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21/02/2025 - 09:00 UTCThe US dollar lost value against major currencies on Thursday, with the USDX declining by 0.77%. Pressure on the dollar could derive from recent hawkish remarks form Federal Reserve officials and Japan's strong inflation data, suggesting an upcoming rate increase.
Surging fuel and food prices drove Japan's core consumer inflation to a 19-month peak of 3.2% in January, with overall inflation hitting 4.0%. This inflationary pressure is prompting the Bank of Japan, which recently increased rates to 0.5%, to contemplate additional hikes, potentially reaching 0.75% by the third quarter of 2025, if economic conditions remain supportive.
US stock markets ended Thursday’s session with modest losses, as renewed inflation concerns weakened consumer optimism. Walmart's stock dropped over 6% after its 2026 sales forecast fell short of expectations, suggesting potential consumer spending weakness amid inflation concerns. As a key indicator of U.S. consumer health, Walmart's warning also negatively impacted other retailers, with Target and Costco shares declining. Separately, Carvana's stock fell 11% due to analysts' concerns about a lack of detail in its current year outlook, despite strong fourth-quarter results. Alibaba's strong third-quarter earnings report that exceeded expectations and the announcement of increased investments in e-commerce and AI send its U.S.-listed shares surging 8%, marking their largest single-day percentage increase since September of the previous year and closing at a three-year high.
Crude oil prices gained for a fourth consecutive session this week, with the two main benchmarks WTI and Brent up by more than 0.7% as drawdowns of U.S. gasoline and distillate stockpiles, along with concerns over tight supplies in Russia, are supporting oil prices. On the demand front, global oil demand has averaged 103.4 million barrels per day (bpd) through February 19, a 1.4 million bpd increase, JPMorgan analysts said in a note on Friday.
For Friday, the focus turns to the release of Flash Manufacturing PMI and Flash Services PMI from the US, the UK and eurozone as well as Canada’s retail sales numbers and U.S. Existing Home Sales.
The EUR/USD pair gained on Thursday, as market participants assessed potential risks from renewed trade tensions. Investors now turn their attention to key economic data, with the advanced HCOB Manufacturing and Services PMIs for Germany and the broader eurozone set for release on Friday.
In the U.S., Initial Jobless Claims for the week ending February 15 rose to 219K, exceeding both the previous week’s revised figure of 214K and market expectations of 215K, according to data released by the U.S. Department of Labor on Thursday. Despite this slight uptick, the report has not altered market sentiment regarding Federal Reserve (Fed) policy, with expectations that the central bank will maintain its current stance for the coming months.
Gold prices edged higher on Thursday and ended the session 0.21% higher. Investor demand for bullion remains strong amid global trade uncertainty.
Minutes from the Federal Reserve’s (Fed) latest policy meeting, released on Wednesday, indicated that trade and immigration policies under former President Donald Trump have fueled concerns over inflationary pressures. As a result, Fed Chair Jerome Powell and policymakers opted to keep interest rates unchanged in January while assessing economic conditions.
On the data front, US jobless claims came in softer than expected, with fewer Americans filing for unemployment benefits than projected. Looking ahead, Gold traders will closely watch Friday’s release of the S&P Global Flash PMIs for further market direction.
Oil prices climbed for a third consecutive session on Thursday, supported by data showing declines in US gasoline and distillate inventories, as well as concerns over potential supply disruptions in Russia.
According to the US Energy Information Administration (EIA), crude oil stockpiles rose slightly more than expected last week, while fuel inventories declined due to seasonal refinery maintenance.
Further geopolitical developments added to supply concerns. Russia launched overnight attacks on Ukraine’s gas infrastructure, damaging production facilities, according to Ukraine’s Energy Minister German Galushchenko.
Market participants will continue monitoring geopolitical developments and economic data for further direction in crude prices.
The US 500 closed lower on Thursday, weighed down by a disappointing sales forecast from retail giant Walmart, which sparked concerns over consumer spending and the broader economic outlook.
Shares of Walmart tumbled more than 6% after the retailer provided a sales forecast for its 2026 fiscal year that fell short of expectations. The guidance raised concerns that the company—widely seen as a barometer for U.S. consumer health—may be feeling the effects of weakening demand amid lingering inflation pressures.
Meanwhile, U.S.-listed shares of Alibaba surged more than 8% after the Chinese e-commerce giant reported stronger-than-expected third-quarter revenue.
Investors will continue to monitor economic data and corporate earnings for further insights into market direction.
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