FX markets are navigating a pivotal mix of US labour data, Tokyo inflation figures, and heightened UK political risk. With the dollar reacting to jobless claims, the yen sensitive to CPI shifts, and sterling trading with an election premium, volatility remains close to the surface.
Key Highlight
- The United States and Iran are poised to restart talks for a third session
Market Recap
Currency markets traded within relatively tight ranges, although the US dollar edged slightly softer overall. The Japanese yen came under noticeable pressure, underperforming against its major peers.
Sterling managed to hold onto gains as broader risk appetite improved, but upside momentum remained limited due to ongoing political uncertainty. Meanwhile, the Australian dollar stood out as one of the stronger performers, supported by comparatively resilient economic data and increasing expectations of further rate tightening.
All of this unfolded against a wider backdrop of tariff-related uncertainty and diverging global monetary policy paths — factors that continue to shape near-term FX direction.
Market Overview:
Today’s FX direction will largely be shaped by US employment data, inflation numbers out of Tokyo, and political developments in the UK.
In the United States, Initial Jobless Claims (previously 206k) will provide another read on labour market strength. A noticeable increase in claims could pressure the dollar, signalling potential cracks in economic momentum. However, if claims remain contained, it would reinforce expectations that the Federal Reserve can keep rates higher for longer — offering near-term support to the USD.
Geopolitics also remains on the radar, with the US and Iran due to begin a third round of nuclear discussions in Geneva, adding an additional layer of uncertainty for markets.
In Japan, attention turns to Tokyo inflation figures, which are expected to moderate from previous readings. Softer data would likely ease pressure on the Bank of Japan to tighten policy further, potentially weighing on the yen. Conversely, any upside surprise could quickly revive rate hike expectations and lend JPY support.
Sterling has pulled back from recent highs as markets await the outcome of the Gorton and Denton by-elections. With current polling suggesting a strong Green showing, GBP continues to trade with a degree of political risk premium. A result favouring the Greens could prompt modest downside pressure, while a Labour win would likely be viewed as more stabilising. As a result, GBP pairs may remain sensitive to headlines in the short term.
24th February 2026
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