On Monday, February 17, 2025, all major U.S. financial markets will be closed

On Presidents’ Day, Monday, February 17, 2025, all major U.S. financial markets, including the New York Stock Exchange (NYSE) and Nasdaq, will be closed in observance of the federal holiday:

  • US bond markets will also be closed
  • Since Presidents’ Day is a federal holiday, most banks (FX will be only limited liquidity) and government offices in the U.S. will be closed.

The Chicago Mercantile Exchange (CME) will observe modified trading hours on Monday

  • electronic trading on CME Globex will have an early halt at 12:00 p.m. Central Standard Time (CST) (this is 1pm US Eastern time)
  • Trading will resume at 5:00 p.m. CST the same day (6pm US Eastern time)
  • Note, the CME is complicated, check their website for more hours.

The NYSE refer to the holiday as Washington’s Birthday.

BoA survey shows the US dollar is expected to top out in Q1 2025

Ukraine talks between US and Russian officials in Saudi Arabia expected on Tuesday

New Zealand January services PMI jump into expansion at 50.4 (prior 47.9)

New Zealand’s services sector PMI from the BNZ – BusinessNZ Performance of Services Index (PSI) for January 2025

50.4, expanding again after 10 consecutive months of contraction

Sub-index Activity/Sales, highest value since March 2023

  • New Orders/Business highest since February 2024
  • Employment and Supplier Deliveries remained in contraction

BNZ’s Senior Economist Doug Steel:

  • “the PSI is consistent with stabilisation rather than elevation, but its latest move upwards is encouraging”

Economic calendar in Asia 17 February 2025 – Japan Q4 GDP the focus

Trade ideas thread – Monday, 17 February, insightful charts, technical analysis, ideas

Trump says working very hard to make peace, Zelinskiy involved

Monday morning open levels – indicative forex prices – 17 February 2025

As is usual for a Monday morning, market liquidity is very thin until it improves as more Asian centres come online … prices are liable to swing around, so take care out there.

Indicative rates, a little change from late Friday, but not as much as we’ve come to expect over these past three weeks:

  • EUR/USD 1.0483
  • USD/JPY 152.26
  • GBP/USD 1.2588
  • USD/CHF 0.8992
  • USD/CAD 1.4183
  • AUD/USD 0.6353
  • NZD/USD 0.5719

ps. Load up on another extra large coffee for this time tomorrow – there are market closures in the US on Monday for a holiday so we get to do this pretty much all over again

Weekly Market Outlook (17-21 February)

UPCOMING
EVENTS
:

  • Monday: Japan GDP.
  • Tuesday: RBA Policy Decision, UK Employment report, German
    ZEW, Canada CPI, US NAHB Housing Market Index, New Zealand PPI.
  • Wednesday: Australia Wage Price Index, RBNZ Policy
    Decision, UK CPI, US Housing Starts and Building Permits, FOMC Minutes.
  • Thursday: Australia Employment report, PBoC LPR, Canada
    PPI, US Jobless Claims.
  • Friday: Australia/Japan/Eurozone/UK/US Flash PMIs,
    Japan CPI, UK Retail Sales, Canada Retail Sales.

Tuesday

The RBA is
expected to cut interest rates by 25 bps bringing the Cash Rate to 4.10%.
As a reminder, the RBA softened
further
its stance
at the last policy decision as it prepared for the first rate cut. The
market is now seeing an 90% chance of a 25 bps cut at this week’s meeting with
a total of 75 bps of easing expected by year end.

These expectations
have been shaped by the recent inflation data. In fact, the Australian Q4
CPI
missed
expectations across the board with the underlying inflation figures easing
further and now comfortably in the RBA’s target range on a 6-month annualised
basis.

Reserve Bank of Australia

The UK Unemployment
Rate is expected to tick higher to 4.5% vs. 4.4% prior. The Average Earnings
are expected at 5.9% vs. 5.6% prior, while the Ex-Bonus Earnings are seen at
5.9% vs. 5.6% prior. Analysts continue to caution against the employment data
reliability
and therefore it’s unlikely to influence interest rate
expectations much. The market is currently pricing 55 bps of easing by year-end.

UK Unemployment Rate

The Canadian CPI
Y/Y is expected at 1.8% vs. 1.8% prior, while the M/M reading is seen at 0.0%
vs. -0.4% prior. The Trimmed-Mean CPI Y/Y is expected at 2.6% vs. 2.5% prior,
while the Median CPI Y/Y is seen at 2.5% vs. 2.4% prior.

Inflation has been
inside the target band for almost a year and the BoC at the last policy
decision acknowledged that absent the threat of tariffs, the risks to the
inflation outlook are roughly balanced. This implies that the central bank is
now in neutral stance and the pace of easing will be much slower.

The economic
data out of Canada has been picking up
after the aggressive easing in monetary
policy and the CAD has been held back only by trade uncertainty. This
uncertainty has eased recently, and the Loonie got the green light to finally
appreciate.

Canada Inflation Measures

Wednesday

The RBNZ is
expected to cut interest rates by 50 bps bringing the OCR to 3.75%. The central
bank will likely signal a slower pace of easing going forward. At the
last policy decision, Governor Orr said that they expected to reach the neutral
rate by the end of 2025 putting the neutral rate around 2.5-3.5%.

Therefore, dovish
surprises could come from a 75 bps cut (although that will likely imply a long
pause) or the central bank willing to reach the neutral rate by mid-2025. On
the other hand, a “hawkish” surprise could come from just a 25 bps cut or an
upward revision to the neutral rate.

Reserve Bank of New Zealand

The UK CPI Y/Y is
expected at 2.8% vs. 2.5% prior, while the M/M reading is seen at -0.3% vs.
0.3% prior. The Core CPI Y/Y is expected at 3.6% vs. 3.2% prior, while
Services CPI Y/Y is seen at 5.2% vs. 4.4% prior.

These would be all
disappointing figures for the BoE which failed to obtain the same progress
against inflation like the other central banks. The market is pricing 55 bps
of easing by year-end
but if further progress fails to materialise in the
next months, then the market will likely need to scale back the rate cuts
expectations.

UK Core CPI YoY

Thursday

The Australian
Employment report is expected to show 20K jobs added in January vs. 56.3K in December,
and the Unemployment Rate to tick higher to 4.1% vs. 4.0% prior. The unemployment
rate has been stable around 4.0% for a year after the gradual pick up from the
2022 lows.

This report is
unlikely to influence interest rates expectations much but (although unlikely) a
more marked deterioration in the labour market going forward should see the
market pricing in a more aggressive pace of easing for the RBA.

Australia Unemployment Rate

The US Jobless
Claims continue to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial
Claims remain inside the 200K-260K range created since 2022
, while Continuing Claims continue to hover around
cycle highs although we’ve seen some easing recently.

This week Initial
Claims are expected at 215K vs. 213K prior, while Continuing Claims are seen at
1863K vs. 1850K prior.

US Jobless Claims

Friday

The Japanese Core
CPI is expected at 3.1% vs. 3.0% prior. As a reminder, at the last policy
decision, the BoJ hiked interest rates by 25 bps but didn’t offer much in terms
of forward guidance apart from the usual “will raise policy rate if economic,
price conditions continue to improve”. Since then, we’ve got very strong
wage growth data and some hawkish comments from BoJ officials
. As a result,
the market started to price in some chances of a third rate hike this year.

Japan Core CPI YoY

Friday will also be
the Flash PMIs Day for the Eurozone, the UK and the US. These are generally
market moving releases and they might influence the markets expectations for
interest rates. The European data in particular (France, Germany and
Eurozone) will likely see bigger moves
as the market is slowly starting to rethink
its downbeat expectations.

Flash PMIs

Forexlive Americas FX news wrap 14 Feb: Retail sales show consumer weakness to start year

US retail sales for January came in significantly weaker than expected, raising concerns about economic momentum as the new year begins. The control group, which feeds directly into GDP calculations, fell -0.8% (vs. +0.3% expected), while the headline figure dropped -0.9% (vs. -0.1% expected). In response, the Atlanta Fed’s GDPNow growth estimate for Q1 was revised down to 2.3% from 2.9%.

Other economic data showed mixed resilience—industrial production rose 0.5% (vs. 0.3% expected), and capacity utilization edged up to 77.8% (vs. 77.7% expected). However, business inventories declined by -0.2% (vs. 0.0% expected), signaling potential weakness in supply chain demand.

The US dollar weakened across the board today following the disappointing retail sales data, with all major currencies closing higher against the greenback. For the day, the New Zealand dollar led the gains with a rise of +1%, followed by the Australian dollar at +0.63%.

Both the Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) expected to announce interest-rate cuts when they meet on Tuesday and Wednesday respectively. The RBA is expected to cut rates by 25 basis points to 4.10% (86% probability), while the RBNZ has a 68% probability of a 50 basis point cut and a 32% chance of a 25 basis point cut from the current 4.25% level.

Despite the cut expectations, the AUDUSD rose 1.41% this week (AUD higher/USD lower). The NZDUSD rose an identical 1.41% for the week.

Looking at the other currencies vs the USD for the week:

  • EURUSD rose 1.62% (lower USD)
  • GBPUSD rose 1.58% (lower USD)
  • USDJPY rose 0.61% (higher USD)
  • USDCHF fell -1.05% (lower USD)
  • USDCAD fell -0.81% (lower USD).

In the US debt yields moved lower in reaction to the weaker data as well:

  • 2 year yield 4.263%, -4.8 basis point
  • 5-year yield 4.331%, -5.5 basis points
  • 10-year yield 4.478%, -4.7 basis points
  • 30-year yield 4.703%, -2.3 basis points

For the week, yields were mixed with the two year down while the thirty-year rose modestly. The debt market did have to maneuver through higher-than-expected CPI and PPI data and a 10 and 30 year coupon auctions which were met with below average demand.

  • 2 year yield, -4.1 basis points
  • 5 year yield, -1.6 basis points
  • 10-year yield, -1.5 basis points
  • 30-year yield, +0.8 basis points

The major US stock indices close with mixed results today. The Dow industrial average is lower, the S&P index was unchanged, and the NASDAQ index was higher. The S&P closed within four points of a record level. For the trading week the NASDAQ index had its best week of the year with a gain of 2.58%. It outpaced the more modest gains in the Dow industrial average and the S&P indices.

  • Dow rose 0.55%
  • S&P rose 1.47%
  • Nasdaq rose 2.58%

Worth mentioning is that Meta shares closed higher for the 20th consecutive day today.

Looking at other markets as the week came to a close:

  • Crude oil fill -0.79% or -1.12% at $70.49. For the week the price fell -0.68%.
  • Silver fell $-0.19 or -0.60% to $32.13. For the week the price rose 1.489%
  • Gold tumbled $45.09 for -1.54% to $2882.21 in trading today. For the week the price rose 0.77%, and traded to a record intraday level of $2942.71
  • Bitcoin (which never closes) rose $900 today to $97,500. For the trading week, the high price reached $98,871 while the low price was at $94,091