Week’s main events (February 02 – February 06)

On Wednesday, markets are expecting high volatility ahead of the release of the US Non-Farm Payrolls (NFP) report, which was postponed from last Friday. Non-farm payrolls are forecast to rise by 70,000 after increasing by 50,000 in December, while the unemployment rate is expected to remain stable at 4.4%, close to the four-year high of 4.5% in November. Average hourly earnings are forecast to rise 0.3% m/m and 3.6% y/y, slowing from 3.8% in December, indicating continued strength in the labor market but with a slowdown in hiring.

Weak data could increase pressure on the US dollar, reinforcing expectations of an economic slowdown and possible easing of the Fed’s monetary policy as early as the first half of 2026, which would negatively affect the currency and stock indices. The market reaction will depend on how much the actual figures deviate from forecasts, especially the unemployment rate and wage growth. At the same time, investors will be watching inflation data in China: consumer prices are expected to grow by 0.4% y/y, down from 0.8%, while the producer price index is expected to rise from 1.9% to 1.5%, which may slightly ease deflationary pressures and have a short-term impact on Chinese indices. It’s a bank holiday in Japan.

On Thursday, markets will focus on data from the British economy, including GDP, industrial production, and the trade balance. UK GDP is expected to grow by 0.2% in Q4, slightly exceeding the 0.1% figure for the previous quarter, while industrial production growth is forecast to stall after a 1.1% increase in December. Given the Bank of England’s extremely close decision (5 votes to keep rates unchanged versus 4 to cut), weak GDP figures could reinforce expectations of a rate cut at the next meeting, putting pressure on the pound. At the same time, commodity market traders will be watching natural gas inventories, which have been highly volatile in recent weeks due to the northern cyclone in the United States. A reduction in inventories amid high demand could support gas prices again.

On Friday, markets will focus on two key publications. During the European session, attention will focus on Swiss inflation data. As the Swiss franc is in demand as a safe-haven asset and the Swiss National Bank (SNB) maintains a zero interest rate, with the prospect of a transition to negative rates, a decline in inflation could reinforce expectations of monetary policy easing and support the CHF. Before the US session opens, US CPI data for January will be released. Annual inflation is forecast to decline from 2.7% to 2.5%, and core inflation from 2.6% to 2.5%. A weaker-than-expected reading will reinforce expectations of a Fed rate cut, which will have a positive impact on stock indices by reducing financing costs and supporting risky assets. The eurozone GDP report and unemployment data will also attract investors. GDP is expected to grow by 0.3% quarterly, while the unemployment rate is expected to remain at record lows. This will provide short-term support for the euro, helping the currency recover amid moderate economic growth. Still, the impact is likely to be limited given other global factors such as Fed actions and geopolitical risks.