EUROPEAN SESSIONIn the European session, we will get the final services PMI for the major Eurozone economies and the UK. The market reacts the most to new information, so the Flash data is more important than the final PMIs. Therefore, unless we get big deviations, the market reaction will likely be muted. The main highlight will be the Flash Eurozone CPI. The CPI Y/Y is expected at 1.7% vs 1.9% prior, while the Core CPI Y/Y is seen at 2.3% vs 2.3% prior. As a reminder, the ECB has been repeating that they won't respond to small or short-term deviations from their 2% target, so unless we see big deviations, the data is not going to change much for the central bank.AMERICAN SESSIONIn the American session, the focus will turn to the US ADP and the US ISM Services PMI. The ADP is expected to show 48K jobs added in January vs 41K in December. The US data has been showing gradual improvement lately, especially on the labour market side. If we get a strong report, we could see a hawkish reaction in the market as the 48 bps of easing expected by year-end get repriced. The US ISM Services PMI is expected at 53.5 vs 54.4 prior. The S&P Global US PMIs reaffirmed sustained economic growth at the start of the year, but the rate of expansion has cooled compared to the pace indicated back in the fall of 2025. The agency noted that jobs growth remains disappointing, with near stagnant payroll numbers. Lastly, elevated rates of input cost and selling price inflation were commonly attributed to tariffs, especially in the manufacturing sector, where price pressures intensified in January. However, service sector inflation moderated, linked in part to intensifying competition.The ISM Manufacturing PMI on Monday though painted a different picture with the index jumping strongly into expansion for the first time since February 2025 and the new orders index rising to the best levels since 2022. The employment index has also showed material improvement, while the prices index held steady. A surprisingly strong ISM Services PMI could also trigger a hawkish reaction and lead to a repricing in interest rate expectations.CENTRAL BANK SPEAKERS17:00 GMT/12:00 ET - Fed's Barkin (hawkish - non voter) This article was written by Giuseppe Dellamotta at investinglive.com.

There are just a couple to take note of on the day, as highlighted in bold below.They are both for EUR/USD and currently sandwiching the current spot price, with the expiries resting at 1.1800 and 1.1850. They're not ones that tie to any technical significance but could act as bookends for price action in terms of any extensions we see during European morning trade later.The dollar continues to keep steadier on the week but more watchful eyes will be on USD/JPY instead, that especially as the pair continues to creep back up. After the speculated 'rate checks' at the end of January, actual intervention remains the next course of action and a return back towards 160 will certainly raise odds of that happening.So, just be wary of that as it could also have some spillover impact on dollar sentiment elsewhere. That as well as if precious metals can stick with the latest recovery we're seeing in the past few sessions. So far, gold is the one making waves and trying to lead the charge on that front as seen here.For more information on how to use this data, you may refer to this post here.Head on over to investingLive (formerly ForexLive) to get in on the know! This article was written by Justin Low at investinglive.com.

It was a poor day for US equities in general, with tech shares leading the declines. The S&P 500 closed down by 0.8% with the Nasdaq down by 1.4%. Meanwhile, the Dow fared better in closing down by just 0.3%.What is interesting about the selloff yesterday is how tech-heavy they were for the most part. Tech shares dragged down the S&P 500 even when more than half of the stocks in the index ended higher on the day. That speaks to the weightage but also how perhaps there is some rotational play happening in Wall Street.The ongoing narrative since the turn of the year is that there are concerns that AI valuations have stretched out too far. It is about time for tech firms and those investing heavily in AI to deliver some results. And investors are pretty much starting to err towards "show me the money" or else it is time to move on.Adding to the concerns is increasing scrutiny over OpenAI at the moment. That is especially made complicated by their "frenemy" relationship with Nvidia. And making the news in the past week is that Nvidia is not going to outright commit and pay up on their $100 billion partnership with OpenAI. As such, that has the potential to open up a whole new can of worms in the AI saga.Putting aside the known unknowns, what is market sentiment telling us based on the charts?Well, it's a key moment for the Nasdaq especially as the drop yesterday ran to test the 100-day moving average (red line) again. That has been where dip buyers have been drawing a line since the end of last year in keeping the upside momentum running. But amid price stalling closer towards 24,000, it is raising doubts about whether the latest rally has run out of steam.If anything else, keep a watchful eye on the 100-day moving average and if tech shares can hold up to keep above that. A firm break below could start to trigger stops and lead to accelerated profit-taking, that especially if accompanied by the right selling triggers from any fault to the AI bubble.For some context, the last time the Nasdaq traded above both key daily moving averages and broke down below the 100-day moving average was back in late February 2025. And during that fallout, the index dropped by over 22% before the dip buyers eventually put a stop to the whole rout in April 2025.As a reminder though, that sharp selloff was largely due to major concerns surrounding Trump's tariffs and 'Liberation Day'. And we all know how that played out in the end. Got TACOs anyone? This article was written by Justin Low at investinglive.com.

The over 2% gains so far today brings gold back above the crucial $5,000 mark. That's a big psychological win for dip buyers but even more so when you look at the charts. After the sharp pullback from Thursday last week to Monday this week, we are seeing a solid recovery in precious metals in the past few sessions. And gold is a standout in leading that charge ahead of silver this time around.Looking at the near-term chart:Not only is gold breaching above the $5,000 mark, it is also contesting a firmer break of the 50.0 Fib retracement level at $5,002 today. And adding to that, we're seeing price action start to creep towards testing waters above the 100 (red line) and 200-hour (blue line) moving averages. That is a pivotal near-term resistance point to take note of. And if buyers can secure a firm break above that, it will switch the near-term bias to being more bullish again.The gains yesterday may not look like much but $285 at face value represents the biggest daily jump in gold price on record. So, that speaks to dip buying appetite more so than anything else.As mentioned as well, the latest rebound cannot be compared to a dead cat bounce such as what we normally see with sharp selling and quick nosedive in other assets. That is because the fundamental factors driving up precious metals are still very much in play and underpinning demand. The pullback is largely to do with a case of Icarus flying too close to the sun. It isn't one that is driven by a material shift in the market outlook.All in all, this can be seen as a healthy correction for gold and precious metals in general. The question now is do we move on to a stronger consolidative phase or skip that altogether and march towards another surging run to fresh record highs? This article was written by Justin Low at investinglive.com.

South Korea’s won firms as pension fund weighs dollar bond issuanceBank of England set to hold rates February 5 as inflation cools but wage risks lingerMarkets cautious on Warsh-led Fed outlook as rate pricing holds steadyChina services PMI rises to three-month high as demand and hiring improveNomura sees BoJ rates rising to 1.5% by 2027, with hawkish risks beyondPBOC sets USD/ CNY mid-point today at 6.9533 (vs. estimate at 6.9385)Japan services PMI hits 11-month high as demand and hiring strengthenNew Zealand Commodity Price Index rose in JanuaryPBOC to inject 800 billion yuan via three-month reverse repo operationYuan seen rising in 2026, but China signals resistance to rapid gainsPowell pardon won’t lift Fed blockade as Tillis holds line on investigationAMD shares fall as AI outlook disappoints despite strong Q4 earnings beatNew Zealand jobs report shows firmer hiring but unemployment edges to a 10 year highAustralia services PMI hits near four-year high as demand surges in JanuaryNew Zealand Q4 2025 unemployment rate 5.4% (expected 5.3%, prior 5.3%)Oil: Private survey of inventory shows a large headline crude oil draw vs. build expectedinvestingLive Americas market news wrap: US House votes to end government shutdownAt a glance:Asia equities mostly weaker following a poor Wall Street leadYen weakened further, with USD/JPY back above 156NZD slightly softer after Q4 jobs data showed higher unemploymentAMD shares slid sharply on disappointing guidance despite an earnings beatPMI data across Australia, Japan and China pointed to improving activity momentumRegional equities were mostly lower in the session, tracking a weak lead from Wall Street. Indian shares opened on the back foot but turned positive as the session progressed, continuing to draw support from optimism around the US–India trade deal.In FX, the yen lost ground again, with yen crosses pushing higher and USD/JPY moving back above 156.20. Elsewhere, moves across major currency pairs were relatively subdued. NZD/USD edged slightly lower following the release of New Zealand’s Q4 2025 employment report, which showed the unemployment rate rising to 5.4%, its highest level in a decade. Despite the headline increase, the details of the report were viewed more constructively, limiting downside pressure on the kiwi.On the corporate front, Advanced Micro Devices reported fourth-quarter earnings after the US close. While the chipmaker beat expectations on both revenue and profit, its forward guidance fell short of more optimistic forecasts, triggering a sharp sell-off in extended trading.In US politics, Donald Trump signed legislation to reopen most of the federal government, formally ending a partial shutdown that began over the weekend. The bill narrowly cleared the House after passing the Senate last week. Trump later said negotiations with Iran remain ongoing.Macro data flow was busy across the region. Australia’s services PMI surged to a near four-year high in January, pointing to strong demand momentum and supporting the Australian dollar. Easing price pressures in the survey may temper near-term inflation concerns for policymakers.Japan’s services PMI rose to an 11-month high, driven by stronger new orders, exports and hiring. Input cost inflation eased to its softest pace in nearly two years, though selling prices accelerated and business confidence softened. China’s services PMI also improved, rising to a three-month high as domestic and export demand strengthened. Employment expanded for the first time in six months, while cost pressures eased and output prices stabilised, although sentiment edged lower.Separately, Stephen Miran resigned on Tuesday from his role as chair of the White House’s Council of Economic Advisers, a White House spokesperson said. Miran had been on leave from the CEA since being appointed last year to fill a vacancy on the Federal Reserve Board, where his term formally ended in January. He can stay at the Fed until the president nominates someone to his seat. Asia-Pac stocks: Japan (Nikkei 225) -0.8%Hong Kong (Hang Seng) -0.4% Shanghai Composite 0%Australia (S&P/ASX 200) +0.7% This article was written by Eamonn Sheridan at investinglive.com.

The won steadied as plans for NPS dollar bond issuance raised hopes of reduced FX pressure.Summary:South Korea’s won pared losses after reports the NPS may issue dollar bondsPension fund aims to diversify funding amid FX volatilityDollar bond issuance could ease pressure on the wonReview of FX hedging strategy now under wayAuthorities step up coordination on currency stabilitySouth Korea’s currency trimmed earlier losses after reports that the National Pension Service is moving closer to issuing foreign-currency bonds, a step seen as potentially easing pressure on the won amid persistent exchange-rate volatility. The comments marked the first time a government official has publicly outlined a possible timeline for the fund’s unprecedented entry into offshore debt markets.Officials indicated the pension fund hopes to begin issuing dollar-denominated bonds by the end of this year, subject to swift legislative changes. The move forms part of broader efforts to diversify funding sources and better manage foreign exchange exposure at the world’s third-largest pension fund, which oversees assets of nearly 1.44 quadrillion won.The won has fallen around 7% against the dollar since mid-2025, creating challenges for both policymakers and institutional investors. Currency weakness has complicated South Korea’s overseas investment plans and increased sensitivity around capital outflows. In response, the pension fund has been actively selling dollars in the FX forwards market to support the currency, a strategy that has drawn growing attention from markets. --- Dollar bond issuance by the National Pension Service would allow the fund to raise foreign currency directly, reducing the need to convert won into dollars when investing abroad. This can lessen immediate demand for dollars in the spot market, helping stabilise the won. In addition, borrowing against existing overseas assets provides funding flexibility without triggering fresh FX outflows, a dynamic that markets typically view as currency-supportive.Officials also signalled that the fund is reviewing its longer-term currency hedging framework. While FX hedging has so far been conducted flexibly rather than mechanically, authorities acknowledged that a reassessment is needed to ensure the strategy remains effective as market conditions evolve. Hedging operations have involved selling dollar forwards to increase dollar supply and slow the pace of won depreciation.The potential bond issuance mirrors approaches used by other large global pension funds, including Canada’s, and would likely be capped as a proportion of the fund’s overseas investment exposure. Alongside this, asset allocation targets have been adjusted to slightly reduce overseas equity exposure while lifting domestic equity weightings, reflecting sensitivity to currency conditions.A new four-way consultative body involving the finance ministry, welfare ministry, central bank and pension fund is set to meet this week to coordinate responses to market volatility. For now, the prospect of offshore issuance has offered some near-term relief for the won, even as broader currency pressures remain tied to global dollar dynamics. This article was written by Eamonn Sheridan at investinglive.com.

The BoE is set to hold rates steady, with messaging and the vote split key to near-term market reaction.Summary:Bank of England expected to keep Bank Rate unchanged at 3.75%Inflation set to fall sharply, but wage growth remains a concernGuidance likely to stay vague and data-dependentVote split and tone seen as more important than the decisionMarkets have pared back expectations for rate cuts this yearThe Bank of England is widely expected to leave policy unchanged when it announces its February decision on Thursday February 5, with Bank Rate likely to remain at 3.75%. With a rate cut delivered just before Christmas and inflation dynamics still uneven, policymakers appear in no rush to accelerate easing.While headline inflation is expected to fall sharply in coming months and move closer to the 2% target, underlying pressures continue to complicate the outlook. Services inflation and wage growth remain elevated, leaving parts of the Monetary Policy Committee uneasy about declaring victory. As a result, guidance is expected to remain deliberately non-specific, reinforcing a data-dependent approach rather than offering firm signals on the timing or scale of future cuts.The vote split will be closely watched. A narrow or divided outcome would suggest the committee is edging closer to further easing, even if policy is left unchanged. Conversely, a more unified vote to hold rates steady would point to continued discomfort around domestic inflation pressures, particularly in the labour market, and a willingness to keep policy restrictive for longer.Market pricing reflects this uncertainty. Expectations for rate cuts this year have been scaled back materially, with investors now attaching a low probability to near-term easing. This repricing reflects not only domestic inflation concerns but also changing global dynamics, including firmer economic momentum in the UK and a reassessment of the likely pace of policy easing in the United States.Updated economic projections are unlikely to show major changes from the Bank’s previous forecasts, which already pointed to inflation hovering around target over the medium term. Policymakers are also expected to remain alert to external risks, including geopolitical uncertainty and shifts in global financial conditions, even if recent market reactions have been muted.For markets, the focus will be on messaging rather than mechanics. Any subtle shift in language around wages, labour-market slack or financial conditions could shape expectations for when the next move might come, even as the Bank keeps its options firmly open. This article was written by Eamonn Sheridan at investinglive.com.

Views are mixed on a Warsh-led Fed, with rate pricing steady but conviction limited.Summary:Investor views on a Warsh-led Fed remain mixed rather than uniformSome participants see scope for a dovish narrative centred on productivity gainsFed funds futures continue to imply two cuts this year, though conviction appears limitedWarsh is widely viewed as institutionally credible and independence-mindedBalance sheet reduction and mandate discipline seen as likely prioritiesNews that Kevin Warsh is to be nominated as the next Federal Reserve chair, replacing Jerome Powell when his term ends in May, has not triggered a decisive shift in market pricing. Instead, investor responses appear fragmented, with no clear consensus emerging around how a Warsh-led Fed would ultimately steer monetary policy.Among some investors, there is an assumption that Warsh could seek to frame policy in a way that allows for eventual easing, leaning on the argument that productivity gains linked to artificial intelligence may help contain inflation pressures over time. This line of thinking suggests inflation could continue to moderate without the need for persistently restrictive interest rates. However, this view is far from universal and appears to coexist with more cautious interpretations of his policy leanings.Despite that divergence, rate futures continue to reflect expectations for two Federal Reserve rate cuts this year, a configuration that has been largely unchanged for several months. Rather than signalling strong conviction, this stability may indicate that investors are not yet prepared to reprice the outlook aggressively in response to leadership speculation alone.Warsh is sometimes characterised as less overtly dovish than some alternative candidates, but he is generally regarded as a credible figure within policy circles. His prior interactions with Federal Reserve officials have reinforced the perception that he would respect institutional norms and avoid actions that could undermine the central bank’s independence. That assessment has helped temper, though not eliminate, concerns that a leadership change under Donald Trump could weaken the Fed’s credibility.As a result, some earlier fears around political interference appear to have eased at the margin, even as uncertainty remains. Expectations are also forming that a Warsh-led Fed would place greater emphasis on balance sheet reduction and a tighter interpretation of the Fed’s mandate, focusing more narrowly on inflation control and financial stability.Overall, the potential leadership transition is being treated cautiously rather than conclusively. While parts of the market appear comfortable with continuity, others remain unconvinced, leaving pricing steady but fragile as investors await clearer policy signals. This article was written by Eamonn Sheridan at investinglive.com.

China’s services sector started 2026 on firmer footing, though confidence remains cautious despite easing cost pressures.Via private survey RatingDog / S&P Global.Summary:China’s services sector accelerated to a three-month growth high in JanuaryNew business and export orders strengthened at the start of 2026Employment rose for the first time in six monthsCost pressures eased, while selling prices stabilisedBusiness confidence softened despite improved activityChina’s services sector gained momentum at the start of 2026, with business activity expanding at its fastest pace in three months as demand conditions improved both domestically and overseas. The latest PMI data showed a modest but broad-based acceleration, underpinned by stronger new orders and a return to growth in export-related business.The Services Business Activity Index edged higher to 52.3 in January from 52.0 in December, remaining firmly above the 50 threshold that separates expansion from contraction. This extended the current run of growth in China’s services sector to just over three years and signalled a stable start to the year.The improvement was driven primarily by faster growth in new business, with firms citing successful promotions, stronger client interest and new product launches as key supports. External demand also improved, with new export orders returning to expansion after contracting late last year, marking the second rise in overseas demand in the past three months.Stronger inflows of new work fed through to employment. Service-sector staffing levels rose for the first time since July, although the increase was modest and marked only the fourth instance of employment growth over the past year. The rise in labour supply helped prevent a sharper build-up in backlogs, with outstanding business continuing to increase only marginally despite quicker order growth.Price dynamics were more favourable. Input costs continued to rise, driven mainly by higher fuel and purchased item prices, but the pace of cost inflation eased to a five-month low. At the same time, output prices were broadly unchanged, suggesting some relief in downstream pricing pressures and limited ability or willingness among firms to pass costs on to customers.At the broader economy level, the Composite Output Index rose to 51.6 from 51.3, pointing to a modest acceleration in overall business activity across both services and manufacturing. New orders at the composite level strengthened, supported again by improved export demand, while staffing levels increased to help work through outstanding business. Notably, composite output prices rose for the first time in more than a year, reflecting stabilising margins amid easing cost pressures. Despite firmer activity, business sentiment softened. While firms remain broadly optimistic about growth over the coming year, confidence dipped below its 2025 average as concerns about the global economic outlook weighed on expectations. Looking ahead, seasonal support from the extended Spring Festival holiday may lift consumer-facing services, though producer services could see a temporary lull, leaving the recovery dependent on sustained domestic demand. This article was written by Eamonn Sheridan at investinglive.com.

Nomura sees Japan’s rate cycle extending into 2027, with risks tilted toward a higher terminal rate.Summary:Nomura sees a high probability of further BoJ tightening through 2027Base case assigns 60% odds to three rate hikes by mid-2027Policy rate would rise to 1.50%, the highest level since 1995A hawkish scenario sees four hikes, lifting rates to 1.75%Inflation persistence and wage dynamics are key swing factorsNomura expects the Bank of Japan to continue its gradual policy normalisation over the coming years, assigning a 60% probability to a scenario in which the central bank delivers three additional rate hikes by mid-2027. Under this base case, the BoJ’s policy rate would rise from the current 0.75% to 1.50%, marking the highest level since 1995 and a decisive break from Japan’s long era of ultra-loose monetary policy.In Nomura’s central scenario, the tightening cycle unfolds at a measured pace, with rate increases pencilled in for June 2026, December 2026 and June 2027. This path reflects the view that underlying inflation pressures will remain sufficiently firm to justify further normalisation, while the BoJ remains cautious about tightening too quickly given Japan’s sensitivity to higher borrowing costs and global growth risks.The forecast assumes that wage growth continues to improve gradually, supported by tight labour market conditions and structural labour shortages, while inflation remains anchored above levels consistent with policy neutrality. However, Nomura does not expect a rapid or front-loaded hiking cycle, arguing that the BoJ will prioritise financial stability and avoid destabilising bond markets or triggering excessive yen volatility.Alongside its base case, Nomura outlines a more hawkish alternative scenario, assigning it a 40% probability. In this outcome, the BoJ delivers four rate hikes by the end of 2027, lifting the policy rate to 1.75%, a level last seen in 1993. This scenario would likely require stronger and more persistent inflation dynamics, firmer wage gains, and a clearer signal that Japan’s economy can withstand higher interest rates without stalling growth.Nomura’s analysis highlights the growing asymmetry in BoJ risks. While downside risks still exist, particularly from global demand and financial conditions, the balance has shifted toward the possibility of higher terminal rates if domestic inflation proves more resilient than expected. As such, markets may need to increasingly price the risk that Japan’s policy rate ultimately settles higher than previously assumed. This article was written by Eamonn Sheridan at investinglive.com.

Earlier:PBOC to inject 800 billion yuan via three-month reverse repo operationYuan seen rising in 2026, but China signals resistance to rapid gainsThe PBOC allows the yuan to fluctuate within a +/- 2% range, around this reference rate. Previous close 6.9397Injects 75bn yuan in 7day RRs @ 1.4% This article was written by Eamonn Sheridan at investinglive.com.

Japan’s services-led recovery gained pace in January, though confidence remains cautious despite easing cost pressures.SummaryJapan’s services sector growth accelerated to an 11-month high in JanuaryNew orders and export demand strengthened alongside rising backlogsEmployment continued to expand as firms responded to higher workloadsInput cost inflation eased to its softest pace in nearly two yearsBusiness confidence remained positive but softened amid global concernsJapan’s services sector regained momentum at the start of 2026, with business activity expanding at its fastest pace in almost a year, according to the latest PMI data. The improvement was driven by firmer demand conditions, rising new orders and a continued expansion in employment, signalling a more durable recovery in the private sector.The Services Business Activity Index climbed to 53.7 in January from 51.6 in December, marking the strongest reading since February last year and extending the sector’s growth run to ten consecutive months. The acceleration reflected a quicker rise in new business, which recorded its best performance in four months. Firms cited successful marketing efforts, new client wins and improving foreign demand as key drivers of the uptick in activity.Growth was not uniform across sub-sectors. Finance and insurance firms continued to lead the expansion, while information and communication services lagged behind, posting the weakest growth. Even so, the overall picture pointed to broadening resilience across the services economy.Stronger inflows of new work led to a further build-up in outstanding business, with backlogs rising at the fastest pace since September. To manage these higher workloads, companies continued to add staff. Although the pace of hiring eased slightly from December, employment growth remained solid, underlining ongoing capacity expansion across the sector.Cost pressures showed signs of easing. Input prices rose at their slowest rate in nearly two years, providing some relief to margins. However, firms increased selling prices at a faster pace, pushing output price inflation to a seven-month high as service providers attempted to pass on higher costs where possible.At the broader economy level, momentum also strengthened. The Composite PMI Output Index rose to 53.1 from 51.1, marking the fastest expansion in total private sector output since May 2023. The improvement was driven not only by stronger services activity but also by the first increase in manufacturing output since mid-2025. New orders across the private sector grew at their fastest pace since May 2024, while export business expanded for the first time in nearly a year.Despite stronger current conditions, business sentiment softened. While firms remain broadly optimistic about the year ahead, confidence slipped to its lowest level since July, weighed down by concerns around global growth, weaker tourism trends, demographic challenges and persistent labour shortages. This article was written by Eamonn Sheridan at investinglive.com.

Rose 2.0% m/m in Januaryprior -2.1%In NZD terms the index rose 1.3% m/mstronger NZD offsetting higher commodity prices overseasEarlier:New Zealand jobs report shows firmer hiring but unemployment edges to a 10 year high This article was written by Eamonn Sheridan at investinglive.com.

Earlier:Yuan seen rising in 2026, but China signals resistance to rapid gainsThe People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations. Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks. As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence. This article was written by Eamonn Sheridan at investinglive.com.

China’s central bank said it will inject 800 billion yuan via a three-month outright reverse repo, using a tool introduced in late 2024 to keep banking system liquidity ample without changing benchmark interest rates.Summary:PBOC announced a large three-month liquidity injectionOperation uses outright reverse repos introduced in late 2024Move aims to keep banking system liquidity ampleTool complements existing short-term liquidity operationsPolicy stance remains supportive but controlledChina’s central bank has stepped in to reinforce liquidity conditions, announcing a sizeable medium-term cash injection aimed at keeping funding conditions stable as the economy moves deeper into 2026. The People's Bank of China said it will conduct an 800 billion yuan outright reverse repo operation on February 4, signalling a continued preference for proactive but measured liquidity management.The operation will be conducted via interest-rate bidding with a fixed total amount, with successful bids allocated across multiple price levels. The transaction carries a tenor of three months, or 91 days, providing funding support beyond the very short-term horizon typically associated with daily open market operations.The use of outright reverse repos reflects the PBOC’s evolving policy toolkit. Introduced in October 2024, outright reverse repos are designed as a monthly liquidity management instrument with maturities of up to one year. Unlike traditional short-term reverse repos, these operations allow the central bank to inject liquidity in a more durable and predictable way, helping smooth funding conditions across quarters rather than days.--- In an outright reverse repo, the central bank buys securities from banks with an agreement to sell them back at a later date. For banks, this effectively provides cash funding for the duration of the operation. Because the maturity is longer than standard repos, it helps anchor expectations around liquidity availability and reduces the need for frequent short-term interventions. By using interest-rate bidding, the PBOC also retains flexibility to gauge market demand and signal its policy stance without formally changing benchmark rates.The operation adds to a growing set of policy tools, which already includes temporary repos, temporary reverse repos, and outright purchases and sales of government bonds. Together, these instruments give policymakers greater precision in calibrating liquidity without resorting to broad-based easing measures such as reserve requirement cuts.Overall, the move underscores the central bank’s intention to maintain ample liquidity while preserving policy flexibility. It suggests support for growth and financial stability remains in place, even as authorities continue to avoid sending an overt signal of aggressive monetary easing. This article was written by Eamonn Sheridan at investinglive.com.

China’s export-driven yuan gains are set to continue in 2026, but policymakers are poised to cap the pace of appreciation.Summary:Analysts expect the yuan to strengthen further in 2026, but policy resistance remainsExport inflows and FX conversions have surged to record levelsConsensus forecasts cluster near 6.9 per dollar, with upside risks flaggedAuthorities are expected to lean against excessive appreciationTwo-way volatility remains Beijing’s preferred outcomeSource: ReutersChina’s currency is widely expected to strengthen further through 2026, supported by booming exports and heavy foreign exchange inflows, but policymakers are signalling little appetite for allowing a rapid or uncontrolled rise. While market forces continue to push the yuan higher, Beijing appears intent on slowing the pace of appreciation to protect exporters and preserve economic stability.Over the past nine months, the yuan has gained nearly 6% against the US dollar, driven largely by export strength and rising conversions of foreign currency into local units. As the exchange rate moved through the psychologically important 7-per-dollar level last year, foreign currency inflows into Chinese banks surged to a record $452 billion in December, with $311 billion converted into yuan. These flows pushed the currency to its strongest level since 2023, briefly trading near 6.94 per dollar.Despite this momentum, analysts broadly expect authorities to act if gains accelerate further. A survey of 13 global banks puts the average year-end forecast at around 6.92 per dollar, while derivatives markets are pricing a somewhat stronger outcome near 6.8. Policymakers are seen deploying familiar tools to cap appreciation, including state bank dollar buying, tighter daily trading bands, verbal guidance, and adjustments to foreign exchange reserve requirements.Still, upside risks are increasingly acknowledged. Goldman Sachs recently revised its 12-month forecast to 6.7 per dollar, citing record inflows and a perceived shift in central bank communication. Analysts noted that the pace of appreciation has exceeded earlier expectations, even before the recent broad-based weakening in the US dollar.China’s central bank, the People's Bank of China, continues to manage the currency within a 2% trading band around a daily midpoint. Officials have reiterated that two-way fluctuations remain policy preference, reinforcing expectations that authorities will intervene to smooth moves rather than endorse a one-directional rally.A significantly stronger currency would risk eroding export competitiveness, a key pillar of China’s growth model. Exports underpinned roughly 5% GDP growth last year, delivering a record trade surplus of $1.2 trillion. Economists argue that while export strength supports the yuan, policymakers are unlikely to tolerate appreciation that undermines this advantage, particularly as global trade tensions and protectionist pressures rise.Looking ahead, analysts expect continued strength in export receipts and repatriation flows to keep upward pressure on the currency. However, Beijing is widely expected to ensure any appreciation remains gradual, allowing the yuan to strengthen without destabilising growth or financial conditions. This article was written by Eamonn Sheridan at investinglive.com.

A Powell pardon would not break the Senate logjam, with Tillis holding firm until the Fed probe concludes.Summary:Senator Tillis says a Powell pardon would not lift his Fed nominee blockadeHe insists the Justice Department investigation must conclude firstTillis’ stance continues to stall Kevin Warsh’s confirmation processRepublicans lack the votes to bypass him on the Banking CommitteeThe dispute underscores rising political tension around Fed independenceSource: PoliticoA potential presidential pardon for Federal Reserve Chair Jerome Powell would not resolve the political standoff blocking progress on senior central bank nominations, according to Republican Senator Thom Tillis. Speaking on Tuesday, Tillis said he would continue to oppose any Federal Reserve nominees until the Justice Department completes its investigation into Powell’s past testimony before the Senate Banking Committee.Tillis, who sits on the Banking Committee, has emerged as the decisive obstacle preventing the confirmation of Kevin Warsh, President Donald Trump’s nominee to succeed Powell as Fed chair. With Republicans holding only a slim majority on the panel, Tillis’ opposition alone is sufficient to block Warsh from advancing unless Democrats provide support.The North Carolina senator rejected the idea that a presidential pardon could offer a clean resolution, arguing instead that such a move could reinforce suspicions surrounding the investigation. In his view, a pardon would risk implying wrongdoing rather than closing the issue, undermining the principle of central bank independence. Tillis said only a full conclusion of the Justice Department’s probe would be acceptable, regardless of the outcome.While maintaining his hardline stance, Tillis struck a measured tone on Warsh himself, suggesting the nominee could be a credible candidate to lead the Fed at a later stage. However, he made clear that timing remains conditional on the investigation’s resolution, whether during the current Congress or the next.The standoff adds another layer of uncertainty to the political backdrop facing the Federal Reserve, at a time when questions over institutional independence have become increasingly sensitive. Tillis framed his position as a defence of the Fed’s autonomy, arguing that allowing nominations to proceed while an unresolved investigation remains would set an undesirable precedent.President Trump, meanwhile, has played down speculation that he might intervene to halt the investigation in order to clear the way for Warsh’s confirmation. He indicated that prosecutors intend to pursue the matter to its conclusion, a position Tillis said aligned with his own willingness to see the process through.For now, the impasse leaves the Fed’s leadership transition timeline uncertain, with political considerations continuing to weigh on the confirmation process. This article was written by Eamonn Sheridan at investinglive.com.

AMD beat Q4 forecasts but cautious guidance dented confidence as investors pushed for faster AI upside.Summary:AMD beat Q4 earnings and revenue expectationsGuidance disappointed, triggering a sharp after-hours sell-offAI revenue momentum lagged high-end investor expectationsChina demand contributed materially to AI chip salesManagement reaffirmed ambitious long-term AI growth targetsAdvanced Micro Devices delivered a strong finish to 2025 on headline results, but a softer near-term outlook weighed heavily on investor sentiment, sending the stock lower after hours. The chipmaker reported adjusted earnings per share of $1.53 for the December quarter, comfortably ahead of expectations, alongside revenue of $10.27 billion, also above consensus forecasts.Despite the solid beat, attention quickly shifted to forward guidance. AMD forecast first-quarter revenue of around $9.8 billion, a figure that fell short of the most optimistic market expectations and was enough to disappoint investors positioning for a more aggressive AI-driven acceleration. While the guidance still sits above average analyst forecasts, sentiment had been leaning toward a print closer to, or even above, the $10 billion mark.The reaction highlights the increasingly demanding bar being set for AI-exposed semiconductor names. Investors have been looking for clearer evidence that AMD is rapidly closing the gap on Nvidia in high-performance AI computing, particularly in data centre applications. While AMD continues to make progress, the company acknowledged that its most powerful next-generation AI design will only come to market later this year, leaving near-term growth expectations more constrained.One notable positive from the quarter was strong AI chip demand from China. AMD disclosed that it generated $390 million in Q4 sales from China tied to its MI308 AI chip, underscoring the importance of overseas markets to its current AI revenue base. This contribution helped support overall data centre performance, even as broader expectations remained elevated.Looking further ahead, AMD struck a confident tone on its longer-term trajectory. Management reiterated expectations that its AI business could scale to tens of billions of dollars in annual revenue by 2027, supported by rapid expansion in data centre unit shipments. The company expects data centre volumes to grow at an annual rate exceeding 60% over the next three to five years, reflecting both product upgrades and broader adoption of AI workloads.In short, AMD’s Q4 results underscored solid execution and meaningful AI progress, but also revealed the tension between improving fundamentals and the market’s increasingly aggressive expectations for near-term AI monetisation. This article was written by Eamonn Sheridan at investinglive.com.

New Zealand’s Q4 jobs data showed improving labour momentum beneath a higher jobless rate, leaving policy expectations largely unchanged.Unemployment rate hit a decade high at: 5.4% (prior 5.3%; exp 5.3%; RBNZ forecast 5.3%)Employment change: +0.5% q/q (prior 0.0%; exp +0.3%; RBNZ forecast +0.2%)Participation rate: 70.5% (prior 70.3%; exp 70.3%; RBNZ forecast 70.3%)Private-sector labour costs: +0.5% q/q (prior +0.4%; exp +0.5%)Summary:Unemployment edged higher despite solid job gains in Q4Employment growth outpaced population growth, lifted by participationHours worked rose again, pointing to improving activity signalsWage growth remained subdued amid ongoing labour market slackData broadly aligns with central bank forecasts, policy outlook unchangedNew Zealand’s labour market showed early signs of stabilisation in the December quarter, even as the headline unemployment rate ticked higher. The jobless rate rose to 5.4%, up from 5.3% previously, coming in slightly above consensus and the central bank’s own projections, which had both pointed to an unchanged outcome.Beneath the surface, however, the details were more encouraging. Employment rose by 0.5% over the quarter, stronger than both market expectations and the central bank’s forecast, and comfortably above the 0.3% increase in the working-age population. The increase in jobs was accompanied by a notable rise in labour force participation to 70.5% from 70.3%, exceeding expectations and explaining the modest lift in unemployment. In effect, stronger labour supply more than offset employment gains.Additional support for an improving labour backdrop came from the household survey’s measure of hours worked, which rose 1.0% in Q4 following a 1.1% increase in the September quarter. This metric has proven to be a reliable leading indicator for swings in quarterly GDP in recent years, suggesting momentum in activity may be firming. That said, the business-focused Quarterly Employment Survey painted a softer picture, showing a 0.5% decline in total paid hours after a strong prior quarter, highlighting some lingering cross-currents in the data.Wage pressures remained contained, reflecting the existing degree of slack in the labour market. The Labour Cost Index rose 0.5% in the private sector, in line with expectations, while overall quarterly growth remained modest. On an annual basis, labour cost growth slowed to 2.0%, the weakest pace since early 2021. Broader measures of wage growth that account for productivity-linked pay increases also softened, with annual growth easing to the lowest level in nearly four years.Overall, the results were broadly consistent with forecasts from the Reserve Bank of New Zealand and are unlikely to materially alter the policy outlook ahead of the February 18 meeting. Muted wage pressures and only gradual labour market improvement suggest policymakers have time to assess the durability of the recovery. On that basis, expectations for a first OCR hike remain centred on late 2026 rather than an earlier move. This article was written by Eamonn Sheridan at investinglive.com.

Australia’s services sector surged to a near four-year growth high in January, but softer confidence signals caution beneath the strong activity rebound.Summary:Australia’s services sector posted its strongest growth in nearly four years in JanuaryNew business rose at the fastest pace since April 2022, including stronger export demandHiring accelerated for a second straight month, though labour constraints remainInput and output price pressures eased, signalling cooling inflation dynamicsBusiness confidence slipped despite stronger activity, reflecting global growth concernsAustralia’s services sector began 2026 on a strong footing, recording its fastest expansion in activity in almost four years, as a sharp rise in new business lifted output and prompted firms to step up hiring. The latest PMI data showed services activity accelerating well above the 50-mark that separates growth from contraction, extending the sector’s expansionary run to two years and marking the strongest reading since early 2022.The pickup in activity was driven primarily by a surge in new business, with order growth accelerating for a third consecutive month to its fastest pace since April 2022. Firms reported that successful business development initiatives and broader customer reach helped underpin demand, while external conditions also improved. Export-related orders increased as service providers gained traction in overseas markets, adding another layer of support to overall activity.Rising workloads flowed through to employment, with service firms lifting staffing levels at the fastest pace since September. Hiring growth has now accelerated for a second straight month, reflecting efforts to keep pace with expanding order books. Even so, labour constraints remained evident, and combined with strong demand, contributed to a further build-up in outstanding work.Encouragingly, price pressures showed signs of easing. While input costs continued to rise, largely due to wages and supply-related expenses, the pace of cost inflation slowed to a 14-month low. Output price inflation also moderated, easing to its softest rate in two months, suggesting that disinflationary forces are gradually gaining traction within the sector.At the broader economy level, the Composite Output Index also strengthened sharply, pointing to the fastest expansion in private-sector activity in nearly four years, with both services and manufacturing contributing to the improvement. New orders across the economy similarly rose at the quickest pace since April 2022, reinforcing the sense of a strong start to the year.Despite these positives, business confidence weakened in January, falling to its lowest level since October 2024. Firms cited heightened competition and uncertainty around the global economic outlook as key headwinds, leaving the near-term growth picture mixed despite the strong momentum in current activity. Earlier:Australia manufacturing PMI hits five-month high as growth accelerates in January This article was written by Eamonn Sheridan at investinglive.com.