Macro Day: Global PMIs and Fed Under Pressure

Macro Day: Global PMIs and Fed Under Pressure

Asia/Europe PMIs, US GDP 1.4% and PCE 2.9%: impacts on USD, EUR, GBP, AUD, JPY and gold

Today markets digested a package of “market-moving” data across Asia, Europe, and the United States. The picture that emerges is mixed: US growth is slowing sharply, inflation embedded in domestic prices remains elevated, while PMIs show an improving Europe, a surprisingly resilient Japan, and a cooling Australia. In FX, the dominant driver remains the rate path: anything that changes the probability (and timing) of Fed cuts moves the dollar more than any other factor.

Key data released today (latest figures)

Japan — Inflation and PMI

• CPI Inflation (YoY, January): 1.5% (slowing).
• Tokyo Core CPI (YoY, January): 2.0% (around BoJ target).
• Manufacturing PMI (flash, February): 52.8 (accelerating).
• Services PMI (flash, February): 53.8
• Composite PMI (flash, February): 53.8

Macro view: recovering demand (including external) and solid services, but with headline inflation easing. This combination keeps the BoJ cautious about the pace of any further tightening.

Australia — PMI

• Manufacturing PMI (flash, February): 51.5
• Services PMI (flash, February): 52.2
• Composite PMI (flash, February): 52.0 (sharp slowdown vs January).

Macro view: growth remains in expansion territory, but momentum is fading (especially in services). Markets may more easily price a less restrictive RBA stance if cooling continues.

Eurozone — PMI

• Manufacturing PMI (flash, February): 50.8 (back above 50).
• Services PMI (flash, February): 51.8
• Composite PMI (flash, February): 51.9

Macro view: stronger-than-expected improvement, with manufacturing returning to expansion. The message for the EUR is “growth breathing again,” though not necessarily enough to significantly lift rate expectations, as price pressures remain monitored and growth is uneven across countries.

United Kingdom — PMI

• Manufacturing PMI (flash, February): 52.0
• Services PMI (flash, February): 53.9
• Composite PMI (flash, February): 53.9

Macro view: private sector activity remains solid, but markets stay focused on inflation, labor market dynamics, and expectations of BoE rate cuts in spring.

Canada — PPI

• PPI MoM (January): +2.7% (sharp increase).

Macro view: such a strong PPI print (especially if concentrated in energy/industrial goods) revives the “pipeline inflation” theme, particularly relevant for a cyclical, commodity-linked currency like the CAD.

United States — GDP, PCE and PMI

• US GDP (Q4 2025, advance): +1.4% annualized (clear slowdown).
• Price Index for Gross Domestic Purchases (Q4): +3.7%
• PCE Price Index (Q4): +2.9%
• Core PCE (Q4, ex food & energy): +2.7%
• US PMI (flash, February): Composite 52.3 (down from 53.0; lowest since April according to reports).

Macro view: a mix of “growth scare + sticky inflation.” Growth is slowing (GDP), yet domestic prices remain elevated (3.7%), and quarterly PCE has not fallen enough to “guarantee” an immediate rate cut.

FX: reaction vs USD and YTD trends

Current levels (vs USD)

• EUR/USD ~ 1.1767
• GBP/USD ~ 1.3468–1.3474
• AUD/USD ~ 0.7044
• USD/JPY ~ 155.4

YTD performance (since January 1, 2026)

• EUR/USD: ~+0.2% YTD (almost flat).
• GBP/USD: ~0.0% YTD (sideways).
• AUD/USD: ~+5.5% YTD (strongest among the group vs USD).
• JPY vs USD: ~+0.8% YTD (USD/JPY slightly lower).

Cross interpretation (what’s driving moves)

• USD (common driver): today’s 1.4% GDP supports a more “dovish Fed” narrative, but the price block (3.7% gross domestic purchases; PCE 2.9%) limits rate-cut euphoria. Result: the dollar is more sensitive to the timing (when) rather than the direction (if) of cuts.
• EUR/USD: better PMIs provide marginal support, but the anchor remains the expected Fed–ECB rate spread. Manufacturing improvement is constructive, yet as long as the Fed moves first, EUR gains may remain gradual rather than explosive.
• GBP/USD: strong PMI is not enough to change BoE pricing. Markets focus on easing inflation and cooling labor data, fueling expectations of cuts as early as March according to market consensus cited in the press.
• AUD/USD: YTD rally aligns with “risk-on/commodities” and a less dominant dollar; however, slowing Australian PMIs increase the risk of profit-taking if the global narrative turns more defensive.
• USD/JPY: with Tokyo core CPI at 2% and strong PMIs, Japan is no longer just a pure carry trade story; however, the yen remains highly sensitive to risk sentiment (and therefore geopolitics and US yields).

Geopolitics: key effects on crosses (and why it matters today)

• USD & JPY (safe havens): escalation in US–Iran tensions keeps defensive assets bid and supports gold. In risk-off phases, the yen tends to benefit (though not always linearly when US yields move sharply).
• EUR: the Eurozone is sensitive to energy shocks (oil/gas → inflation/import channel). With Middle East tensions and oil volatility, the EUR may suffer if “terms of trade” and fragile growth concerns re-emerge.
• GBP: more domestically driven narrative; BoE cut expectations and mixed data have weighed on sterling despite solid PMIs.
• AUD: typically pro-cyclical; benefits when global growth holds and volatility declines, but suffers when geopolitical shocks and risk aversion rise.

Fed: what today’s GDP and PCE change and current rumors

Next FOMC decision: March 17–18, 2026.

Market positioning / rumors:

• A large portion of the market still expects no cut in March, shifting focus to mid-2026; surveys cited by Reuters and FedWatch readings indicate a very high probability of a “hold” in March.
• Some institutions discuss cuts starting in June/July. BofA (as reported in financial press) notes that cuts are “priced in” but not necessarily “justified” by fundamentals, with FedWatch assigning a meaningful probability to a first cut in June.

Our view: 1.4% GDP gives arguments to doves, but the price package (3.7% gross domestic purchases; PCE 2.9%; core PCE 2.7% quarterly) makes aggressive cuts difficult without further confirmation of disinflation. The most likely outcome: cautious communication in March, with markets continuing to “play the calendar” (June as pivot), rather than an automatic immediate cut.

Gold: trend and impact of today’s data

• Spot gold ~ $5,021/oz today.
• YTD: from ~$4,933/oz (January 1) to ~$5,021/oz, about +1.8% YTD (approximate).

Why gold is reacting this way:

1. Geopolitics (US–Iran) → safe-haven demand.
2. Expected real rates: weaker GDP supports the idea of Fed cuts in 2026, reducing gold’s opportunity cost; however, sticky inflation limits a straight-line acceleration.

Operational summary (FX & commodities perspective)

• USD: more sensitive to the timing of cuts than their mere existence; weak GDP = downside pressure, still-elevated prices = restraint.
• EUR: better PMIs help, but direction mainly depends on expected Fed–ECB rate spreads.
• GBP: solid PMIs, yet sterling remains vulnerable if markets continue pricing a more dovish BoE.
• AUD: strong YTD, but slowing PMIs = risk of mean reversion if risk-off intensifies.
• JPY: strong PMIs and inflation closer to target keep BoJ cautious; yen mainly reacts to US yields and geopolitical sentiment.
• Gold: supported by geopolitics and prospects of lower rates later in 2026; watch volatility around inflation data and Fed forward guidance.

This content is for informational purposes only and does not constitute financial advice, solicitation, or an investment recommendation. Markets involve risk; always assess your personal situation and, if necessary, consult a licensed professional.