On February 2nd, data released by the U.S. Bureau of Labor Statistics revealed: U.S. December PPI year-on-year was 3%, compared to an expectation of 2.8% and a previous value of 3%. U.S. December Core PPI year-on-year was 3.3%, versus an expectation of 2.9% and a previous value of 3%. U.S. December PPI month-on-month was 0.5%, against an expectation of 0.2% and a previous value of 0.2%. U.S. December Core PPI month-on-month was 0.7%, compared to an expectation of 0.2% and a previous value of 0%. Breaking down the components, service costs rose significantly, with the trade margins component posting its highest monthly increase since mid-2024, driven primarily by wholesale margins for machinery and equipment; goods prices were flat overall due to declining energy costs, but core goods prices continued to show an accelerating upward trend. This data holds critical implications for monetary policy. Several components of the PPI feed into the core Personal Consumption Expenditures (PCE) price index, which is more closely watched by the Federal Reserve, and could influence the future path of interest rate decisions. Previously, Fed Chair Jerome Powell had already signaled a pause in the current rate-cutting cycle, citing "solid economic performance and a rebalancing labor market."
Furthermore, data from Statistics Canada indicated that in November 2025, the Canadian economy stalled, with Gross Domestic Product (GDP) registering zero growth, following a 0.3% decline in October. Growth in the service sector offset a contraction in goods-producing industries, including manufacturing. Statistics Canada reported that overall manufacturing output fell by 1.3%, with durable goods production experiencing the largest drop of 1.9%. This decline encompassed the manufacturing of transportation equipment, machinery, metal products, as well as motor vehicles and parts. The agency added that the overall downturn in the durable goods sector in November brought it to its lowest level since mid-2011, excluding the first half of 2020 which was affected by the COVID-19 pandemic.
Key data to watch today includes Germany's December Real Retail Sales month-on-month, the Eurozone's January SPGI Manufacturing PMI Final, the UK's January SPGI Manufacturing PMI Final, and the U.S. January ISM Manufacturing PMI.
Gold / USD Gold plummeted significantly last Friday, hitting a new 8-day low, with the spot price currently trading around $4550. Besides persistent profit-taking exerting downward pressure on gold, the nomination of the relatively hawkish Kevin Warsh for Federal Reserve Chair was also a major factor pressuring gold lower. Additionally, a substantial climb in the U.S. Dollar Index, supported by favorable economic data among other positive factors, also contributed to the selling pressure on gold. Focus today is on resistance near $4700, with support located around $4400.
USD / JPY The USD/JPY pair staged a strong rebound last Friday, reaching a new 3-day high, with the current exchange rate trading around 154.90. Apart from short-covering providing some support, a sharp rebound in the U.S. Dollar Index, which reclaimed the 97.00 level, was a key factor underpinning the pair's recovery. Moreover, disappointing Japanese CPI data released during the session and lingering concerns over Japanese political uncertainty also offered some support to the pair. Attention today is on resistance near 156.00, with support found around 154.00.
USD / CAD The USD/CAD pair experienced a significant rebound last Friday, recapturing the 1.3600 level and reaching a fresh 3-day peak, currently trading around 1.3660. In addition to short-covering and technically-driven buying interest near the 1.3500 psychological level supporting the pair, a robust surge in the U.S. Dollar Index, buoyed by strong economic data and other positive catalysts, was a primary driver behind the rally. Resistance near 1.3750 is in focus today, while support lies around 1.3550.
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