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Core inflation accelerated faster than expected in January, while Japan’s service-led recovery continued. The Bank of Japan (BoJ) is expected to deliver a 25 bp rate hike in May, though a sharp rise in the JPY complicates the economic outlook.

The EU’s vision on Agriculture and Food is clearly farmer-centric. But what's in the document – and equally, what isn't – provides valuable guidance for food manufacturers, traders and retailers about the direction of EU policy towards 2040. With limited guidance on how to achieve emission cuts, the Commission remains open to a range of solutions.

Prospects of increased EU military spending are keeping bond yields under upward pressure, this time compounded by hawkish comments from the ECB. Hotter UK CPI figures on Wednesday also pushed in the direction of a more hawkish adjustment of BoE rate cut expectations.

The EU agreed on a 16th sanctions package against Russia, which includes a ban on aluminium imports and additional curbs on Russian vessels

The standout move in overnight FX markets has been the drop in USD/JPY close to 150 as traders get excited about another hike from the Bank of Japan. Expect USD/JPY to stay offered today before tomorrow's January CPI data release. Elsewhere, we think a new fiscal risk premium could emerge in the euro as national bond markets take the strain of defence spending.

The Japanese economy continues to grow, faster than the BoJ's forecast. Given the upside risks to higher inflation, the BoJ is likely to raise rates as early as May if the Shunto wage negotation results are as strong as last year.

Oil prices are under pressure this morning with talk of a potential restart in oil exports from Iraq’s Kurdistan region.

The dollar continues to trade on the softer side after Friday's soft US January retail sales questioned the strength of US activity. USD/JPY has been in the vanguard of this dollar correction and Japan's stronger GDP data is helping today.

Three weeks into office, President Trump advanced his 'America First' trade agenda by investigating reciprocal tariffs and scrutinising the VAT system, viewing it as a tariff. While countries could lower tariffs to US levels to avoid new tariffs, abolishing the VAT system is unlikely.