Market Roundup
•Japan Overall Wage Income of Employees (Dec): 2.4%, 3.0% forecast, 1.7% previous
•Japan Overtime Pay (YoY) (Dec): 0.90%, 1.20% previous.
•Japan Current Account n.s.a. (Dec): 7.288T, 1.060T forecast, 3.674T previous.
•Japan Adjusted Current Account (Dec): 2.70T, 2.95T forecast, 3.14T previous.
•Japan Bank Lending (YoY) (Jan): 4.5%, 4.5% forecast, 4.3% previous.
Looking Ahead Economic Data (GMT)
•09:30 EU Sentix Investor Confidence (Feb)-0.2 forecast,-1.8 previous.
•Hungary Budget Balance (Jan) -1,669.0B previous.
Looking Ahead Events And Other Releases (GMT)
• No events Ahead
Currency Forecast
EUR/USD : The euro edged higher on Monday as dollar weakened as investors awaited key jobs and inflation data due later in the week to gauge U.S. interest rate trajectory. Payrolls are forecast to rise 70,000 in January, to leave the unemployment rate at 4.4%, though payroll growth over 2025 is also expected to be revised down quite sharply.Retail sales are seen up a moderate 0.4%, while headline and core consumer price inflation is forecast to slow a little to 2.5% in January. San Francisco Federal Reserve President Mary Daly said on Friday she thinks one or two more interest rate cuts may be needed to counteract weakness in the labour market. Immediate resistance can be seen at 1.1872(38.2%fib), an upside break can trigger rise towards 1.1974(Jan 30th high).On the downside, immediate support is seen at 1.1783(SMA 20), a break below could take the pair towards 1.1724(50%fib).
GBP/USD: Sterling edged higher but gains were limited as investors assessed political uncertainty in the UK and expectations of a more dovish Bank of England weighed on sentiment toward the pound. Investor confidence was shaken following the resignation of Prime Minister Keir Starmer’s top aide, McSweeney, on Sunday, amid controversy linked to the Mandelson-Epstein scandal. The development has intensified political pressure on Starmer, marking one of the most serious challenges of his leadership and raising concerns about policy stability. At the same time, sterling’s upside remains limited as markets increasingly price in the possibility of further interest rate cuts by the Bank of England, following recent signals pointing to a softer monetary policy stance. Lower rate expectations tend to reduce the pound’s yield appeal, putting additional downward pressure on the currency. Immediate resistance can be seen at 1.3663(38.2%fib), an upside break can trigger rise towards 1.3733(Feb 4th high).On the downside, immediate support is seen at 1.3583 (SMA 20), a break below could take the pair towards 1.3512(50%fib).
AUD/USD: The Australian dollar edged higher on Monday as commodity-linked Australian dollar was supported by a continued recovery in precious metals. silver added 2.4% to $79.82, after swinging wildly from a 15% loss to a 9% closing gain on Friday. The metal had plunged in the last two weeks as leveraged positions were caught in a vicious squeeze triggering margin calls and forced selling. Gold was also up 1.5% at $5,033 an ounce having been as low as $4,403 at one stage last week.Market attention is now turning to several Reserve Bank of Australia speaking engagements this week, where policymakers are expected to maintain a hawkish tone amid persistent inflation concerns. Hawkish RBA expectation combined with improving commodity prices, has raised expectations that AUD/USD could extend its 2026 rally beyond the 0.7158 level, which marked a three-year high. Immediate resistance can be seen at 0.7091(23.6%fib), an upside break can trigger rise towards 0.7141(Higher BB).On the downside, immediate support is seen at 0.7000(38.2%fib), a break below could take the pair towards 0.6921(50%fib)
USD/JPY: The U.S. dollar edged lower on Monday as the Japanese yen strengthened following Prime Minister Sanae Takaichi’s decisive victory in Sunday’s election, snapping a six-day losing streak as investors wagered that fiscal stimulus could support equities.Takaichi is projected to secure around 328 of the 465 seats in Parliament’s lower house for her Liberal Democratic Party. Together with coalition partner Japan Innovation Party, known as Ishin, she now commands a two-thirds supermajority, enabling her to override the upper chamber, which remains outside her control.The Liberal Democratic Party’s landslide win has reduced political uncertainty and reinforced confidence in the government’s ability to implement its policy agenda . Immediate resistance can be seen at 157.71(Daily high) an upside break can trigger rise towards 158.97(23.6%fib) .On the downside, immediate support is seen at 156.34 (38.2%fib) a break below could take the pair towards 154.14 (50%fib).
Equities Recap
Asian markets rose on Monday after Japanese Prime Minister Sanae Takaichi’s decisive election win boosted expectations of reflationary policies, while a late rebound in U.S. chip stocks also lifted investor sentiment.
Hang Sang was up 1.45%, Japan’s Nikkei 225 was up by 4.39 % ,South Korea’s KOSPI was up at 3.95 %
Commodities Recap
Oil prices fell 1% on Monday after the U.S. and Iran agreed to continue nuclear talks, easing immediate Middle East conflict fears and concerns over supply disruptions.
Brent crude futures fell 67 cents, or 1%, to $67.38 a barrel on Monday by 0444 GMT, while U.S. West Texas Intermediate crude was at $62.94 a barrel, down 61 cents,or 1%.
Gold extended gains on Monday as the dollar weakened, with investors awaiting a key U.S. labour report for clues on interest rate direction.
Spot gold rose 1.4% to $5,029.09 per ounce by 0037 GMT after a near 4% climb on Friday. U.S. gold futures for April delivery gained 1.4% to $5,051.0 per ounce.
