Mon: Australian Holiday (Australia Day), German Ifo (Jan).Tue: Chinese Industrial Profits (Dec), US Richmond Fed (Jan), US Consumer Confidence (Jan).Wed: Fed Policy Announcement, BoC Policy Announcement, BCB Policy Announcement, Australia CPI (Q4), German GfK (Feb), NZ Trade (Dec).Thu: Riksbank Policy Announcement, CBRT Minutes, EZ Money Supply (Dec).Fri: German Import Prices (Dec), German Unemployment (Jan), German GDP (Q4, flash), HICP (Jan), EZ GDP (Q4, flash).Sat: Chinese NBS PMI (Jan).Chinese Industrial Profits (Tue): The previous release (covering January-November 2025), showed a sharp loss of momentum, with YTD profits at major industrial firms up just 0.1% Y/Y, slowing sharply from 1.9% growth in the first ten months. November profits alone fell 13.1% Y/Y, after a 5.5% drop in October, marking the steepest monthly contraction in more than a year. By sector, resilience was confined to high-tech manufacturing, where profits rose 10%, and equipment manufacturing, up 7.7%, while heavy industry remained a major drag, with coal mining and washing profits down 47.3% and oil and gas extraction down 13.6%. By ownership, state-owned enterprises reported a 1.6% Y/Y decline in profits, while private firms slipped 0.1%. Analysts cited weak domestic demand and persistent factory-gate deflation, warning profits remain vulnerable unless pricing power and demand improve.Australian CPI (Wed): The ABS is due to publish December and Q4 inflation data, with the focus firmly on the quarterly print. Headline CPI stood at 3.4% Y/Y in November, remaining above the RBA’s 2-3% target band, though the central bank in December said that recent firmness in underlying inflation reflected temporary factors, while also flagging increased noise in the monthly CPI series. Attention now turns to Q4 after CPI in Q3 edged up to 3.2% Y/Y. NAB expects a notably firm outcome, forecasting trimmed mean inflation at 0.9% Q/Q and 3.3% Y/Y, above the RBA’s own projections of 0.75% Q/Q and 3.2% Y/Y, citing ongoing pressure from housing costs, services inflation – particularly seasonally strong travel prices – and new vehicles. Any upside surprise in Q4 inflation would reinforce the Bank’s tightening bias amid a still-tight labour market, even as market pricing implies about a 60% chance of a February cut (up from roughly 30% before the latest employment data).BoC Policy Announcement (Wed): Canada headline CPI rose to 2.4% Y/Y in December from 2.2%, slightly above expectations, reflecting higher food, alcohol and selected goods prices. The increases were driven in part by unfavourable base effects linked to last year’s GST holiday, which more than offset a sharp monthly decline in energy prices. Measures of core inflation were broadly stable: CPI excluding food and energy edged higher, but the BoC’s preferred core measures eased, suggesting underlying price pressures remain contained. Oxford Economics argued that the Bank will not be swayed by M/M volatility in headline inflation caused by base effects, instead focusing on the underlying trend, which both it and the BoC see in the mid-2% range. Oxford Economics also highlighted ongoing upside risks from US tariffs and elevated trade policy uncertainty, and continues to expect the BoC to keep rates on hold at 2.25% until early 2027. Meanwhile, the BoC’s Business Outlook Survey sends a similar signal. While businesses are more optimistic about sales and point to firmer GDP growth, they still anticipate layoffs and continue to face persistent cost pressures. According to NAB, this combination provides little evidence that inflation risks have fully receded, reinforcing the case for policymakers to remain on hold until there is clearer confirmation that price pressures are durably under control.Fed Policy Announcement (Wed): The FOMC is widely expected to leave the policy rate unchanged at 3.50-3.75% at next week’s meeting. As has been the case for several meetings now, the decision itself matters less than the guidance, particularly around how patient policymakers intend to be before easing eventually comes into view. A Reuters poll showed unanimous expectations for no change at this meeting, while 58% of economists also see rates staying on hold through the quarter. Recent data continue to underline resilient US growth and sticky inflation, which together argue against any urgency to cut rates. The economy expanded strongly in the H2 2025, while inflation remains above target, reinforcing the Fed’s preference for patience. Policymakers are therefore likely to repeat their data-dependent messaging and avoid signalling that easing is imminent. Markets will pay close attention to Chair Powell’s press conference for any tonal shift, particularly given growing political pressure on the central bank. Public criticism from President Trump and ongoing legal scrutiny related to the Fed’s HQ renovation have raised questions around institutional independence, though officials are expected to steer clear of political commentary. Analysts said that, overall, the balance of risks still points to rates remaining on hold through Q1, with cuts more likely later in the year if inflation shows clearer signs of moderation. Further hikes remain very unlikely, but strong growth and expansionary fiscal policy suggest that any easing cycle, when it comes, is likely to be gradual. Few surprises are expected from the meeting, leaving markets focused on Powell’s assessment of inflation persistence, labour market tightness and financial conditions.BCB Policy Announcement (Wed): Policymakers are expected to maintain a cautious tone following December’s decision to hold the Selic rate at 15.00%. At that meeting, the central bank described the current policy stance as “adequate” to deliver inflation convergence over time, while emphasising that future steps may be adjusted as needed. This wording leaves room for renewed tightening should inflation pressures re-emerge, but also preserves flexibility for eventual easing once confidence in the disinflation path improves. Pantheon Macroeconomics viewed the shift in language from “sufficient” to “adequate”, alongside a return to “as usual” vigilance, as signalling slightly higher confidence without constituting a clear dovish pivot, and continues to characterise the BCB’s stance as hawkish. Pantheon expects the current hold to extend into early 2026 as policymakers seek to re-anchor expectations. Since the December meeting, however, inflation data have surprised to the downside, strengthening the case for eventual easing. Annual inflation for 2025 slowed more than both the central bank and

Japan’s intervention risk is back in sharp focus after PM Takaichi warned on Sunday against speculative moves, following a violent yen reversal and rate-check chatter late Friday.Summary:Japan PM Sanae Takaichi warned officials stand ready to act against “speculative and highly abnormal” market moves as the yen weakens and bond yields rise.The remarks follow sharp yen gains late Friday after market chatter of a Federal Reserve rate check, a precursor to actual FX intervention if needed.USD/JPY reversed violently from above 159.20 to below 156.00, a move in Friday (thinning) liquidity.Officials appear to be escalating from verbal warnings to operational signalling, increasing intervention risk into thin-liquidity sessions.Takaichi’s comments ahead of Monday Asia trade reinforce expectations Japanese authorities remain on high alert for disorderly yen moves.Japan has stepped up its warning rhetoric on the yen, with Prime Minister Sanae Takaichi signalling readiness to act against speculative market moves as pressure builds across currency and bond markets.Speaking during a televised debate among party leaders on Sunday, Takaichi said authorities would not hesitate to respond to “speculative and highly abnormal movements,” even as she acknowledged that market pricing itself is not a matter for political direction. While she did not explicitly reference either the yen or Japanese government bonds, the timing of the remarks leaves little doubt over the intended target.The comments follow a dramatic reversal in the yen late on Friday after traders reported that the Federal Reserve Bank of New York had contacted financial institutions to ask about the yen’s exchange rate. This is a ‘rate check’ action that is a precursor to actual intervention (its the next step along from the verbal jawboning we’ve had in recent months) that may follow if the yen continues to weaken. USD/JPY had earlier surged to around 159.22 following the Bank of Japan decision before reversing sharply, falling to the mid-155s into the close. The late-week timing raised eyebrows, with thin Friday liquidity amplifying the impact of official signalling. While direct intervention was not seen yet, the Fed’s outreach was widely interpreted as groundwork that can precede coordinated action when currency moves are seen as excessive or disorderly.Market participants have long flagged holiday-thinned sessions as attractive windows for Japanese action, given the greater price impact per dollar deployed. While I had focused on Monday’s U.S. holiday (January 19) as a potential flashpoint, Friday’s rate-check chatter confirms officials are willing to act opportunistically as liquidity fades.With Takaichi now reinforcing the message ahead of Asia-Pacific trade on Monday, traders are increasingly wary that Japan is transitioning from prolonged verbal jawboning to more tangible market operations if yen weakness accelerates further. Its not usual for the PM to jump in with verbal intervention, but given its now an election campaign its unusual times. This article was written by Eamonn Sheridan at investinglive.com. 🔗 Source 💡 DMK Insight Japan’s yen intervention risk just spiked—here’s why that’s crucial for traders right now: PM Takaichi’s warning against speculative moves highlights a growing concern over the yen’s volatility, especially after a sharp reversal late Friday. This isn’t just noise; it signals that the Bank of Japan might step in if the yen continues to weaken, which could lead to significant market shifts. Traders should be on high alert for any intervention announcements, as these can cause rapid price movements. If the yen breaks key support levels, expect a potential surge in volatility across forex pairs, particularly those involving the USD/JPY. But here’s the flip side: if the yen stabilizes without intervention, it could indicate a shift in market sentiment, potentially leading to a stronger yen in the medium term. Keep an eye on the 145 level for USD/JPY; a breach could trigger intervention, while a bounce could signal a recovery. Watch for any upcoming economic data releases from Japan that might influence the BOJ’s decision-making process, as these could provide clues on future intervention timing. 📮 Takeaway Monitor the USD/JPY around the 145 level—any intervention could lead to sharp price swings, so stay alert for news from Japan.