Week of 23rd-27th February: Market Outlook for Investors

The upcoming week in the Forex market is expected to be relatively light in terms of scheduled economic events. Key highlights include inflation data from Australia and Japan, as well as various economic indicators from the U.S., U.K., and Canada. Throughout the week, several FOMC members are also expected to provide remarks on the market.

In the U.S., attention will be on the Conference Board consumer confidence, with the consensus expecting a modest improvement from the previous reading. Despite concerns about tariffs, global political risks, and affordability pressures, consumer sentiment is expected to show some resilience. However, the lingering uncertainties in the economy may impact household sentiment in the near term.

Australia is set to release CPI data, with expectations for a slight easing in the annual rate. Rising food prices and health costs are anticipated as key drivers of inflation, while declines in prices for certain goods may offset some of the inflationary pressures. The market expects a rate hike in Australia in May, although risks are skewed to the downside due to inflation pressures being concentrated in regulated sectors.

In Japan, all eyes will be on the Tokyo CPI for February, with expectations for a drop in the core CPI figure. While underlying inflation remains above the Bank of Japan’s target, there is no immediate need for a rate hike. The upcoming wage negotiations and CPI data in April will be crucial indicators for the policy outlook in Japan.

In Canada, GDP growth is expected to be modest, with some stabilization following temporary disruptions in the previous quarter. While manufacturing and wholesale activity have shown signs of improvement, underlying momentum remains mixed. The Bank of Canada expects growth to be in line with expectations despite some softness in certain sectors.

Lastly, in the U.S., the core PPI and overall PPI data will be closely watched for any signs of inflation. A softer than expected PPI could reinforce a disinflation narrative, while a stronger print may delay expectations of future rate cuts by the Fed. The market continues to price in two rate cuts by the end of the year, despite a hawkish tone at the January FOMC meeting.