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🗞️ Will USD strength and JPY weakness continue? U.S. GDP and PCE are the pivot

🗞️ Will USD strength and JPY weakness continue? U.S. GDP and PCE are the pivot

🎯 Today’s focus

Confirm whether the USD-up / JPY-down trend can hold via the advance U.S. GDP and PCE inflation data.
The week has been led by strong USD and weak JPY. A pre-weekend pullback is possible, but U.S. top-tier data should set the tone.

💴 USD/JPY: from the 152s to the 155s

  • Start of week: 152 handle

  • Today: trading in the 155 handle

That’s roughly a 3-yen rise this week.

Meanwhile:

  • EUR/USD softened from the high 1.18s to the mid-1.17s

  • EUR/JPY was choppy: dipped below 181 at one point, then rebounded back into the 183s

🇺🇸 What’s driving USD strength

  • FOMC minutes reaffirmed a hawkish stance

  • Fed speakers also hinted at higher-for-longer

  • U.S. data has generally come in firm

➡️ The market has re-priced the idea of rates staying high for longer.

📊 Key U.S. releases tonight

🏛️ Real GDP (Q4 advance)

  • Forecast: +2.8% annualized

  • Prior: +4.4%

➡️ A slowdown is expected, mainly due to cooling consumption.

💵 PCE Price Index (Dec)

  • MoM: +0.3%

  • YoY: +2.8%

  • Core YoY: +2.9%

➡️ Inflation is expected to remain sticky.

Slower growth vs. persistent inflation — that’s the tug-of-war.

🌍 Geopolitics

Tensions between the U.S. and Iran remain elevated.

  • Oil and gold are higher

  • Markets remain in cautious mode

Safe-haven demand + renewed inflation concerns continue to support the USD.

🇯🇵 Japan-side factors

  • Expectations for “Takaichi Cabinet 2.0” and more aggressive fiscal policy

  • After Japan’s GDP/CPI, expectations for an early BoJ hike have eased

➡️ Baseline bias remains JPY-weak, though geopolitical headlines can create sudden swings.

🇬🇧 London: GBP supported by strong UK PMI

UK flash PMI (Feb)

  • Manufacturing: 52.0 (above forecasts)

  • Services: 53.9 (above forecasts)

Expansion continues, lifting GBP:

  • GBP/USD: 1.3479

  • GBP/JPY: 209.51

  • EUR/GBP: down to 0.8730

🧭 Scenarios to watch

  1. GDP weak + PCE strong → inflation dominates → USD buying persists

  2. GDP weak + PCE weak → rate-cut bets revive → USD pullback

  3. Both strong → USD extends higher

📌 Wrap-up

  • USD strength / JPY weakness remains the week’s theme

  • A pre-weekend adjustment is possible

  • U.S. GDP + PCE should decide whether the move extends or fades

Tonight is the pivot: USD can accelerate — or the market shifts into weekend consolidation.

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