Global markets remain cautious as investors await key data from the US and the UK. Sentiment is also shaped by rising US–Iran tensions and a pending US Supreme Court ruling on President Donald Trump’s power to impose heavy tariffs under a national emergency.
The US dollar gained after stronger data and firm-leaning Federal Reserve (Fed) minutes, though Derek Halpenny of MUFG Bank doubts the strength will last. At the same time, weaker trade figures led to cuts in the advanced fourth quarter (Q4) Gross Domestic Product (GDP) outlook and may pull 2025 growth below 3%. December trade balance came at -70.3 billion dollars versus -55.5 billion expected. January pending home sales fell -0.8% against a +1.3% forecast. Initial jobless claims improved to 206K from 225K expected. The February Philadelphia Fed Business Index rose to 16.3 versus 8.5 expected, while the Atlanta Fed GDPNow estimate slipped to 3.0% from 3.6%.
San Francisco Fed President Mary Daly said policy is in a good position as inflation cools and Artificial Intelligence (AI) supports productivity, reflecting a steady-to-slightly dovish tone. Minneapolis Fed President Neel Kashkari noted the labor market has softened but remains fairly solid.
The tariff ruling is expected in the current opinion window, with February 20 in focus. JPMorgan said equities could react sharply depending on whether tariffs are upheld, removed, or quickly replaced. About 124 billion dollars in customs duties were collected through January, so fiscal reasons could drive fast replacement if International Emergency Economic Powers Act (IEEPA) tariffs are limited.
Iran warned it would respond firmly to any attack, telling United Nations (UN) Secretary-General António Guterres that while it does not seek conflict, it would target hostile forces in the region if struck. Officials said Trump’s remarks raise the risk of military escalation. The Wall Street Journal reported that Trump is considering a limited strike to push for a nuclear deal.
Trump said a meaningful agreement is necessary and warned of serious consequences otherwise. He confirmed sending 22 more B2 bombers to the Middle East and suggested clarity could come within about 10 days. Oil first declined, but later jumped on the Wall Street Journal report. Rising geopolitical risk is lifting gold, the US dollar, and Treasuries, weighing on equities and increasing upside risks for crude.
European Central Bank (ECB) President Christine Lagarde said she intends to complete her term until October 2027, stressing the importance of securing the ECB’s recent progress.
In Japan, the February flash Purchasing Managers’ Index (PMI) improved, with the composite at 53.8 and exports strengthening, offering slight support to the yen and maintaining Bank of Japan (BoJ) normalization expectations. However, January inflation slowed to 1.5%. Core Consumer Price Index (CPI) for January 2026 came at 2.0%, in line with expectations but down from 2.4%, the lowest since January 2024, slightly easing tightening pressure.
Australia’s February flash PMI fell to 52.0 from 55.7, though price pressures increased. Slower growth weighs mildly on the Australian dollar (AUD), while firm costs keep the sticky inflation narrative alive. The Reserve Bank of Australia (RBA) recently raised rates for the first time in nearly two years, and markets still see chances of further hikes.
Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said returning inflation to 2% has been uneven but expects it to be within the target in the first quarter and near the 2% midpoint within a year. He stressed that the policy will adjust with incoming data. RBNZ Chief Economist Paul Conway added that the bank will not be aggressive with further hikes. This balanced tone reduced near-term rate expectations and pressured the New Zealand dollar (NZD). January 2026 trade data showed exports and imports declined from December levels.
Canada’s December trade deficit narrowed to -1.31 billion dollars from -2.59 billion.
Reports suggest the Reserve Bank of India (RBI) sold USD/INR to support the rupee (INR). The currency steadied near 90.95 after briefly crossing 91, helped by likely pre-market intervention. Thin liquidity, strong Non-Deliverable Forwards (NDF) dollar demand, and higher oil also weighed on the INR.
The US Dollar Index (DXY) marked a fifth straight daily rise, trading at a one-month high and heading for its strongest weekly gain since early November 2025. A stronger USD pressured major currencies and Antipodeans, while crude, gold, and silver edged higher. Cryptocurrencies were mixed, with Bitcoin (BTC) slightly up and Ethereum (ETH) falling for a fourth session, both on track for a fifth weekly loss. Asia-Pacific markets traded mixed after a cautious lead from Wall Street.
Weak February Consumer Confidence in the Eurozone, combined with overall US Dollar strength, pushed EURUSD lower for the third straight session, dragging the pair to its lowest level in a month.
GBPUSD is also under pressure, falling for the fifth consecutive day and touching a one-month low. Mixed UK employment and inflation figures, along with a brewing political crisis in Britain, are weighing on the Pound.
In contrast, USDJPY has risen for three sessions in a row, reaching its highest level since February 10. The pair’s strength shows that the Japanese Yen (JPY) is not attracting its usual safe-haven demand. This comes despite the Bank of Japan (BoJ) maintaining a hawkish stance and expectations of heavy fiscal stimulus from Japan’s Prime Minister (PM) following a strong victory in the snap election. A broadly stronger USD is also supporting the pair.
Mixed economic releases from Australia and New Zealand, along with renewed doubts about how aggressive the Reserve Bank of New Zealand (RBNZ) and the Reserve Bank of Australia (RBA) will be, are pressuring AUDUSD and NZDUSD. Chinese holidays and a generally stronger US Dollar are adding further downside pressure to both pairs.
At the same time, USDCAD is not falling despite higher crude oil prices, which usually support the Canadian Dollar as oil is Canada’s major export. The pair remains firm due to mixed Canadian data, a hawkish Federal Reserve (Fed) tone, and mostly solid US economic numbers ahead of today’s key events.
As investors move toward traditional safe-haven assets ahead of major events, gold and silver are ticking higher, even though a stronger US Dollar is limiting gains.
Crude oil is climbing sharply and heading for its biggest weekly rise in three weeks. Prices touched their highest level since August following reports of continued US military buildup near Iran. Concerns that any disruption to Iranian supply or a possible closure of the Strait of Hormuz could hurt Europe more than the US also supported both oil and the USD. Adding to the upside, Energy Information Administration (EIA) data showed crude inventories fell by -9014K, compared to expectations of a +2149K increase, strengthening bullish sentiment.
Low confidence in digital assets, a cautious market tone, and a stronger US Dollar kept cryptocurrencies under pressure. Performance was mixed but mostly negative, with Bitcoin (BTC) posting a slight gain while Ethereum (ETH) declined for the fourth straight session. Both are heading toward a fifth consecutive weekly loss.
On Wall Street, major indices ended slightly lower. Walmart remained in focus after a volatile trading day. In pre-market action, the stock was flat despite solid quarterly results and careful guidance. Fourth quarter comparable US sales increased +4.6%, equal to the previous quarter and above expectations. Adjusted Earnings Per Share (EPS) rose to 0.74 dollars from 0.66 dollars, marking a +12.1% gain, and global eCommerce sales jumped +24%. Still, the company’s cautious outlook pointed to slower growth in the coming quarters.
Retail Sales from the UK and Canada, along with the preliminary February Purchasing Managers’ Index (PMI) readings from major economies, will keep traders busy before the US Advance Gross Domestic Product (GDP) for Q4 and the Core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) preferred inflation measure.
Markets will also track updates on the possible US–Iran conflict and the US Supreme Court ruling on Trump’s tariffs.
As the US Dollar gradually strengthens, any additional strong US data and rising risk aversion could help the Greenback secure a weekly gain. This may pressure major currencies, Gold, Silver, Antipodeans, and Cryptocurrencies. However, Crude Oil could extend gains, and equities might recover recent losses if these events improve growth expectations.
May the trading luck be with you!
