FXTRADING Economic Data Summary (Asia-Pacific | 02/27)

Signs of marginal cooling in the US labor market

The latest data suggest that the US labor market remains resilient, but some leading indicators have begun to show modest fluctuations. Initial jobless claims for the week ending February 21 rose to 212,000, an increase of 4,000 from the previous week and slightly above market expectations. In absolute terms, the level remains historically low, indicating that businesses are not showing a strong inclination to lay off workers and that labor demand has not weakened materially. From a trend perspective, the four-week moving average rose to 220,000, suggesting short-term volatility is gradually tilting toward a mild upward direction. At the same time, continuing claims declined to 1.833 million, reflecting that unemployed individuals are still able to find new jobs relatively quickly. Overall, the labor market has not entered a clear downturn, but tightness is gradually easing. FXTRADING believes the US labor market is moving from an overheated state toward a more balanced range. This moderate cooling helps ease inflation pressure and suggests there is no urgent need for the Federal Reserve to shift toward policy easing in the near term.

Eurozone inflation continues to decline

Eurozone inflation data for January further confirmed that price pressures are easing. Headline CPI rose 1.7% year-on-year, a noticeable decline from the previous reading, while core inflation also fell to 2.2%. This development indicates that the effects of earlier tightening are gradually taking hold, with both demand and cost pressures cooling. Structurally, services remain the main driver of inflation, contributing nearly half of the overall increase. Food, alcohol and tobacco continue to provide some support, while non-energy industrial goods have a limited impact. Energy prices remain the primary drag, exerting a clear downward pull on overall inflation. Across the broader European Union, inflation declined in the majority of member states compared with the previous month, pointing to a widespread cooling trend. FXTRADING believes Eurozone inflation is entering a sustained downward phase, but sticky service-sector costs will likely limit the pace of rate cuts, meaning the European Central Bank will maintain a cautious approach to any policy shift.

Underlying inflation pressures re-emerge in New Zealand

New Zealand‘s business confidence index edged lower in February, suggesting a slight softening in firms’ assessment of the macroeconomic environment. However, firms‘ own activity expectations improved, with the activity outlook index continuing to rise, indicating that operational confidence at the micro level remains solid and that the economy has not shown clear signs of weakening. More importantly, cost and pricing signals warrant attention. While short-term pricing intentions eased slightly, cost expectations rose significantly, approaching recent highs. Meanwhile, one-year inflation expectations climbed to 2.93%, and wage expectations moved back above 3%. This suggests that cost pressures at the corporate level continue to build, creating some divergence from the official view that inflation will steadily decline. FXTRADING believes New Zealand’s disinflation path still faces the risk of setbacks, as rising corporate costs and wage pressures may limit the central banks room for easing, making a clear shift toward a looser policy stance unlikely in the near term.

Conditions for Bank of Japan policy normalization are gradually maturing

Within the Bank of Japan, official communication on the policy outlook has begun to shift. Policymakers noted that external uncertainties that previously constrained decision-making are easing, particularly concerns related to trade and tariffs, providing greater room for policy adjustment. More importantly, the domestic inflation environment is undergoing a structural change. The long-standing difficulty in generating price increases is fading, medium- to long-term inflation expectations are rising, and corporate pricing behavior has become more proactive. At the same time, wage growth is expected to continue into 2026, which would support a more sustainable positive cycle between demand and prices. Against this backdrop, policymakers have begun laying the groundwork through forward communication. FXTRADING believes Japan is gradually emerging from its prolonged low-inflation era. If wages and prices form a virtuous cycle, the Bank of Japan will have the conditions necessary to continue advancing policy normalization.