ING Comments on Euro, Swiss Franc, Czech Republic's Koruna

0854 GMT - The Swiss franc could extend its recent decline if optimism over a Ukraine-Russia ceasefire deal reduces safe-haven demand and data Thursday show Swiss inflation eased in January, ING analyst Chris Turner says in a note. A softer inflation print Thursday and the prospect of even lower inflation next quarter, as forecast by the Swiss National Bank, could weaken the franc, he says. "We could see [EUR/CHF] 0.9500-0.9520 this week as investors reprice for some positive Ukraine news out of this weekend's Munich security conference." EUR/CHF falls 0.1% 0.9458 after hitting a 12-day high of 0.9473 Tuesday, according to FactSet. (renae.dyer@wsj.com)

0840 GMT - An uncertain external backdrop limits Bank Indonesia's room to keep cutting rates, Nomura analysts say. After an unexpected 25-basis-point cut in January, the analysts continue to sense rising market concerns that BI is turning pro-growth too early, potentially undermining its forex stability goal. Despite lower inflation, they think BI will hold rates for the rest of 2025, as further cuts could add to balance-of-payment pressures as the external environment remains uncertain and trade tensions rise. Protectionism, declining investment spending and persistently weak consumer sentiment pose downside risks to growth, Euben Paracuelles and Nabila Amani write. They expect GDP growth to slow to 4.9% in 2025 from 5.0% in 2024. (fabiana.negrinochoa@wsj.com)

0818 GMT - The outperformance of eurozone equities this year, with several indexes hitting record highs, is unlikely to offer much support to the euro, ING analyst Chris Turner says in a note. Periods of rotation into eurozone equities have helped the euro in the past as equity investments are largely non-foreign exchange hedged, he says. "Frankly, it's hard to see such optimism coming through for the euro today." Growth remains weak, fiscal policy support is lacking and the European Central Bank could cut interest rates by another 100 basis points this year. That means any recovery in the euro could be limited. The euro rises 0.1% to $1.0376.(renae.dyer@wsj.com)

0755 GMT - The U.S. dollar is likely in a consolidation phase versus its Singapore counterpart, says Quek Ser Leang of UOB's Global Economics & Markets Research in a report. After failing to sustain the build-up in upward momentum, the currency pair has traded sideways, the markets strategist notes. Also, exponential moving averages on the daily chart are horizontal, indicating a lack of direction, while the "contracting moving average envelope" shows USD/SGD is consolidating, the strategist says. The currency pair must break decisively below the 1.3445-1.3370 support zone or above the 1.3675-1.3751 resistance area before a directional trend can be expected, the strategist adds. USD/SGD is down 0.1% at 1.3535. (ronnie.harui@wsj.com)

0751 GMT - The dollar trades steady as investors weigh remarks from Federal Reserve Chair Jerome Powell and look ahead to U.S. inflation data due at 1330 GMT. In a testimony before the Senate Banking Committee Tuesday, Powell said the Fed is in no hurry to cut interest rates. He will address the House Financial Services Committee at 1500 GMT. Softer-than-expected inflation data would soothe concerns about price pressures and weaken the dollar, Swissquote Bank analyst Ipek Ozkardeskaya says in a note. Conversely, a stronger-than-expected set of inflation figures could back a further rise in U.S. yields and the dollar, and weigh on risk appetite, she says. The DXY dollar index trades at 108.010. (renae.dyer@wsj.com)

0733 GMT - The FTSE 100 is expected to open little changed, according to IG. The index closed nine points higher, or 0.1%, to 8777 points Tuesday. In a testimony before the Senate Banking Committee Tuesday, Federal Reserve Chair Jerome Powell said the Fed is in no hurry to cut interest rates given a strong economy and inflation above the Fed's 2% target. He is due to speak to the House Financial Services Committee at 1500 GMT. The market will also closely monitor U.S. inflation data at 1330 GMT. Another uptick in inflation would potentially "upset market expectations for the Fed to still cut this year," Deutsche Bank analysts say in a note. (renae.dyer@wsj.com)

0726 GMT - The Chinese central bank's planned issuance of a combined CNY60 billion in renminbi bills via the Hong Kong Monetary Authority is likely aimed at stabilizing the yuan, DHF Capital's Bas Kooijman says in an email. The PBOC earlier announced a tender of CNY40 billion in three-month bills and CNY20 billion in one-year bills due to held Friday. However, the yuan's outlook remains bearish, says the CEO and asset manager. Further weakness is likely, depending on global trade conditions and U.S.-China relations, Kooijman adds. The 10-year Chinese government bond yield is likely to stay subdued, as the PBOC may need to maintain accommodative policies to support the economy, he says. USD/CNY is steady at 7.3089; USD/CNH is little changed at 7.3131. (ronnie.harui@wsj.com)

0707 GMT - The issuance of long-dated government bonds will be heavy in the eurozone on Wednesday, potentially driving yields higher with upside risks to yields from U.S. CPI data as well, says Commerzbank Research's Michael Leister in a note. "Combined with heavy euro-duration supply, we stick with our short bias," the head of interest rates strategy says. France is set to syndicate a new 30-year OAT with maturity in 2056, while Germany will auction a combined 2.5 billion euros in 2050- and 2054-dated Bunds. In addition, Portugal's auction will also focus on long-end bonds with maturities in 2034, 2042 and 2052, while Greece will auction a 2035-dated bond. (emese.bartha@wsj.com)

0659 GMT - Japan's benchmark Nikkei Stock Average closed higher, supported by industrial and some electronics stocks. The index rose 0.4% to 38963.70, supported by a weaker yen that boosted expectations of better earnings potential for export-driven companies. Among the gainers, Mitsubishi Heavy Industries added 0.5%, and Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha gained 1.8% and 3.6%, respectively. In electronics, Canon and Nikon rose nearly 4.0% and 2.7% each. USD/JPY was at 153.637. (venkat.pr@wsj.com)

0657 GMT - U.S. Treasury yields edge higher, extending the previous day's move, ahead of January inflation data at 1330 GMT. "Even if the annual rate falls back, the threats of Trump tariffs and strong growth continue to be an upside risk to inflation," says SEB Research strategist Olle Holmgren in a note. U.S. Treasury yields rose Tuesday, more so on the long end, as Federal Reserve Chair Jerome Powell repeated at a Senate hearing that the Fed doesn't need to be in a hurry to cut interest rates. The 2- and 10-year U.S. Treasury yields rise 1 basis point to 4.300% and 4.547%, respectively, according to Tradeweb. (emese.bartha@wsj.com)

0651 GMT - U.S. core inflation has a good chance of getting quite close to the Federal Reserve's target by the end of the year, though it may be a slow and bumpy process, BeiChen Lin at Russell Investments says in a note. Some measures of consumer inflation expectations have recently risen as a result of anxiety surrounding tariffs. However, it's worth noting that tariffs generally represent a one-time shock to prices, he says. "So while the imposition of tariffs may push out when inflation returns to the Fed's target, it's still likely to be a temporary hiccup." U.S. CPI data for January is due at 1330 GMT. The on-year headline inflation is expected to stay unchanged at 2.9%, while the annual core CPI is expected at 3.1% in January, down from 3.2% in December, according to The Wall Street Journal's poll. (emese.bartha@wsj.com)

0513 GMT - India's currency and stock market are set for further weakness, Capital Economics' Shivaan Tandon says in commentary. A slowdown in the domestic economy, coped with unfavorable external conditions, have led to weakness in India's currency and declines in its stock market, the economist says. Despite potential interventions by the RBI, the central bank may not stand in the way of gradual rupee weakness in 2025, predicts Capital Economics, as domestic growth stays soft and inflation continues to slow. The risk of further rupee weakness could also hinder foreigners from investing in India's stock market, the economist adds. Capital Economics now expects the rupee to end the year at 90.00 against the U.S. dollar, versus its previous forecast of 87.00. The USD/INR is 0.1% lower at 86.73. (ronnie.harui@wsj.com)

remains offered as the weekend announcement over steel tariffs was the first to hit the European Union, said ING.

The EU is now bracing for other sectors, such as autos, to be tariffed, wrote the bank in a note. There is little justification for the EU bloc to be hit with reciprocal tariffs since the EU tariff regime is relatively low.

However, presumably, European politicians are more fearful about broader tariffs in April once the U.S. Commerce Department delivers its report on why the U.S. runs large trade deficits.

Whatever Tuesday's news on tariffs, wide rate spreads justify continuing to trade near 1.03 and undermine the need for any corrective bounce, wrote ING in a note.

The decoupling of the eurozone from U.S. rate spreads can see differentials stay wide, if not move wider over the coming months. Combined with rising natural gas prices, expect to stay offered, stated the bank. A decline towards the 1.0250/60 range, or potentially lower, seems probable ahead of the new tariffs.

Even though is range-bound, ING us starting to see some decent moves lower in and . In , two-year swap differentials have moved in favor of Sweden's krona (SK) as the European Central Bank is priced for another 88bps of easing this year, while the Riksbank is barely expected to cut once.

But the story seems larger than rate differentials, and like its Central and Eastern European (CEE) peers, the krona is shaking off the rise in gas prices. This resilience may be driven by growing optimism about a potential ceasefire deal in Ukraine, pointed out ING. Expectations are that the U.S. will reveal more of its plans at a Munich security conference this weekend - although any breakthrough with Russia would be a major surprise and is not priced in FX markets.

For now, however, can drift down to the 11.15 area. And Norway, benefiting hugely from the rise in energy prices, can see test and possibly break 11.50.

Former United Kingdom Bank of England Monetary Policy Committee arch-hawk and now arch-dove, Catherine Mann, speaks at 930 a.m.CET on Tuesday. ING is all interested to hear why she flipped her voting intentions at last week's BoE meeting.

An interview given by Mann to the Financial Times published Tuesday looks to largely have answered that question, added the bank. Her concern is that demand conditions are weakening, corporate pricing power is fading and there is a risk of a 'non-linear' drop in employment.

Further comments along those lines on Tuesday could see the markets firm up pricing of three further 25bps BoE cuts this year. Currently the market prices just 66bp. ING thinks is more vulnerable than , however.

This is because the euro could (EUR) get hit should the U.S. turn its attention to the EU auto sector. 1.2250 looks like the near-term target for .

The opening of the week was positive for the CEE region, added ING. Speculation about peace talks between Ukraine and Russia is filtering through to the markets regardless of the details of a possible deal.

As such, the CEE market can ignore a stronger US dollar (USD) or higher gas prices or threats of trade wars. Long positioning has been building in Poland's zloty (PLN) and Hungary's Forint (HUF) in particular for some time now so ING doesn't like to chase this rally, but for now, nothing prevents EUR-crosses going a little lower.

This should also have a positive impact on fixed-income assets where the bank can see a decent rally as well despite the negative fiscal policy picture and heavy bond issuance. The key will be the weekend security conference in Munich, which could reveal how close the sides are to some first realistic draft agreement, deciding on further direction for CEE markets.

The repricing of the Federal Reserve cycle after the strong United States jobs data has seen EUR:USD two-year swap rate differentials widen beyond 190bps, said ING.

The bank expects those differentials to stay near 200bps for most of the year and to keep under pressure.

Friday's release of the European Central Bank's staff paper on the neutral interest rate had little impact on the pricing of the ECB cycle, stated ING.

The threat of U.S. tariffs coming to Europe this week has seen drop close to 1.03 again, wrote the bank in a note. A move back to 1.0225 is possible if there are 'reciprocal' tariffs from the European Union or some of the major European countries not in the bloc.

Wednesday's U.S. consumer price index release is another negative event risk for , pointed out ING. If it can survive the tariff risk and the CPI, the run-up into Friday could look a little better for as investors turn their attention to the Munich security conference. Here the bank is expecting to hear more about the U.S. proposed ceasefire deal in the Russia-Ukraine war.

A surprise deal would certainly be a positive for the European currency.

The data calendar is light on Monday — just ECB President Christine Lagarde in parliament at 3 p.m. CET.

is offered again early Monday as financial markets are dominated once more by the tariff story, added the bank. Markets expect the EU to have more to lose than the United Kingom on tariffs.

ING cannot rule out another drop in to the 0.8250 area should tariffs hit the EU in the early part of this week. However, Tuesday could see the focus flip back to the Bank of England easing cycle. Former arch-hawk — potentially now arch-dove — Catherine Mann delivers a speech on the U.K. outlook.

Understanding why she voted for a 50bps rate cut last week could shed light on whether others will want to follow suit. A soft Q4 U.K. gross domestic product figure out on Thursday could also add to a dovish narrative.

should be the focus for any sterling downside, however. ING favors heading down towards the lower end of a 1.2250-1.2500 trading range.

The Swiss franc could appreciate in coming months as the Swiss National Bank is unlikely to return to negative interest rates, Commerzbank analyst Michael Pfister says in a note. The SNB will probably end its rate-cutting cycle with a policy rate of 0.0%, compared to 0.5% currently, he says. Inflation has eased but should stabilize above the lower limit of the SNB's 0%-2% target range. Switzerland's economic growth also continues to be much stronger than of the eurozone. At the same time, global uncertainties "will not disappear completely this year" and this should drive safe-haven flows to the franc. Commerzbank expects EUR/CHF to fall to 0.91 by year-end, from 0.9424 currently. (renae.dyer@wsj.com)

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1002 ET - The Swiss franc could appreciate in coming months as the Swiss National Bank is unlikely to return to negative interest rates, Commerzbank analyst Michael Pfister says in a note. The SNB will probably end its rate-cutting cycle with a policy rate of 0.0%, compared to 0.5% currently, he says. Inflation has eased but should stabilize above the lower limit of the SNB's 0%-2% target range. Switzerland's economic growth also continues to be much stronger than of the eurozone. At the same time, global uncertainties "will not disappear completely this year" and this should drive safe-haven flows to the franc. Commerzbank expects EUR/CHF to fall to 0.91 by year-end, from 0.9424 currently. (renae.dyer@wsj.com)

0957 ET - For the November-to-January period, employment in Canada rises 211,000, or an average 70,000 a month--the type of job creation that's generally tied to period of healthy growth, says BMO Capital Markets economist Doug Porter. The January data were full of strong underlying details, from a hefty 0.9% rise in hours worked and 57,000 rise in private-sector employment. "If we weren't all absorbed with the possibility of a trade war, we would be talking about the comeback in the Canadian domestic economy in recent months," Porter writes, adding this is yet another sign that aggressive rate cuts last year are beginning to bear fruit. However, the prospect of trade conflict will hover over Canada, so that keeps the possibility alive for another rate cut in March. (Paul.Vieira@wsj.com; @paulvieira)

0948 ET - Yields on U.K. government bonds rise, tracking U.S. Treasury yields, following U.S. non-farm payrolls data. These showed a resilient labor market and increased the chances of U.S. interest rates staying higher for longer. The U.S unemployment rate fell to 4.0% in January from 4.1% in December, even as non-farm payrolls came in at 143,000, weaker than the 169,000 forecast by economists in a WSJ poll. "With the unemployment rate at just 4%...the Fed will be on hold for several more months," says ING economist James Knightley in a note. The 10-year gilt yield rises to 4.491%, from 4.448% before the data, Tradeweb data show. The 10-year U.S. Treasury yield climbs to 4.493%, from 4.446% prior to the data. (miriam.mukuru@wsj.com)

0941 ET - The dollar reacted modestly to the latest U.S. jobs data as the figures are unlikely to alter the market's Federal Reserve interest rate expectations, XTB's Kathleen Brooks says in a note. Nonfarm payrolls were weaker than predicted in January but the unemployment rate unexpectedly fell and wage growth exceeded forecasts. Downgrades to annual benchmark revisions weren't sizeable, suggesting the labor market remains strong with only a mild softening, she says. "We do not think that the labor market data shifts the dial for the Fed." The DXY dollar index rises 0.1% to 107.830, compared to 107.810 before the data. (renae.dyer@wsj.com)

0935 ET - Investors are boosting the odds of a longer pause on interest rate cuts by the Fed, following January payrolls. Although job creation declined to 143,000 from 307,000, past figures were revised up. The unemployment rate surprisingly declined to 4% from 4.1% and earnings growth accelerated, all giving reasons to believe the Fed would refrain from cutting for a while. A hold in March is now priced at 91% odds, up from 84% yesterday, on the CME's FedWatch tool. Odds of only one cut or less by December are 49%, up from 42%. (paulo.trevisani@wsj.com; @ptrevisani)

0930 ET - Solid Canadian job growth in January gives the Bank of Canada some flexibility should President Trump refrain from hefty tariffs on Canadian and Mexican imports in early March, says Desjardins Group economist Royce Mendes. Canada added a net 76,000 jobs, well above market expectations, with most of the hiring in the private sector. The unemployment rate fell again, to 6.6% in January after peaking at 6.9% in November. Absent hefty tariffs, Mendes says BOC might choose to keep its policy rate unchanged in March, noting BOC Gov. Tiff Macklem delivered "somewhat hawkish" remarks Thursday at a conference hosted by Bank for International Settlements. (paul.vieira@wsj.com; @paulvieira)

0930 ET - Revisions in payrolls data show stronger job creation than previously reported, indicating that U.S. labor markets are tighter than the January report could imply. Last month's payrolls were 143,000, while economists surveyed by The Wall Street Journal forecast 169,000. But the December figure was revised up by 51,000 to 307,000. November's was adjusted upward by 49,000 to 261,000. Average hourly earnings growth accelerated to 0.5% from 0.3%, taking the annual gain slightly above 4%. Economists expected a slowdown on earnings. (paulo.trevisani@wsj.com; @ptrevisani)

0921 ET - The U.K. real estate sector is showing signs of recovery, especially since the Bank of England first cut interest rates last summer, Zurich Insurance Group says in its analysis of the 2025 outlook for real-estate investment. "The momentum in the U.K. market is encouraging, with listed real estate companies staging a meaningful recovery," Global Head of Real Estate & Strategy Andrew Angeli writes. The government's focus on fiscal expansion and real wage growth is expected to support the consumer sector and housing market, the analysis says. (nina.kienle@wsj.com)

0911 ET - The Bureau of Labor Statistics says that California wildfires and severe winter weather in much of the U.S. "had no discernible effect on national payroll employment, hours, and earnings" in January payrolls. The report showed a larger-than-expected drop in job creation last month, to 143,000, less than half as much as in December. Average hourly earnings rose 0.5% in the month, compared to a 0.3% pace in December. The BLS says data are collected through the 12th of the month and employees who were paid even for only one hour during the week are counted in the payroll figures. (paulo.trevisani@wsj.com; @ptrevisani)

0909 ET - Canada surprised with a third-straight solid hiring performance in January, led by a strong advance from manufacturers. CIBC Capital Markets notes the factory sector would be hardest hit in the event President Trump slaps a hefty 25% tariff on Canadian imports starting in early March. The 1.8% month-over-month gain in manufacturing hiring is unlikely to be repeated, CIBC says. Even with solid performances over the past three months, CIBC says the unemployment rate, at 6.6%, remains elevated, and consistent with a labor market with plenty of spare capacity. Lower interest rates will be needed to assure that slack is absorbed, the firm says. (Paul.Vieira@wsj.com, @paulvieira)

0907 ET - Canada's job change rate, a measure of workers who remained employed one month to the next but who changed jobs, sat at 0.4% last month. That compares with 0.5% a year earlier and a prepandemic average for January from 2017 to 2019 of 0.7%. Statistics Canada data also shows 6.1% of permanent employees in January reported they were planning to leave their job in the next 12 months, down from 6.9% the same month last year. That likely reflects still-soft economic conditions, which generally heighten a worker's desire for job stability. While the jobless rate in Canada fell for a second straight month in January to 6.6%, it remains higher than the 6.1% rate a year earlier. (robb.stewart@wsj.com; @RobbMStewart)

0905 ET - Reasons for unemployment didn't change much in January--these numbers have been pretty stable for more than a year. Last month, 47% of unemployed people were out of work because they either lost a job, or finished temporary employment. 31% of the unemployed were looking for work after a previous break from working. 10% of workers are new entrants to the labor market looking for work for the first time. And 13% of unemployed people left their last job voluntarily while searching for a new one. (matt.grossman@wsj.com; @mattgrossman)

The European Central Bank will publish its staff revision on the neutral rate on Friday, noted ING.

President Christine Lagarde said last week that r-star is "a range that does not give a guideline or a destination" and Governing Council member Olli Rehn added Thursday that "we should not constrain our freedom of action because of a theoretical concept."

That said, with the next couple of cuts not particularly up for debate, a lot of the action in pricing is focused on the terminal rate, wrote ING in a note. The scope and timing of United States trade tariffs would have a big say, but while markets await President Donald Trump's move on the European Union, Friday's report is all markets will get in terms of terminal rate guidance, and ING expects a euro reaction.

Based on Rehn's comments and the fact that r-star projections are model-based — embedding significantly higher inflation than in the past — the bank's best guess is that Friday's note will show a relatively high rate and send a hawkish signal. When adding downside risks for U.S. payrolls due later Friday, ING favors a new leg higher in to retest the 1.044 Wednesday highs.

Thursday's Czech central bank (CNB) meeting brought several surprises, stated ING. Ahead of the meeting, data showed that inflation slowed less than expected, dropping to 2.8% year-on-year from 3.0% in December, mainly due to food prices. Investors won't know the core inflation numbers until next week but the breakdown from the flash report suggests a "weak" number.

However, the CNB did cut rates by 25bps to 3.75%. The central bank also unveiled a new forecast that is more or less in line with ING's expectations. The gross domestic product outlook was revised down closer to the bank's forecast, and inflation were revised down, while the rates path is slightly higher this year but lower next year.

The press conference was accompanied by the usual hawkish tone, but ING found the tone slightly softer compared with previous meetings. The CNB is visibly open to further rate cuts, but the bank also knows that the Board believes it's close to the end of the cutting cycle.

Markets remained essentially flat in the rates space however the koruna (CZK) did rally some, much like the rest of the region. Although ING dropped its bearish bias on Thursday, should remain higher in the 25.100-200 range.

Given weaker inflation, ING predicts rate cuts to be on the table for the next meeting, which should keep the CZK at current levels.

Poland's central bank (NBP) press conference offered little new information compared with previous meetings, added ING. However, the lack of new developments suggests a less hawkish stance for markets.

As such, the discussion of rate cuts was enough for markets to rally a bit. Although investors didn't hear anything new on the timing, markets did raise the pricing of rate cuts with the first move in July and a total of 75bps of cuts this year. This roughly matches ING's expectations of 50bps-100bps in the second half of the year.

Rates rallied after the press conference on Thursday, but at the same time, foreign exchange saw further support. Similar to Central and Eastern European (CEE) peers, Poland's zloty (PLN) saw further gains despite a lower and narrower differential after rates rallied.

CEE had a strong week overall, possibly due to the mention of progress on a Ukraine deal with Russia from the new U.S. administration, noted the bank. Investors may know the details next week.

However, the simultaneous rally in foreign exchange and rates suggests that positive sentiment on this is likely driving the move. reached new lows on Thursday, and ING doesn't expect changes anytime soon.