Forex News

Commerzbank's Economic Research report highlights the ongoing struggles of the Chinese economy, with both the manufacturing and services sectors slipping into contraction territory. The official purchasing managers' indices for January 2026 indicate a weak start to the year, with GDP growth expected to slow to 4.0% in 2026. The report emphasizes the need for further economic stimulus measures from the government in Beijing.

Weak economic indicators signal challenges

"The official Chinese purchasing managers' indices (PMI) for January 2026 were worse than expected, signaling a weak start to the new year. Both the manufacturing and service sectors unexpectedly slipped into contraction territory (values below 50 points)."

"We expect GDP growth to slow to 4.0% in 2026 (2025: 5.0%). The weak January figures are increasing pressure on the government in Beijing to introduce further economic stimulus measures."

"Interestingly, the private RatingDog Manufacturing PMI (which surveys more smaller, private export-oriented companies) rose slightly from 50.1 to 50.3 points. This suggests that large state-owned enterprises in particular are suffering from weak domestic demand, while the export sector is showing some resilience."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

The Dollar has shown signs of recovery as precious metals decline, with expectations for positive data this week. ING analysts anticipate a decent payroll report, which could support further Dollar strength. The focus remains on how the Dollar will respond to upcoming economic data and short-term rate dynamics, notes Francesco Pesole from ING.

Dollar shows signs of strength

"With the dollar now having recovered to some degree, we think it will move more in line with data and short-term rates dynamics this week."

"Our call is for 80k payrolls and unchanged 4.4% unemployment, which can set the stage for a further stabilisation/recovery in the dollar."

"Before then, we’ll be observing closely how much interest there is in buying the dips in EUR/USD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Silver prices (XAG/USD) fell on Monday, according to FXStreet data. Silver trades at $77.45 per troy ounce, down 7.13% from the $83.40 it cost on Friday.

Silver prices have increased by 8.96% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 59.64 on Monday, up from 58.18 on Friday.

(An automation tool was used in creating this post.)

• Silver plunges after Trump’s nomination of Kevin Warsh as Fed Chair signaled a more cautious approach to easing.
• Silver’s safe-haven appeal fades as geopolitical tensions ease following US–Iran negotiations.
• Safe-haven demand for Silver also weakens amid cautious Fed commentary.

Silver price (XAG/USD) extends its losses after declining by 28.45% in the previous session, trading around $77.80 per troy ounce during the European hours on Monday. The non-interest-bearing Silver plunged after US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve (Fed) Chair.

Markets interpreted Warsh’s appointment as signaling a more disciplined and cautious approach to monetary easing. Traders also booked profits after a relentless rally that had pushed Silver to historic highs.

The safe-haven metals, including Silver, lose shine amid fading geopolitical concerns following the United States (US)–Iran negotiations. Over the weekend, US President Donald Trump said the United States “hopefully” would reach a deal with Iran, after Supreme Leader Ayatollah Ali Khamenei warned that a US attack could trigger a wider regional conflict.

The safe-haven demand for Silver also weakens amid cautious Fedspeak. St. Louis Fed President Alberto Musalem noted that additional rate cuts are unnecessary at this stage, describing the current 3.50%–3.75% policy rate range as broadly neutral. Echoing this sentiment, Atlanta Fed President Raphael Bostic called for patience, emphasizing that policy should remain somewhat restrictive. Risk sentiment improved after the US Senate reached an agreement to advance a government funding package, thereby averting a shutdown.

Silver prices could extend gains on a structural market deficit and the debasement trade, as investors shift from currencies and bonds into physical assets amid rising government debt concerns. Momentum buying amplified the rally, with heavy purchases by Chinese speculators adding froth before a sharp reversal intensified the sell-off.

• EUR/JPY is looking for direction around 183.50 after bouncing from lows sub-182.00 last week.
• Risk-aversion is weighing on the Euro, despite upbeat Eurozone data.
• Takaichi praised a weak Yen earlier on Monday.

The Euro is practically flat against the Yen on Monday. trading at 183.55 at the time of writing. The risk-off market is offsetting the positive impact from upbeat Eurozone and German manufacturing PMI figures, while the Yen remains on its back foot, following Japanese Prime Minister Sanae Takaichi’s comments praising Yen weakness.

Manufacturing activity in the Eurozone region improved to 49.5 in January, beyond the preliminary estimations of 49.4 from 48.8 in December, as reported by the HCOB Purchasing Managers’ Index Release.

Likewise, German Manufacturing PMI has been upgraded to 49.1, from preliminary estimations of a steady 48.7 reading, and data released earlier on Monday revealed that German Retail Sales increased against expectations in December.

Takaichi talks down the Yen

In Japan, Prime Minister Takainchi said earlier on Monday that a weak Japanese Yen poses an advantage to Japanese exporters, a rhetoric opposed to her finance minister’s efforts to stem Yen depreciation, which have included serious intervention warnings in recent weeks.

The Yen has also taken a beating from reports pointing to a landslide victory for Takaichi in the snap elections next week. Investors are wary that a stronger parliamentary support will encourage the prime minister to deepen her commitment to lower taxes and large economic stimulus policies, adding pressure on the country’s strained finances.

The Early Morning Reid Macro Strategy report from Deutsche Bank reveals that Silver experienced its largest daily fall since 1980, dropping 26.36%. The report discusses the implications of this volatility, linking it to the recent nomination of Kevin Warsh as Fed Chair, which has heightened hawkish sentiment. The report also notes that Silver's price has not kept pace with inflation over the long term.

Historic decline amid market turbulence

"Silver saw its largest daily fall since 1980 (36% at the intraday lows, 26.3% at the close)."

"With the overnight moves, Silver is now around $5 below its real adjusted level from 1790—something we explored in last Monday’s CoTD."

"Even incorporating the dramatic 1980 boom and bust and the recent surge, Silver has failed to outperform inflation over more than 230 years of data."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Societe Generale's report argues the European Central Bank (ECB) is likely to maintain interest rates amidst mixed inflation signals. The report highlights that euro area inflation is expected to dip slightly below target in January, with a forecast of 1.8%. The ECB is positioned to keep rates unchanged, focusing on the stronger Euro while not anticipating significant shifts in forecasts due to the current economic landscape.

ECB maintains steady rates amid inflation concerns

"With core inflation still above the 2% line and decent growth, the ECB is well positioned to keep rates unchanged at its Thursday meeting and to keep its options open for the near future."

"Our forecast for the headline rate is 1.8% (after 1.9% in December) while we see core inflation stable at 2.3%."

"At this stage, we don’t think the stronger euro will be enough of a factor to shift the ECB’s forecasts."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)