On Friday, January 26, the PMI report released by S&P Global indicated that U.S. business activity continued to expand in January, yet the pace of growth was notably weaker compared to the robust expansion commonly seen in the second half of 2025. Manufacturing growth accelerated and outpaced the service sector, but underlying order growth in both manufacturing and services has recently slowed, with declining exports being a primary drag. Furthermore, employment levels remained largely unchanged in January. The U.S. S&P Global Manufacturing PMI for January was slightly higher than in December, while the Services PMI held steady, though both figures came in marginally below expectations. The PMI survey revealed that overall confidence for the coming year remains positive but has softened slightly. Expectations for sustained economic growth and an improved demand environment were partly offset by lingering concerns over political uncertainty and persistent price increases. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, commented that the preliminary PMI data shows the U.S. economy maintaining steady growth at the start of the year, but also reveals increasing signs that the current expansion has cooled significantly from the hotter pace reflected last autumn.
Meanwhile, the Bank of Japan held its policy rate steady at 0.75% last Friday but raised its medium- to long-term inflation forecasts. Governor Kazuo Ueda explicitly stated that if economic conditions develop as expected, the central bank will continue to raise interest rates, leaving room for further policy tightening. In a subsequent press conference, Ueda emphasized that underlying inflation would continue to rise moderately and that financial conditions remained accommodative even after the December rate hike. Addressing the recent rapid rise in long-term interest rates, he stated that the BOJ would conduct bond operations flexibly under special circumstances and might take measures to encourage the formation of stable yields. Outlining the future policy path, Ueda indicated that the Bank of Japan would continue to increase interest rates if the economic situation unfolds as anticipated. He noted that it would take considerable time for the effects of rate hikes to broadly permeate the real economy and prices, and the central bank would closely scrutinize the various impacts of past hikes on corporate and household activities, as well as the broader economy and prices.
Key data to watch today include Germany's January IFO Business Climate Index and the U.S. preliminary Durable Goods Orders monthly rate for November.
Gold/USD Gold surged significantly on Friday, setting a new record high, with the spot price currently trading around $5060. Besides persistent safe-haven demand fueled by ongoing trade tensions supporting gold, escalating geopolitical tensions also contributed to its climb. Additionally, a weakening U.S. dollar index provided strong support for the precious metal. Resistance is seen near $5100 today, with support around $5000.
USD/JPY The USD/JPY pair fell sharply on Friday, hitting a fresh 4-week low, with the current exchange rate trading around 154.00. Apart from profit-taking and technical selling pressure near the 159.00 level weighing on the pair, hawkish signals from the Bank of Japan also exerted downward pressure. Furthermore, a softer U.S. dollar index and mounting concerns about potential intervention by the Japanese authorities in the currency market added to the selling pressure. Resistance is anticipated near 155.00 today, while support lies around 153.00.
USD/CAD The USD/CAD pair moved lower in volatile trading on Friday, touching a 3-week low, with the current rate trading near 1.3680. The pair was pressured not only by a weaker U.S. dollar, which softened due to trade tensions and disappointing economic data, but also by robust economic data from Canada released during the session. Moreover, a substantial rebound in crude oil prices further weighed on the pair. Resistance is eyed near 1.3750 today, with support around 1.3600.