Last week, two significant economic indicators from the US were published. The jobs report exceeded expectations, showing some resilience in the economy and easing concerns about the labour market, which has shown signs of weakness lately.
In contrast, the Consumer Price Index (CPI) data came in slightly softer, aided by declining energy prices. The headline CPI registered at 2.4 percent, slightly below the anticipated 2.5 percent, and still not close to the Federal Reserve’s inflation target of 2 percent.
This situation suggests that the Fed may not reduce interest rates in March, a sentiment echoed by futures markets, where majority of participants do not foresee a cut, with delays expected until June.
The US stock market remained relatively stable, though there is still uncertainty about potential Artificial Intelligence (AI) influences that could further affect the market.
Previously, AI was the major driver for investors, but it has begun to pose challenges, and its future trajectory remains uncertain. The recent performance of the tech sector, which has struggled, highlights the uncertainties ahead and signals weaknesses in the AI industry that may need restructuring due to diminishing earnings.
The US Dollar retained a weaker tone, while the Japanese Yen continued to show strength following Japan’s recent elections, which are anticipated to promote stability. There is potential for the Yen to gain against the US Dollar before reaching its peak, driven by inflation risks and high interest rate increases that support the Japanese currency.
However, a key challenge lies in balancing growth-promoting lending with problematic high debt, which could make financing more expensive. This dynamic suggests that the Yen may soon reverse against the Dollar before the latter peaks.
As long as a weaker US Dollar is accepted and manageable for the economy, other major currencies, including the Euro and Pound Sterling, are likely to remain strong, supported by a stable economic outlook in both the Eurozone and Britain.
However, the political climate in the UK warrants close scrutiny as it may exert pressure on the Pound. From an economic growth perspective, the UK is progressing at a reasonable speed.
Meanwhile, the US Dollar index, which tracks a basket of six currencies, experienced its third straight weekly decline, falling to 96.82 (futures).
On the domestic economic front, it’s expected to be a quieter week, followed by speeches from Federal Reserve policymakers. The minutes from the Federal Open Market Committee (FOMC) meeting are set to be released on Wednesday, potentially offering insights into inflation. Attention will particularly focus on Friday’s announcement of the Core PCE, the Federal Reserve’s preferred inflation gauge.
However, geopolitical tensions between the US and Iran remain unchanged, requiring the market to stay alert for any emerging developments.
Next week, on Monday, US markets will be closed in observance of President’s Day. On Tuesday, the Empire State Manufacturing Survey will be published. On Wednesday, reports on US Durable Goods Orders, Housing Starts, Building Permits, and the minutes from the January monetary policy meeting will be released. Thursday will bring weekly jobless claims, the Philadelphia Federal Reserve Manufacturing Survey, and US Pending Home Sales data. On Friday, the US Advance Q4 GDP, Core PCE Index, S&P Flash Manufacturing PMI, Revised University of Michigan Consumer Sentiment, and New Home Sales will be announced, with particular focus on the Core PCE Index as the Federal Reserve’s preferred inflation indicator.
WEEKLY OUTLOOK — FEB 16-20
GOLD @ USD 5043— This week, market volatility is expected to persist as geopolitical uncertainties lead to fluctuating gold prices. More stable conditions may provide an opportunity for consolidation. However, buyers are likely to step in during price dips, drawn by the appealing low gold prices. For gold to progress towards USD 5250, it needs to surpass USD 5140. Conversely, a drop below USD 4910 could lead it down to USD 4840.
EURO @ 1.1869— Euro finds support at 1.1740, which is likely to hold firm. A decisive move above 1.1960 will boost prospects for hitting 1.2025. However, a violation of the support level could lead to a drop to 1.1670.
GBP @ 1.3649— As long as the support level at 1.3502 remains intact, the Pound Sterling is expected to stay in demand. For it to achieve further gains, it must break through 1.3765. Otherwise, it is likely to fluctuate within a range.
JPY @ 152.70— For the $/JPY pair to hit 150.20, it needs to drop below 151.10. On the other hand, the risk is that if it goes past 154.80, the USD could rise toward 155.60.
Copyright Business Recorder, 2026
The writer is former Country Treasurer of Chase Manhattan Bank. The views expressed in this article are not necessarily those of the newspaper
He tweets @asadcmka
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