The upcoming week is set to be a high-stakes period for global markets as a “deluge” of rescheduled US economic data meets critical growth updates from Europe and a high-stakes political showdown in Japan.
US Data Deluge: NFP and CPI take center stage
The primary focus for market participants will be the rescheduled US labor and inflation data, which were delayed due to a recent federal government shutdown. The Non-Farm Payrolls (NFP) report, now slated for Wednesday, February 11, is expected to show a modest gain of 70,000 jobs (up from 50,000 in December), with the unemployment rate holding steady at 4.4%.
However, downside risks remain. Recent ADP figures showed only 22,000 private-sector gains, and “professional and business services” are seeing a sharp decline in hiring rates, a potential early sign of AI-driven displacement. If the NFP underwhelms, it could cement expectations for a Fed rate cut as early as March or April.
Following the jobs data, Friday’s Consumer Price Index (CPI) report will provide the final piece of the puzzle. While headline inflation held at 2.7% in December, the Fed remains wary of stickiness. A hot inflation print would likely force the US dollar to reverse any NFP-related losses, as it would challenge the narrative of aggressive rate cuts in 2026.
Japan’s Snap Election: A turning point for the Yen
Over the weekend, Japan heads to a snap election called by Prime Minister Takaichi. The outcome will be the primary driver for the Yen (JPY) on Monday morning.
Landslide for Takaichi: Markets expect this would lead to continued fiscal expansion and pressure on the Bank of Japan (BoJ) to keep rates low, potentially pushing the USD/JPY back toward the 160.00 level.
Loss of Majority: A poor showing for the coalition could trigger safe-haven flows into the Yen, as it might signal a more hawkish BoJ path and political instability.
Europe: GDP and central bank pivot points
In Europe, the focus shifts to growth momentum. The UK’s Q4 GDP (Thursday) and Eurozone GDP (Friday) will be scrutinized for signs of recovery.
United Kingdom: Following a razor-thin 5-4 vote by the Bank of England to hold rates last week, a soft GDP print would significantly raise the odds of a March rate cut. Analysts note that while manufacturing has seen a boost from car production, the broader services sector remains sluggish.
Eurozone: President Lagarde has recently expressed concern that a “strong Euro” could suppress inflation too much. A weak GDP reading could reinforce the ECB’s increasingly dovish stance.
China: Deflation Watch
On Wednesday, China releases its CPI and PPI data. Market participants are looking for evidence that recent stimulus efforts are curbing deflationary pressures. While domestic demand remains weak highlighted by a 17% drop in property investment, a rise in business selling prices in January suggests that the worst of the deflationary cycle might be bottoming out.
