China’s Consumer Price Index (CPI) is anticipated to decrease slightly in February, as mentioned by Huang Yiping, an advisor to the People’s Bank of China (PBOC). He indicated that shifts in the external environment would add pressure on domestic demand this year.

A notable contraction in demand has been driven by a deep adjustment in the property market. Furthermore, tariff increases from the Trump administration may directly affect US-China trade, potentially leading to a considerable decline in China’s exports to the United States.

This statement serves as a caution regarding current economic conditions domestically and suggests further implications from ongoing trade tensions.

Huang’s comments suggest that inflation will remain under downward pressure, making it harder for businesses to raise prices. If household spending weakens further, companies may struggle to maintain profits, which could slow hiring and investment. This puts policymakers in a difficult position, as they must balance efforts to support the economy while avoiding long-term financial instability.

The housing sector remains a central issue. Property prices have seen steep corrections, and many developers continue to face liquidity pressures. If sentiment in the real estate market does not improve soon, it could weigh on consumer confidence and broader consumption trends. Policymakers have taken steps to ease financing conditions, but the effectiveness of these measures remains uncertain.

External risks also appear to be growing. Trade restrictions from Washington could push exporters into a tight corner, making it harder for businesses to sustain overseas revenue. If tariffs reduce shipments to the United States further, manufacturers may have to cut costs elsewhere, which could limit wage growth and domestic spending.

We are watching how authorities react to these challenges. Measures to stabilise borrowing costs and encourage lending could help in the short term, but they also come with long-term trade-offs. Over-reliance on monetary easing could add strain to the financial system, especially if credit flows to less productive areas of the economy.

With all this in mind, expectations for inflation, trade policy outcomes, and government intervention will need to be reassessed frequently. Economic shifts are moving fast, requiring close attention to both market signals and policy adjustments. The next few weeks will likely provide more clarity on the economy’s direction.

A recent analysis indicates that any potential decline in GBP/USD is expected to remain within the range of 1.2600 to 1.2670. A drop below 1.2600 is deemed unlikely, while a breach of 1.2580 may signal that reaching 1.2730 is unattainable for now.

In terms of recent performance, GBP reached a two-month high of 1.2690 before falling to 1.2613. Despite this volatility, GBP closed at 1.2626, showing minimal overall change. The upward momentum is beginning to slow down, affecting short-term forecasts for the currency pair.

Given what we’ve seen so far, traders working with derivatives need to be mindful of the shifting pace in momentum. The pound made an attempt at higher levels, touching a peak not seen in two months, but failed to hold onto those gains. This tells us that, while there was earlier confidence in a climb, hesitation has started to settle into the market.

With that in mind, keeping an eye on the lower threshold of 1.2600 is key. The analysis suggests that the price is unlikely to fall below this point, but if 1.2580 gives way, expectations around further upward movement will need to be revisited. Price action in this region will offer insight into whether recent bullishness was temporary or if there’s still reason to anticipate another move toward 1.2730.

At the moment, there isn’t strong enough momentum to assume that higher levels will be challenged again immediately. The fact that the pair struggled to maintain higher ground and rounded off the session without making much headway suggests that traders should be preparing for more hesitation in the near term.

Keeping positions balanced will be important. If the pound holds within the noted range, short-term opportunities may arise for those comfortable with trading inside narrow boundaries. However, should selling pressure break support that was previously expected to hold, expectations would need to shift quickly.

The EUR/USD pair continues to struggle with a consistent break of the 1.0500 mark. Recent German political developments did not provide the necessary momentum for a breakthrough, with the euro’s gains diminishing by European trading time.

The CDU/CSU alliance aims to collaborate with the SPD for a centrist coalition, despite the SPD’s poor election performance. This coalition’s formation, excluding the Greens, diminishes hopes for meaningful debt reform.

Currently, the pair remains around its pre-weekend levels. While buyers are active, key support is found at 1.0460-62, which maintains a bullish sentiment in the near term.

Short-lived rallies above 1.0500 continue to attract selling pressure, making sustained upside movement difficult. Each attempt to push beyond this barrier has struggled to hold, suggesting sellers remain firmly in control at higher levels. Buyers are present, but their strength appears limited, with upward moves meeting resistance before gaining traction. This lack of follow-through makes it clear that confidence in prolonged euro gains remains fragile.

German politics, while always an essential factor for euro sentiment, failed to provide the push some had hoped for. The CDU/CSU and SPD coalition discussions reaffirm a centrist path, yet any hopes for debt reform have faded with the Greens’ exclusion. Without their influence, policies that might have supported fiscal tightening or broad structural changes now seem unlikely. This removes one potential driver for long-term euro strength and keeps traders cautious about overly optimistic positioning.

With price action remaining stable near pre-weekend levels, the pair continues to respect 1.0460-62 as a support area. This zone has held well, encouraging dip-buying and preventing sharper declines. While this gives buyers a foothold, their ability to generate momentum remains untested. The hesitation to push higher signals that broader sentiment leans towards neutrality rather than outright optimism.

Looking ahead, the relationship between European yields and US interest rate expectations will play a defining role. Bond markets offer a clear indication of investor positioning, and recent movements suggest that US yields still dominate market direction. Federal Reserve officials have continued to highlight their focus on inflation data, reinforcing a patient stance. If incoming reports show persistent price pressures, expectations for rate cuts will be pushed further out, providing the US dollar with renewed strength. Any shift here would make it even harder for the euro to overcome resistance barriers.

For now, traders must watch whether buyers can maintain control above support levels without quick exhaustion. If selling pressure returns swiftly, forcing a retest of recent lows, downside risks will come back into focus. Alternately, a steady consolidation could indicate that sellers are losing short-term conviction, giving price action the chance to stabilise before the next move unfolds. Timing and reaction to upcoming data will set the tone, especially with market participants remaining focused on signs of divergence between central bank expectations.

The US Dollar (USD) strengthened at the beginning of the week, buoyed by President Trump’s remarks regarding tariffs on Canada and Mexico. A new deadline, set for 3 March, has been established to prevent a potential USMCA trade war.

There is speculation that Trump may continue to leverage tariff threats for negotiations. While the market predicts a low probability of 25% tariffs being implemented, the USD/CAD and USD/MXN pairs may experience short-term upward pressure.

Attention will be focused on the Conference Board consumer confidence index, with expectations of a decline to 102.5. A drop in consumer confidence could suggest softening consumption and lead to a reassessment of Federal Reserve expectations.

At the start of the week, the US dollar gained strength as markets reacted to Trump’s comments on tariffs concerning Canada and Mexico. With a fresh deadline set for early March, traders are watching closely to see whether his administration will maintain its hard stance or use the threat of tariffs as a bargaining tool. The likelihood of tariffs reaching 25% remains low, but even the possibility has caused some movement in dollar-related currency pairs.

For those trading the Canadian dollar or Mexican peso, this means short-term shifts could provide opportunities. The USD/CAD and USD/MXN pairs have already felt upward pressure, as some investors reposition to anticipate potential trade complications. However, this is not just about tariffs—other economic indicators are coming into play, shaping expectations for the Federal Reserve in the weeks ahead.

One of the key metrics in focus is the Conference Board consumer confidence index. Analysts are expecting the figure to dip to 102.5, which would signal a potential downturn in consumer sentiment. If confidence declines further than expected, it could hint at weaker consumer spending, something the Fed cannot ignore. With inflation concerns still present, softer consumption data might change the outlook on interest rates.

A shift in the Fed’s stance would not only impact the US dollar but also global risk sentiment. If consumer confidence weakens more than anticipated, markets may reassess how quickly the central bank is willing to adjust policy. That could, in turn, affect everything from equities to bond yields, creating ripple effects across multiple asset classes.

For traders navigating derivatives markets, this sets up a few clear areas of focus. Keeping an eye on economic releases, particularly those tied to consumer sentiment, will offer deeper insight into market behaviour. With tariff discussions ongoing and confidence numbers ahead, there are multiple points of uncertainty that could drive volatility. Timing entries and exits carefully will be key as these themes continue to unfold.

There are no major expiries to consider for today, so market sentiment will largely reflect yesterday’s movements. The dollar is in a mixed position, with USD/JPY lingering around its December lows below 150.00.

Ten-year Treasury yields are decreasing, approaching the 100-day moving average of 4.38%. This is a key level to observe as the week progresses.

EUR/USD remains below the crucial 1.0500 level, having retreated after an early rise. A negative risk mood has contributed to US stocks ending lower, as they await Nvidia’s earnings release.

Additionally, month-end flows may complicate market readings in upcoming sessions. Overall, expiries will not significantly affect trading sentiment today.

With no major option expirations influencing price action, investors are left to focus on broader market trends. Since there is no external pressure from large contracts rolling off, attention naturally shifts to how assets performed in the last session.

The dollar’s position varies depending on the pair in question. Against the yen, it remains weak. USD/JPY is still near its lowest level since December, trading under 150.00. This suggests traders are cautious, and it keeps intervention risks in view. With Japan’s authorities watching movements closely, any sharp declines could prompt action.

In the bond market, movements in US Treasury yields are drawing attention. The ten-year yield is edging lower and is now nearing the 100-day moving average of 4.38%. This threshold is one to watch closely. If yields dip below that mark convincingly, it could reinforce expectations of further declines, which would have clear knock-on effects for currency markets and equities.

Meanwhile, the euro remains under pressure. EUR/USD has failed to reclaim 1.0500, reversing after an initial attempt to move higher. A softer risk environment has added to downward momentum, contributing to weakness in US stocks. Market participants are treading carefully ahead of Nvidia’s earnings. The company’s results will likely influence sentiment, given its role in shaping expectations in the technology sector.

There is also the complication of month-end flows. These can create noise and make short-term price movements harder to interpret. As the final days of the month approach, adjustments by asset managers and corporate hedgers may temporarily mask underlying trends.

For now, with options-related influences taking a back seat, trading will be shaped by sentiment shifts, technical signals, and macroeconomic factors.

In Asian trading on February 25, 2025, the U.S. dollar initially strengthened following President Trump’s confirmation of upcoming tariffs on Mexico and Canada. However, the dollar’s momentum faded, with the euro, Australian dollar, New Zealand dollar, British pound, and Canadian dollar all recovering from their lows.

Japan’s January services PPI data showed a rise of 3.1% year-on-year, up from 2.9% in December, leading USD/JPY to briefly surpass 150.30 before falling back below 150.00.

The Bank of Korea also made a widely anticipated move, lowering its benchmark rate from 3% to 2.75%.

Federal Reserve Bank of Chicago President Austan Goolsbee stated that the Fed is adopting a “wait and see” approach regarding the impact of new administration policies on inflation.

In China, the People’s Bank of China drained 200 billion in its monthly Medium-term Lending Facility operation while keeping the MLF rate stable at 2%. Additionally, the central bank set its USD/CNY reference rate at its strongest point since January 20.

Chinese tech stocks experienced a near 5% drop but rebounded to positive territory within 90 minutes.

The dollar’s initial strength came as traders reacted to Donald’s tariff confirmations, but resistance emerged as other currencies clawed back losses. Traders initially sought safety in the greenback, but its edge faded as broader sentiment improved. The euro and commodity-linked currencies led the charge, recovering once the knee-jerk reaction settled. Sterling found buyers after hitting session lows, while the loonie benefited from steadier risk appetite.

Japan’s services inflation data brought a brief jolt to the yen pair, hinting at persistent pricing pressures in non-manufacturing sectors. USD/JPY breached 150.30 as the figures crossed, but momentum quickly reversed. That level has proven to be a magnet for official scrutiny in the past, making any sustained push above it uneasy ground. Traders faded the move, and with recent rhetoric from policymakers, speculation about intervention will remain present.

South Korea’s central bank acted within expectations, trimming its policy rate to 2.75%. The cut had been telegraphed, so won movements were measured. The bank’s statement leaned cautious, suggesting officials prefer a balanced approach as they gauge inflation risks.

Austan’s remarks reinforced the Fed’s hesitancy to commit to a policy shift too early. The wait-and-see stance, particularly amid tariff-related developments, indicates that officials are watching for any inflation persistence before adjusting course. Market participants took note, as pricing for rate cuts later in the year remained largely steady after his comments.

China’s central bank maintained its MLF rate, choosing instead to drain excess liquidity. That move suggests officials are walking a fine line—supporting growth without overstimulating. At the same time, the fixing of USD/CNY sent a message. By guiding the reference rate to its firmest in over a month, authorities signalled efforts to manage foreign exchange expectations.

Chinese tech shares endured a sharp sell-off but found dip buyers. After tumbling nearly 5%, funds moved in, flipping prices green within an hour and a half. The rapid reversal suggests sentiment remains fragile but far from outright bearish.

Gold prices have dropped from recent highs, reaching around $2,929 due to profit-taking, although concerns around US trade policies are expected to limit further declines. Speculation about potential Federal Reserve rate cuts may also provide support for the metal.

The US dollar’s bounce from a two-month low didn’t help the gold price much, while ongoing trade tensions are fuelling caution regarding the global economy. Recent US macro data has strengthened views for rate reductions later this year.

Near-term price consolidation may occur, with dip-buying expected around the $2,920-$2,915 zone. Additional support levels are noted at $2,900 and $2,880; a break below these could lead to further declines.

We’ve seen gold pull back after reaching fresh highs, with traders locking in profits following a strong rally. But expectations around US economic policy and interest rates should keep downside pressure in check. With concerns about trade policy still present, the metal remains well-supported at lower levels.

Recent US economic data has further strengthened views that the Federal Reserve may have to ease policy in the coming months. This expectation is keeping interest in gold intact, particularly as we inch closer to potential policy shifts. Traders are likely to remain watchful as further confirmation from policymakers could increase volatility.

Meanwhile, the dollar has stabilised after hitting a two-month low, but this hasn’t noticeably impacted gold movements. Market sentiment remains cautious, especially given ongoing global trade tensions. These factors could contribute to further safe-haven buying, preventing any deep corrections.

For now, we may see gold consolidate around the latest levels, as buyers seem eager to step in near the $2,920-$2,915 range. Should prices dip further, additional interest is expected near $2,900 and $2,880. If those levels fail to hold, further selling pressure could emerge, prompting a broader pullback in the short term.

Given the uncertainty surrounding future rate moves, traders should be prepared for sudden shifts. Any changes in expectations could fuel quick swings in price, making it necessary to stay ahead of potential catalysts.

Lorie Logan, President of the Federal Reserve Bank of Dallas, will address the 2025 BEAR Conference focused on central bank balance sheets. The conference will include a question and answer session following her presentation.

Lorie is set to speak at the 2025 BEAR Conference, where she will cover central bank balance sheets in detail. After her presentation, she will take questions. This gives us a chance to learn how she sees policy choices shaping up over the next year.

Her remarks matter given her role in the Federal Reserve system, particularly when it comes to setting interest rates and managing liquidity. When Lorie shares her outlook, it will give us a better sense of what may come next.

Recent statements from her suggest she pays close attention to financial conditions and whether markets are adjusting in ways that align with policy goals. If she expands on this, it could offer insight into how much room there is for further policy moves.

We are watching for any change in tone compared to her previous comments. If she signals concern about inflation pressures picking up again, it may suggest tighter policy for longer. If she focuses more on easing financial strains, the direction could be different.

Beyond Lorie’s speech, the question and answer session could be just as revealing. These exchanges often bring out viewpoints that might not be as clear in prepared remarks. If she is asked about balance sheet adjustments or interest rate path expectations, her responses could shift market expectations quickly.

Heading into this event, understanding past policy discussions helps frame what to focus on. If her comments align with earlier ones from the Federal Reserve, it may reinforce what we already expect. If she departs from prior messaging, traders may have to rethink positioning.

This session may also be the right moment to gauge whether officials see financial conditions as tight enough. Any sign that further measures are in play could be important. If she points to concerns around market stability, it may hint at how soon adjustments would come.

What we take from Lorie’s remarks will matter beyond just this event. If her message matches others in the Federal Reserve, positioning could remain steady. But if she takes a different approach, it could force a shift in market expectations.

Swati Dhingra from the Bank of England confirmed her dovish stance, emphasising that gradual rate cuts will still keep monetary policy restrictive and impact the economy. She voted for a 50 basis point cut on 6 February alongside Catherine Mann.

Chief Economist Huw Pill is expected to address market rate expectations, which remain cautious despite Governor Andrew Bailey’s comments on inflation being temporary. Predictions suggest three more rate cuts this year due to a deteriorating fiscal situation, although EUR/GBP upside is seen as limited due to the euro’s own challenges.

Swati and Catherine’s push for a larger rate cut shows that some within the Bank of England believe monetary policy is still too restrictive, even with inflationary risks in the background. A 50 basis point reduction would have marked a bold shift, but the majority prefer smaller adjustments. That suggests traders betting on a sharp fall in rates may need to reset expectations.

Huw, as usual, will probably attempt to manage market hopes. Given that rate expectations have stayed controlled—despite Andrew hinting that inflation pressures could be short-lived—there’s little risk of a dramatic policy change just yet. Traders should expect more of the same from him: balancing inflation concerns with the need to avoid suffocating growth.

Predictions of three rate cuts this year highlight worsening fiscal conditions, meaning policymakers may not have the freedom to hold rates high for too long. However, those watching EUR/GBP should be aware that the euro is facing its own obstacles. Any upward moves in the pair will have limits, as economic struggles elsewhere in Europe prevent a one-sided trend.

In the coming weeks, positioning should focus on the likelihood of gradual adjustments rather than a policy shift that catches markets off guard. If rate cuts are coming, they seem unlikely to be rushed. The challenge now is in determining precisely when the first move comes, and whether external pressures force action sooner than policymakers would prefer.

Tesla has released software updates for its customers in China.

These updates add Autopilot functionality for urban roads, improving the existing Navigate on Autopilot system.

The vehicles can now manage exit ramps and intersections and can identify traffic lights.

Furthermore, the system is capable of executing maneuvers, including driving straight, turning, and making U-turns.

It can also automatically change lanes according to speed and route conditions.

If no navigation route is designated, the vehicle selects the best road based on real-time information.

This development follows an extended period of anticipation from customers in China. Tesla had previously introduced similar capabilities in other regions, but regulatory concerns and local testing requirements delayed the broader adoption within this market. With this update, owners of compatible vehicles can now experience a more refined version of the driver assistance system, though it still requires active supervision from the person behind the wheel.

In practice, the improvements allow for smoother handling in complex urban environments. Previously, the system’s strengths were primarily exhibited on highways, where traffic patterns are more predictable, and manoeuvres involve fewer sudden stops or unpredictable elements. Now, as Autopilot navigates city streets, it can recognise and react to a wide variety of road signals and situations. The ability to adjust speed dynamically based on surroundings is particularly useful in dense traffic, where conditions often shift rapidly.

Elon, as ever, remains vocal about the company’s ambitions in automation, though Tesla continues to reinforce that this is not fully autonomous driving. Drivers are expected to remain attentive at all times, a message underscored by frequent prompts to keep hands on the steering wheel. Automatic lane changes, which rely on Tesla’s suite of cameras and sensors, are smoother and more context-aware, reducing the chances of abrupt or unnecessary shifts. This refinement is part of a broader push to enhance confidence in assisted driving technology.

Given the strong demand for software-driven vehicle improvements in China, the timing of this release is notable. The company faces increasing pressure from both domestic competitors and regulatory bodies, making continuous software enhancement a necessity rather than an option. The ability of these updates to balance improved automation with stringent local requirements could play a role in customer retention.

Throughout the automotive sector, discussions around assisted driving technologies have intensified. Some manufacturers approach this space with a more conservative outlook, avoiding advanced rollouts until stricter regulatory frameworks exist. Tesla has taken the opposite route, deploying updates at a rapid pace and refining capabilities through real-world usage. This method has drawn scrutiny at times but has also allowed faster development cycles compared to more cautious competitors.

The impact on broader market sentiment will become clearer in the weeks ahead. Investors typically react swiftly to software updates of this nature, particularly when they introduce capabilities that could affect long-term adoption rates. Updates that improve vehicle utility without requiring hardware modifications tend to be well received, as they provide a direct boost to perceived value.

Given these recent changes, the direction of regulatory response also warrants attention. Authorities in China have taken an increasingly active role in overseeing automated driving features, meaning further refinements or restrictions could follow. Tesla’s ability to align its software updates with these evolving expectations will serve as a key factor in maintaining compliance and customer trust. Those monitoring developments closely will be weighing the balance between enhanced system capability and potential regulatory scrutiny.