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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In January, the US Personal Consumption Expenditures (PCE) core rate rose by 2.6%, matching expectations. Monthly core PCE increased by 0.3%, with unrounded figures showing a rise of 0.285%.

Headline PCE also came in at 2.5% year-on-year, consistent with forecasts. Personal income saw an increase of 0.9%, surpassing the expected 0.3%, while personal spending declined by 0.2%.

Real personal spending fell by 0.5%, with the savings rate rising to 4.6% from 3.8%. Vehicle spending dropped, potentially due to adverse weather, with expectations of recovery as conditions improve.

These numbers provide a precise view of inflation and consumer behaviour at the start of the year. A 2.6% rise in core PCE suggests that price increases remain steady, aligning with what was widely anticipated. The monthly increase of 0.3%, with an unrounded 0.285%, reinforces this stability. No unexpected shifts mean the broader trend is still in place, without indications of accelerating or slowing inflation pressure beyond what was predicted.

Annual headline PCE at 2.5% confirms that general price growth remains in check, providing another piece of data in line with forecasts. While core figures strip out the more volatile food and energy components, headline numbers offer a view of overall cost changes faced by households. With both coming in as expected, there is little in this release to suggest any abrupt adjustments in economic assumptions.

Income growth stood out, rising by 0.9% when only 0.3% was expected. A result like this indicates that people earned more than originally thought, whether through wages, investments, or other means. However, personal spending dropped by 0.2%, meaning that additional earnings weren’t immediately channelled into consumption. Instead, more was set aside, as reflected by the rise in the savings rate from 3.8% to 4.6%.

A steeper drop in real personal spending, down 0.5%, points to inflation-adjusted consumption pulling back even further. Within this, vehicle purchases saw particular weakness, which may have been a result of harsh weather conditions making it difficult for buyers to visit dealerships. If weather was indeed the key reason, demand should return as conditions normalise.

For the weeks ahead, these figures offer a clear reference point. Inflation is not deviating from expectations, spending has softened slightly, and households chose to save more of their income. Each of these trends will be watched closely for confirmation or adjustment as new data emerges.

In January, wholesale inventories in the United States increased by 0.7%, surpassing the forecast of 0.1%. This growth is indicative of inventory management levels in the market.

Meanwhile, the EUR/USD currency pair is stabilising around 1.0400 following the US Personal Consumption Expenditures (PCE) inflation data. Gold has dropped to below $2,840, reflecting bearish pressure amid uncertainties regarding trade policy.

GBP/USD also remains firm above 1.2600 in response to the PCE results. The upcoming week will feature key events, including US payroll data and an ECB rate meeting, alongside a focus on tariff concerns from the Trump administration.

The uptick in wholesale inventories suggests that businesses are either stockpiling in anticipation of stronger demand or struggling with slower sales, leading to a build-up of goods. A rise of 0.7% instead of the expected 0.1% means businesses are holding onto more products than analysts had estimated. If this continues, it might indicate weaker consumer demand, which would impact future production rates. It will be key to monitor whether this trend extends into the next couple of months, as it could shape expectations for broader economic activity.

Over in currency markets, the euro’s relative steadiness suggests that traders have largely priced in the latest US inflation data. For now, the pair is showing little intention of a sharp movement in either direction. If there is a fresh development from the Federal Reserve or the European Central Bank, we might see a clearer trend emerge. Likewise, the drop in gold prices below $2,840 aligns with traders seeking safer positions elsewhere, particularly as trade policy uncertainty weighs on sentiment. Those active in such markets should keep a close eye on how the US approaches tariffs, as any unexpected moves could trigger volatility.

Looking at the pound, its stability above 1.2600 suggests that investors are comfortable with how the latest inflation figures are shaping expectations for both the Federal Reserve and the Bank of England. As we move ahead, the labour report in the US will be one of the determining factors for rate bets. If employment figures come in stronger than predicted, the dollar could regain strength, applying pressure on both the euro and the pound.

At the same time, traders need to account for the European Central Bank’s meeting later in the week. If policymakers indicate a firmer stance on policy adjustments, the euro may break out of its current range. However, if they remain cautious, we are likely to see limited movement. Other forces at play include ongoing trade discussions in Washington. This could introduce fresh shocks depending on how restrictive any proposed measures turn out to be.

For those navigating short-term trades, staying attuned to payroll data and central bank rhetoric will be key. The next few sessions could shape expectations not just for the month ahead but for broader currency and commodity trends.

The upcoming PCE report is anticipated to provide insights regarding the Federal Reserve’s ability to cut interest rates amid persistent inflation. The consensus forecast for core PCE inflation is +0.3%, with some predicting +0.27%, leading to a year-on-year figure of +2.6%. The headline forecast is +0.31% and +2.5% year-on-year.

In Canada, the GDP report is expected to show a quarterly annualised growth of +1.8% for Q4. Attention will be on December’s momentum, which is projected at +0.3%.

Markets are bracing for the PCE report, as the data will shape expectations around monetary policy in the coming months. Inflation trends have remained stubborn, leaving officials with little room for immediate manoeuvre. A reading in line with forecasts will reinforce the view that price pressures are easing gradually, while any deviation—particularly to the upside—will reignite concerns that rates might need to stay elevated for longer.

Monthly figures of around 0.3% suggest inflation is proving resistant, albeit at a slowing pace. If the actual number lands closer to 0.27%, it will be seen as a small reassurance, though unlikely to change the broader outlook. However, should it exceed 0.3%, markets will reconsider their expectations for cuts, likely leading to adjustments across rate-sensitive assets. A year-on-year rate of 2.6% keeps inflation above target, reinforcing the lack of urgency for policy shifts, especially given that recent reports have shown slower progress than hoped.

The headline figure, which factors in more volatile components, will also matter. If it aligns with the 0.31% forecast, it suggests price levels remain sticky, keeping pressure on officials to remain cautious. For traders, this means keeping a close eye on any deviations from the expected numbers, as these will dictate moves in yield-sensitive instruments. Short-term volatility is likely, particularly if the data surprises on either end.

Meanwhile, the Canadian economy’s performance in Q4 will offer clues on how much resilience remains despite past rate hikes. A 1.8% annualised expansion indicates moderate growth, but the monthly figure for December holds weight, as it reflects how momentum carried into the year’s end. If the economy managed 0.3% growth in that final month, it supports the view that conditions held firm despite economic pressures. If softer, the argument for rate adjustments gains some strength.

Those watching the releases should prepare for pronounced movements in interest rate expectations. Even minor variations from forecasts will be closely scrutinised, potentially shifting positioning in rates and currencies. Caution is warranted in the early reactions, as the initial market response tends to be sharp before settling as deeper analysis comes into play.

In the fourth quarter, Canada’s annualised gross domestic product (GDP) increased by 2.6%, surpassing predictions of 1.9%. This indicates a solid performance in the country’s economy during this period.

The US Dollar’s performance has been mixed, with the EUR/USD pair stabilising near 1.0400 following January’s PCE inflation data release.

Gold prices have dipped to levels below $2,840, primarily due to uncertainties linked to ongoing trade policies and market dynamics.

GBP/USD has shown resilience, remaining above 1.2600 amidst fluctuating conditions after the PCE data was published. The upcoming week will see significant economic events, such as US payroll figures and an ECB meeting.

Canada’s economy performed well in the final quarter, growing faster than expected at 2.6% on an annualised basis. Forecasts had suggested 1.9%, making this a positive surprise. A stronger expansion like this often suggests resilient consumer spending and business investment. It also means that expectations for future monetary policy may shift slightly, since central banks tend to respond to economic performance.

Meanwhile, the US dollar has shown mixed movements. The EUR/USD pair has stabilised around 1.0400, which is not far from where it was before January’s PCE inflation data became public. This data point is one of the US Federal Reserve’s preferred inflation measures, meaning markets follow it closely when adjusting positions on currency pairs.

Gold has come under pressure, falling below $2,840. This is linked to uncertainties surrounding trade policies and other market forces. Precious metals often struggle when there is uncertainty about global commerce, particularly if investors anticipate changes in monetary policy that could affect demand for safe-haven assets.

The British pound has remained firm above 1.2600 against the US dollar, despite variable market conditions following the recent release of PCE data. When a currency remains stable or outperforms in uncertain conditions, it typically suggests confidence among traders regarding its short-term outlook.

As the coming week unfolds, key events will require attention. US payroll figures are on the horizon, and they often influence expectations for interest rate decisions. There is also an important meeting by the European Central Bank, which could refine speculation around policy directions in that region. Both developments will affect market behaviour, requiring a close watch to gauge potential shifts in trading conditions.

As the US trading session begins, traders are preparing for the US PCE data release, expected to show a 0.3% increase for both headline and core measures. The EURUSD has moved down, while the GBPUSD has increased; the USDJPY is on an upward trend.

In the equity markets, the Dow has risen by 214 points, the S&P by 15.18 points, while the Nasdaq remains close to unchanged, reflecting recent declines over the past five Fridays due to concerns regarding the upcoming weekend news.

The EURUSD is currently trading near the 1.0400 to 1.04065 range, which is a significant swing level and represents 38.2% of the recent upward movement from February’s low. A move above this level indicates bullish sentiment, while a drop suggests bearish outlook.

The USDJPY has managed to surpass the 200-hour moving average and is eyeing the 150.933 level, which aligns with a 38.2% retracement from February’s peak. A breakthrough at this level may facilitate further upward traction.

In the GBPUSD, the exchange rate is testing the former 38.2% retracement level from the September high, which sits at 1.26087. If the price goes beyond this point, a cluster of moving averages between 1.2631 and 1.26395 could support further gains.

As we approach the release of the US core PCE data, market expectations remain firmly set at a 0.3% month-on-month rise. With this in mind, trading sentiment could shift quickly, particularly in currency pairs where momentum already appears to be developing. The pound, for instance, has maintained an upward push, while the euro is struggling to hold onto key technical levels. Meanwhile, the yen continues to weaken, reinforcing the broad dollar strength seen in recent sessions.

Stock markets reflect a mixed picture. While the Dow has added 214 points and the S&P has edged higher, the Nasdaq remains near flat, weighed down by broader concerns. The repeated Friday declines in recent weeks highlight nervousness as traders position cautiously ahead of weekend events that could shift sentiment when markets reopen. Given this backdrop, positioning in risk assets remains sensitive to both economic data and external developments.

In currency markets, the battle around critical technical levels continues. The euro is holding just above 1.0400, but this area is pivotal. This range coincides with a longer-term Fibonacci retracement and has acted as a key decision point in the past. If sellers gain control and push the price lower, it would reinforce the broader negative trend seen throughout the past week. A recovery above 1.04065, however, could signal that buyers are willing to step in with more conviction.

The yen, on the other hand, has maintained its climb against the dollar, with prices now testing 150.933. This area carries weight, as it represents a key retracement level from February’s peak. A move through here would likely encourage further buying pressure, particularly if momentum traders jump on board, targeting the next round of resistance. Should sellers emerge, though, the next test would be whether buyers keep defending the 200-hour moving average that was reclaimed earlier. Markets are watching closely to see how this plays out.

Sterling is also facing a moment of decision. The exchange rate has lifted towards 1.26087, which previously acted as resistance and aligns with a key retracement level from last autumn’s highs. If buyers push beyond this, the focus shifts to an area packed with moving averages between 1.2631 and 1.26395. A successful move beyond this zone would confirm building momentum. However, if momentum stalls, short-term traders may look to fade the rally and force a rotation lower.

As the data release draws closer, traders should remain aware of how these price points interact with broader market sentiment. Economic releases often act as catalysts, determining whether key technical levels break decisively or hold firm. The shifting dynamic between risk appetite, dollar strength, and economic expectations will be central to near-term positioning.