currency markets may persist. On the other hand, any surprise move in inflation readings next month could quickly alter expectations again. Those monitoring these figures must follow the data closely, as delayed reactions to shifting trends can carry consequences.

It is not just local implications at play. A shift in monetary outlook here does not go unnoticed elsewhere. Global traders adjust positions based on where those in charge appear to be heading. If expectations of future adjustments change, we may see market movements with wider reach.

EUR/JPY is experiencing a decline, trading around 155.30, following remarks from BoJ Deputy Governor Shinichi Uchida. He noted Japan’s inflation is rising steadily towards the 2% target, which strengthens the likelihood of impending rate hikes.

The Tokyo Consumer Price Index (CPI) reported a slowdown, with headline CPI increasing by 2.9% year-on-year in February, down from January’s 3.4%. The core CPI rose by 2.2% year-on-year, lower than January’s 2.5%, contributing to the currency’s pressure.

Market sentiment remains risk-averse, partly due to renewed trade tensions instigated by US President Donald Trump. He suggested possible tariffs on European goods and reaffirmed planned duties on imports from Mexico, Canada, and China.

This uncertainty about tariffs could adversely impact the Eurozone economy, which is already facing weak demand, potentially exerting further pressure on the EUR/JPY exchange rate.

Uchida’s remarks have added fuel to expectations that Japan could move towards tightening its monetary policy. Investors paying attention to these signals will recognise that if Japan raises interest rates, the yen could gain more strength against the euro. With EUR/JPY already sliding to around 155.30, this shift may not yet be fully accounted for in pricing. Given Japan’s steady progress towards the 2% inflation target, it’s not surprising that speculation around a rate increase is intensifying.

However, the Tokyo CPI slowing down for February tells a slightly different story. The drop from 3.4% to 2.9% in the headline figure shows that price pressures may not be as persistent as some had expected. A similar trend in core CPI, softening from 2.5% to 2.2%, suggests inflation is cooling rather than accelerating. This could complicate the case for imminent BoJ policy tightening, though market participants might still lean towards positioning for an eventual rate hike rather than dismissing it outright.

At the same time, there is a broader shift in market sentiment. Risk appetite is subdued, and this isn’t just about Japan’s economic policy. Renewed trade tensions are casting a shadow over global markets, with Donald Trump’s comments adding to uncertainty. Potential tariffs on European exports, alongside measures targeting Mexico, Canada, and China, could weigh on growth prospects for several economies.

For Europe, these concerns couldn’t come at a worse time. The region was already contending with weak demand, and additional trade barriers would only add to the economic strain. A slower-performing Eurozone means less room for the European Central Bank to consider tightening its own policy, further tilting the balance in favour of the yen. As long as these headwinds continue for Europe while Japan inches closer to normalising rates, downward pressure on EUR/JPY could persist.

For traders, the next few weeks are likely to be shaped by further developments in these areas. If Japan’s inflation momentum holds up and officials maintain their hawkish tone, it will reinforce the current trend. Meanwhile, any confirmation of trade restrictions from Washington could dampen sentiment around the euro even further. Tracking official comments and inflation data will be necessary to understand the pace at which these shifts are happening.

OPEC+ is currently uncertain about its plans for an oil output increase in April. While Russia and the UAE support proceeding with the hike, Saudi Arabia prefers a delay.

The next Joint Ministerial Monitoring Committee meeting is set for April 5, 2025, to review compliance with OPEC+ agreements. Following that, the full OPEC+ meeting is scheduled for May 28, 2025.

OPEC+ members are not in agreement on whether to move forward with an oil production increase in April. Russia and the UAE favour going ahead as planned, but Saudi Arabia stands on the other side, advocating for a postponement.

This difference in approach brings uncertainty to the oil market. Traders paying attention to these shifts will note that when key producers disagree, price swings often follow. The decision will shape expectations around supply levels in the coming months, and markets tend to react before any formal announcement is made.

One date already on the calendar is 5 April 2025, when the Joint Ministerial Monitoring Committee will meet to assess whether countries are keeping to agreed production targets. Historically, these gatherings do not result in immediate policy changes, but they are closely followed for any signs of shifting positions among member states. If discussions reveal movement towards a compromise or an intensification of divisions, the price response could be swift.

Not long after, on 28 May 2025, the full OPEC+ meeting will take place, where ministers will determine future output levels. Given the divide between Saudi Arabia on one side and Russia with the UAE on the other, this meeting could bring more debate than usual. Those watching carefully will remember how past disagreements within OPEC+ have led to unexpected outcomes, including sudden changes in policy that caught the market off guard.

What happens between now and then will depend on many factors—demand expectations, geopolitical risks, and economic conditions. Traders assessing the situation in the coming weeks should monitor whether other OPEC+ members align with either camp. If more nations side with Saudi Arabia, delays become more likely. If support tilts towards Russia and the UAE, the planned increase could remain in place, despite opposition.

Every statement from top officials matters at this stage. Comments from ministers—whether in official meetings or informal remarks to the media—can shift expectations. In past discussions, a single interview has altered momentum, as traders recalibrate positions based on any sign of compromise or escalation in disagreements.

With the upcoming meetings set, the time between now and those dates will shape how decisions unfold. Supply forecasts, consumption trends, and external pressures will all play their part. As tensions within OPEC+ remain unresolved, market participants must be prepared for movements that might not wait for the official gatherings to take place.

Silver is currently defending the 100-day Simple Moving Average (SMA) support near $31.15, showing a modest recovery from a recent low. Trading is around $31.35, with an increase of over 0.30% for the day, while market participants await the US Personal Consumption Expenditure (PCE) Price Index.

Technical indicators suggest a potential downtrend unless there is a decisive break below the 100-day SMA. Should the price decline below $31.00, it may continue towards $30.25 and potentially reach the psychological level of $30.00.

Further drops could see the price target the $29.50-$29.55 support area, and if $30.00 breaks, it could even approach levels around $28.75. Conversely, resistance is noted near $31.65, with potential upward movement towards $32.00 if surpassed.

If silver maintains strength above $32.00, it may trigger a rally towards the $32.40-$32.45 range and attempt to challenge $33.00. The monthly swing high near $33.40 could also be tested in this scenario.

Silver has found support at the 100-day Simple Moving Average (SMA), holding firm near $31.15 while showing minor recovery. Prices remain near $31.35, with a daily increase surpassing 0.30%. The market is now focused on the upcoming US Personal Consumption Expenditure (PCE) Price Index, which could influence near-term direction.

From a technical perspective, indicators hint at downward pressure unless there is a strong recovery above key levels. A decline beneath $31.00 would likely lead to further weakness, with potential moves towards $30.25 and a psychological barrier at $30.00. Any breach of this zone could open the door for a drop into the $29.50-$29.55 area, with a deeper retracement possibly testing levels near $28.75.

On the upside, $31.65 remains the closest resistance. A sustained push above this could put $32.00 into focus, where bullish momentum might accelerate. If prices hold beyond $32.00, a rise towards $32.40-$32.45 seems plausible, with an attempt at $33.00 also on the table. A continued rally might even see a test of the monthly swing high, located close to $33.40.

For traders involved, recognising these levels is essential in structuring strategies. The balance between support and resistance zones remains delicate, with sentiment hanging on upcoming economic data. Caution is advised as price movement is sensitive to developments in inflation trends and broader market expectations.

Japanese labour unions are advocating for a record wage increase in response to rising living costs and strong wage trends from the previous year. The Japan Council of Metalworkers’ Unions (JCM), representing approximately 2 million workers in major companies, has proposed an average monthly base salary rise of 14,149 yen, translating to a 14% increase on last year’s demand.

Japan’s largest labour organisation, Rengo, is seeking an overall wage rise of at least 5% for 2025, which includes a minimum 3% increase in base salaries. These developments strengthen the argument for potential rate hikes by the Bank of Japan.

A push for higher wages is intensifying pressure on policymakers in Tokyo. As we see it, the demands from Japanese labour unions are not just routine negotiations but part of a broader shift in how wages align with inflation. When groups like JCM and Rengo call for pay rises beyond last year’s figures, it signals an expectation among workers that companies can afford to pay more. Whether firms agree fully or settle for smaller adjustments, the momentum for change is hard to ignore.

Market participants should recognise that a wage surge of this scale carries weight beyond just corporate payrolls. Rising earnings fuel consumer spending, which supports price growth—something the Bank of Japan has been trying to sustain. If salary increases translate into lasting inflation, it strengthens the case for a policy adjustment. This aligns with the central bank’s ongoing stance that sustained wage-driven inflation is a key factor in future decisions.

In recent months, higher pay settlements have already played a part in shaping monetary expectations. The previous wage negotiations set the stage for speculation on rate moves, and this latest push raises the stakes. With calls for substantial increases, we are looking at a scenario in which policymakers may find it harder to argue against tightening conditions. A shift in interest rates would influence funding costs and reshape expectations across multiple sectors.

When wage talks result in actual raises, companies must decide how to absorb higher outlays. Some will pass costs to consumers, reinforcing inflationary pressures. Others may attempt to offset them through productivity gains or cost-cutting elsewhere. How firms respond affects profitability, pricing strategies, and forward guidance, all of which demand attention.

Beyond wages, another element comes into play: timing. Negotiations will take months, but speculative pricing moves faster. Markets tend to react ahead of policy shifts, so expectations will likely show up before official figures reflect actual salary adjustments. This means any signals from corporate leaders, union representatives, or policymakers deserve close scrutiny.

While policymakers continue evaluating inflation data and corporate wage responses, decisions made over the coming weeks will set expectations beyond just an immediate cycle. Tightening financial conditions remain a possibility if trends hold, and actions from businesses will provide additional confirmation.

The wage debate is not happening in isolation. It feeds into broader discussions on capital flows, earnings potential, and market positioning. Investors tracking these developments would do well to stay focused, as shifting wage dynamics could steer corporate strategy as well as broader economic conditions.

The Australian Dollar (AUD) has faced decline for six consecutive days, pressured by US tariffs on Chinese imports, which are now set at 20%. The US GDP grew by 2.3% in Q4 2024, matching market expectations, while AUD/USD trades around 0.6220, with support at 0.6200.

A fall below 0.6200 may see the pair drop to 0.6087, its lowest since April 2020. Following the GDP announcement, the US Dollar Index rose above 107.00, as market sentiment reacted to the tariff threats impacting Australia-China trade dynamics.

Australia’s Private Capital Expenditure data fell by 0.2% in Q4 2024, signifying an unexpected contraction. The Reserve Bank of Australia’s Deputy Governor indicated concerns about inflation and a tightened labour market, coinciding with a recent reduction of the Official Cash Rate to 4.10% after four years.

Ongoing trade war risks remain prominent, especially with data releases and interactions between the US and China. The health of China’s economy and the price of iron ore play vital roles in influencing the AUD, given their direct connection to Australia’s exports.

Interest rates set by the RBA significantly influence the AUD’s relative strength, affecting overall economic conditions. A robust trade balance may support the currency, while a negative balance could lead to a depreciation. In summary, the AUD is adversely affected by geopolitical tensions and its economic context in global markets.

Philip Lowe’s comments on inflation and the state of the labour market highlight an economy at a turning point. With the Reserve Bank of Australia having recently lowered the cash rate to 4.10%—the first cut in four years—the policy shift suggests the central bank is trying to mitigate domestic challenges. Meanwhile, the Australian Dollar’s ongoing struggles against the US Dollar underscore external pressures, particularly the deepening trade tensions between the world’s two largest economies.

From a trading standpoint, the 0.6200 level serves as an important threshold. Should the pair fall through this point, further losses may see it testing 0.6087, a level last reached during the market stress of early 2020. Given the recent contraction in private capital expenditure, a decline in business investment could add further weight to an already pressured currency. Those involved in the market must acknowledge that downward momentum may persist if economic data continues to disappoint.

The rise in the US Dollar Index above 107.00 following the GDP report indicates that traders are maintaining confidence in the US economy, which, for now, remains resilient. That resilience, combined with a more restrictive trade position from Washington, raises concerns over Australia’s economic exposure to Chinese demand. China’s economy has long played a substantial role in shaping the strength of the Australian Dollar, particularly through its influence on commodity exports.

We cannot overlook the importance of iron ore prices as they remain a leading factor in the currency’s performance. Fluctuations in China’s industrial output tend to dictate movement in demand for Australian raw materials. If China were to slow materially, it would ripple through Australia’s export revenues, exerting further downward pressure on the currency.

In the weeks ahead, updates on trade negotiations between the US and China should be carefully observed, as any escalation could lead to further losses for the Australian Dollar. A broader shift in risk sentiment, particularly one driven by concerns over global economic growth, may also play a role in influencing price action. While a stabilisation above 0.6200 would provide temporary relief, broader macroeconomic forces are likely to dictate whether the currency finds stability or continues facing depreciation.

OpenAI CEO Sam Altman announced plans to add tens of thousands of GPUs next week with the release of GPT-4.5. This model is described as the largest and most powerful to date.

The rollout will commence with the plus tier of the service. Altman stated that the model will be both “giant” and “expensive,” indicating OpenAI’s significant growth and current GPU limitations.

Altman’s statement reaffirms what many have already observed—OpenAI’s rapid expansion continues, but the sheer cost and technical burden cannot be ignored. A model of this size requires an enormous number of GPUs, something that has become a recurring concern for large-scale AI deployments. The mention of “giant” hints at both the model’s complexity and, more importantly, the increased resource demand that will come with it.

This comes at a time when demand for high-end chips is nowhere near slowing down. Nvidia remains the dominant supplier, and the industry has already been dealing with shortages that have, at times, constrained AI companies. The upcoming expansion suggests that OpenAI is securing hardware at a faster pace, which could be read as confirmation that supply issues are easing—at least for them. Whether this extends to others in the space is another matter entirely.

Then there is the question of operating costs. “Expensive” is not just a throwaway comment; these systems bring enormous electricity consumption and ongoing expenditure. If OpenAI is willing to publicly acknowledge these costs, it underlines the continued financial weight these models carry. Cloud providers supplying computing power to AI firms have been adjusting their pricing accordingly, which means these costs are unlikely to stabilise in the near term.

For those tracking where high-compute AI is headed, these developments bring both opportunities and fresh challenges. Pricing strategies may shift in response to the increased needs of OpenAI, and any supply chain disruptions would send ripple effects elsewhere. The launch taking place through the plus-tier subscription first is also revealing—OpenAI is prioritising those users, possibly as a way to better control demand or gather early insights before wider availability.

Even beyond OpenAI, the pressure to keep pace with these advancements will weigh on competitors. Scaling up infrastructure is not an overnight process, and any delay in acquiring more GPUs could mean a widening gap between market leaders and those trying to catch up. Some firms may respond by refining their own models to operate with fewer resources, but how that plays out will depend on whether they can maintain quality while doing so.

This is the environment that will shape decisions in the coming weeks. Every adjustment in compute availability, subscription access, and cost structure feeds into broader movements, all of which need to be watched carefully.

WTI crude oil is trading around $69.90 per barrel, marking its first potential monthly decline since November, primarily due to concerns over global economic growth and fuel demand. The US will implement a 10% tariff on Canadian energy imports starting March 4, affecting market dynamics.

On Thursday, oil prices increased over 2% after the US revoked a Chevron license for operations in Venezuela, which may disrupt the country’s oil output significantly. The OPEC+ group is assessing whether to maintain or increase oil production levels amid uncertainty from US sanctions on Venezuela, Iran, and Russia.

US economic data indicates a slowdown, with GDP growth decreasing to 2.3% in Q4 and jobless claims rising to 242,000, signalling potential labour market easing. The market is awaiting the PCE price index report, important for inflation assessment.

At present, crude oil is sitting close to $69.90 per barrel, marking a possible end to its monthly streak of gains that began in November. A primary factor behind this shift is mounting concern over the strength of global economic growth and what that might mean for fuel consumption. Adding to market uncertainty is Washington’s plan to introduce a 10% tariff on Canadian energy imports starting in early March, which could create additional strain on cross-border energy trade.

Thursday saw oil prices jump by more than 2% after Washington pulled Chevron’s Venezuelan license, a decision that may have lasting effects on the country’s crude output. Given Venezuela’s struggling production levels, any further setbacks could impact global supply calculations. Meanwhile, OPEC+ is still weighing its next move—whether to maintain existing production quotas or adjust them—as it considers the impact of US sanctions on Venezuela, Iran, and Russia. The uncertainty around those three nations places added pressure on the group’s decision-making, something traders will need to keep a close watch on.

Turning to the US economy, fresh data reveals some softening. Economic growth slowed to 2.3% in the final quarter of last year, and jobless claims ticked up to 242,000, a figure that could indicate early signs of a cooling labour market. This raises questions about future demand for crude, particularly if broader concerns over economic momentum continue. Attention now shifts to the PCE price index report, widely used to gauge inflation pressures. Its implications will go beyond monetary policy expectations and could influence how markets position themselves in the short term.

The Japanese Yen (JPY) gained traction during the Asian session on Friday, spurred by hawkish comments from Bank of Japan Deputy Governor Shinichi Uchida, who noted a gradual rise in the inflation rate towards the 2% target. The remarks bolstered expectations of further interest rate hikes by the Bank of Japan, countering the softer-than-expected Tokyo Consumer Price Index (CPI) data.

Tokyo’s headline CPI decreased from 3.4% to 2.9% year-on-year in February, while core CPI dropped from 2.5% to 2.2%. Additionally, Japan’s Industrial Production declined by 1.1% month-on-month in January, marking three consecutive months of decreased output.

In the United States, inflationary pressures remain present, reinforcing the Federal Reserve’s cautious approach to monetary policy. The GDP expanded at a 2.3% annualised rate in the final quarter of 2024, aligning with earlier estimates.

The USD/JPY pair retreated below the mid-149.00s, with key support seen at the 149.00 mark. Resistance levels are identified at 148.80 and 150.00, suggesting potential further fluctuations in this range.

Shinichi’s remarks gave traders more confidence that the Bank of Japan could move forward with tighter monetary policy, even though inflation data from Tokyo alone painted a softer picture. While consumer prices there came in below expectations, what matters more is that policymakers, such as him, see the national trend as still pushing towards their long-term aim of stable inflation at 2%.

We also cannot overlook the weakness in Japan’s industrial sector. A third straight month of output declines hints at broader concerns about domestic demand and manufacturing strength. However, the Bank of Japan appears more focused on inflation expectations rather than singular economic reports. That means those trading yen pairs should prepare for future statements from central bank officials. If additional policymakers adopt a similar stance to Shinichi, the market may start pricing in rate changes more aggressively.

Meanwhile, across the Pacific, inflationary forces remain a key concern for Federal Reserve officials, which has kept investors focused on how soon policymakers might consider adjusting interest rates. The most recent US GDP report showed steady growth at 2.3%, confirming that the economy has remained on a solid footing. While this does not dramatically shift expectations for Fed policy, it reinforces the idea that the central bank has reason to avoid easing too quickly.

With the dollar-yen pair easing back below the mid-149 range, immediate attention shifts to levels at 149.00, which may serve as a temporary floor. Should price action remain within this band, any downward pressure could test support near 148.80. On the upside, resistance remains firm around 150.00, making it an area to watch for potential breakouts. Traders managing positions in this market should be mindful of both central bank rhetoric and further economic data that might influence broader sentiment.

Federal Reserve Bank of Philadelphia President Patrick Harker has suggested that a rate hike is not entirely ruled out. While he mentioned that the Fed Funds rate is likely to stay on hold, he stated that potential movements could occur in either direction.

He indicated that there may be a greater chance of a rate cut in the future, but there are no immediate plans for an increase. Harker described the current policy as mildly restrictive and observed that the labour market is aligning with previous trends, noting that shelter inflation should decline at some point.

Patrick’s comments highlight that there is still some uncertainty surrounding future policy moves. While he leans towards keeping rates steady for now, he has not completely dismissed the possibility of another hike. That alone suggests that those expecting an immediate shift to lower rates may need to adjust their expectations.

The fact that he sees policy as only mildly restrictive is also worth noting. If conditions do not tighten enough to slow inflation further, there may be less urgency to cut. At the same time, he appears to believe that broader trends—particularly in jobs and housing costs—are moving in a direction that could support lower rates later on. His view that shelter inflation should decline implies that one of the more persistent contributors to overall price growth may ease, removing a barrier to policy adjustments.

Given this backdrop, positioning based on an assumption that cuts will arrive quickly carries risks. There are indications that rates could stay where they are for some time. The possibility of an increase, even if not the most likely scenario, must at least be factored into decision-making. Any trades that assume a near-term shift in policy could be exposed if incoming data does not justify one.

Inflation readings in the coming weeks will play a role in shaping expectations. If price pressures remain stable or ease further, mentions of potential cuts may grow louder. However, any stubborn inflation prints could reinforce the argument that patience is required before any adjustments take place. Labour market trends will also matter. Patrick’s suggestion that employment conditions are aligning with past norms suggests that policymakers see fewer risks of overheating. But any sudden changes in job growth or wages could alter that view.

There is also the question of how markets respond to this messaging. If investors continue to expect cuts sooner rather than later despite warnings that policy could remain tight, it could lead to volatility when reality does not match those assumptions. That would be particularly relevant if stronger-than-expected economic data forces a repricing of expectations.

In short, while rate cuts may still be likely down the line, there is no definitive timeframe. The risks of holding firm for longer—or even tightening again—are not entirely off the table. That means any moves based purely on the idea that lower rates are just around the corner come with dangers that should not be ignored.