US
USD is a little firmer, largely reflecting broad JPY weakness (see Japan section below). S&P 500 futures point to a steadier open after the benchmark fell 1% yesterday driven by the so-called AI scare trade. In parallel, the US Supreme Court’s tariff ruling could stoke trade friction, posing a drag on broader risk sentiment.
Yesterday, President Donald Trump threatened to place a “much higher tariff” on any country that wants to “play games” with the Court’s tariff ruling. Trumps’ remarks followed reports that the EU is set to freeze ratification of a US trade deal and India delaying the finalization of an interim trade agreement with the US. China also cautioned that it would assess new US tariff moves and may adjust its countermeasures.
The new temporary 10% global tariffs went into effect today and the White House is working on a formal order that will increase it to 15%. The global tariffs can remain in place for a maximum of 150 days, through July 24, without Congressional authorization.
The shift from the pre-ruling tariff regime to the current flat broad-based surcharge produces clear winners (Brazil, China, India) and losers (UK, and EU). However, alternative measures, though more convoluted, are already in the pipeline that will keep most of the pre-ruling tariff in place.
Fed Governor Christopher Waller sees even odds of a 25bps cut at the next March 17-18 FOMC meeting. Waller said “if the good labor market news of January is revised away or evaporates in February, it would support my position at the FOMC's last meeting, that a 25-basis-point reduction in the policy rate was appropriate, and that such a cut should be made at the March meeting.” Fed funds futures price-in nearly zero chance of a cut in March.
A busy slate of FOMC speakers today: Chicago Fed President Austan Goolsbee (2027 voter), Boston Fed Susan Collins (non-voter), Atlanta Fed President Raphael Bostic (retires at the end of the month), Fed Governor Waller, Fed Governor Lisa Cook, and Richmond Fed President Tom Barkin (2027 voter).
ADP private employment change for the four weeks to February 7 is up next (1:15pm London, 8:15am New York). The last report showed that for the four weeks ending January 31 private employers added an average of 10.25k jobs a week. On a side note, the January ADP jobs print was up 22k while non-farm private sector payroll (NFP) growth was much stronger at 172k. Waller pointed out yesterday that this conflict between private jobs data sources and the initial NFP numbers leaves him concerned that the robust January NFP print may contain more noise than signal.
The February Conference Board Consumer Confidence index is the other data highlight (3:00pm London, 10:00am New York). Consumer confidence is seen recovering to 87.1 after falling to 84.5 in January, the lowest level in more than a decade. Pay attention to consumer’s views of the labor market, which worsened in January. The labor differential index (jobs plentiful minus jobs hard to get) index dropped the lowest since February 2021 and job expectations over the next six months (more jobs-fewer jobs) fell to a ten-month low.
President Donald Trump delivers the traditional State of the Union address to Congress today (9:00pm New York). Trump will likely discuss his plans for Iran. The US has amassed a vast military force in the Middle East described as the largest presence since the lead-up to the 2003 invasion of Iraq.
JAPAN
USD/JPY rallied by roughly 1% to a high around 156.28 after Mainichi newspaper reported that Japanese Prime Minister Sanae Takaichi expressed reluctance over further rate hikes when she met with BOJ Governor Kazuo Ueda last week. The specific content of her remarks is unknown, but according to the newspaper “It was a tougher attitude than during the last meeting with Ueda (in November 2025).”
JPY undershoot may fade quickly if officials clarify the context of the conversation between Takaichi and Ueda. Interestingly, following their meeting on February 16, Ueda stressed that the prime minister said that there was “no particular request” for monetary policy.
HUNGARY
USD/HUF is consolidating just above 320.00 after hitting a multi-year low near 314.50 in late January. National Bank of Hungary policy rate decision is today (1:00pm London, 8:00am New York). The bank is expected to cut the policy rate 25bps to 6.25%, marking its first reduction since pausing the easing cycle in October 2024. Hungary headline CPI inflation dropped to 2.1% y/y in January vs. 3.3% in December, the lowest since March 2018 and below the bank’s 3% target.
The swaps curve more than fully price-in 50bps of cuts over the next twelve months. Regardless, Hungary’s positive real interest rates, loose 2026 fiscal stance, and the prospect of a change in government at the upcoming April 12 national election favor a firmer HUF. Prime Minister Viktor Orbán’s party has been trailing in polls for almost a year now.
