Financial & Forex Market Recap: Feb. 2, 2026

U.S. equities rallied to near record highs on Monday as a surprisingly strong manufacturing report bolstered economic optimism, while gold extended losses following last week’s historic rout triggered by President Trump’s nomination of Kevin Warsh as the next Federal Reserve chair.

Check out the forex news and economic updates you may have missed in the latest trading session!

Forex News Headlines & Data:

• The latest Summary of Opinions from the Bank of Japan’s January 22–23, 2026 meeting shows policymakers increasingly concerned that yen-driven inflation pressures and still “considerably accommodative” financial conditions argue for further rate hikes if the current economic and price outlook holds. While the policy rate was left unchanged at 0.75%, several members stressed that the BOJ should not take too much time assessing past hikes and must be ready to raise rates in a timely and appropriate manner to avoid falling behind the curve.
• Australia S&P Global Manufacturing PMI Final for January 2026: 52.3 (52.4 forecast; 51.6 previous)
• Australia ANZ-Indeed Job Ads for January 2026: 4.4% m/m (-0.1% m/m forecast; -0.5% m/m previous)
• Japan S&P Global Manufacturing PMI Final for January 2026: 51.5 (51.5 forecast; 50.0 previous)
• Australia TD-MI Inflation Gauge for January 2026: 0.2% m/m (1.0% m/m previous)
• China RatingDog Manufacturing PMI for January 2026: 50.3 (50.5 forecast; 50.1 previous)
• Germany Retail Sales for December 2025: 0.1% m/m (0.5% m/m forecast; -0.6% m/m previous); 1.5% y/y (1.5% y/y forecast; 1.1% y/y previous)
• U.K. Nationwide Housing Prices for January 2026: 0.3% (0.6% forecast; -0.4% previous); 1.0% y/y (1.5% y/y forecast; 0.6% y/y previous)
• Swiss Retail Sales for December 2025: 1.0% m/m (0.4% m/m forecast; 0.1% m/m previous); 2.9% y/y (2.1% y/y forecast; 2.3% y/y previous)
• Swiss procure.ch Manufacturing PMI for January 2026: 48.8 (46.2 forecast; 45.8 previous)
• Euro area HCOB Manufacturing PMI Final for January 2026: 49.5 (49.4 forecast; 48.8 previous)
  • Germany HCOB Manufacturing PMI Final for January 2026: 49.1 (48.7 forecast; 47.0 previous)
• U.K. S&P Global Manufacturing PMI Final for January 2026: 51.8 (51.6 forecast; 50.6 previous)
• Canada S&P Global Manufacturing PMI for January 2026: 50.4 (48.9 forecast; 48.6 previous)
• U.S. ISM Manufacturing PMI for January 2026: 52.6 (48.2 forecast; 47.9 previous)
• President Trump announced on Monday that the United States and India reached a trade deal. Prime Minister Narendra Modi committed to stop buying Russian oil and to buy substantially more from the U.S. and potentially Venezuela. Trump stated that the U.S. will charge a reduced reciprocal tariff on India, lowering it from 25% to 18% effective immediately, while India committed to reduce its tariffs and non-tariff barriers against the U.S. to zero and to purchase over $500 billion of U.S. energy, technology, agricultural products, and other goods.

Broad Market Price Action:

Monday’s session brought an emphatic reversal in market sentiment as a blockbuster U.S. manufacturing report transformed the narrative from recession fears to renewed economic optimism, pushing equities near record highs while precious metals continued their dramatic correction from last week’s Kevin Warsh-driven selloff.

U.S. equities dipped then rallied on the session, with the S&P 500 climbing 0.57% to close around 6,974. The index’s advance accelerated following the 10:00 am ET ISM manufacturing release, with gains extending through the afternoon session as traders embraced the report’s implications for corporate earnings and economic momentum. The rally appeared broad-based, with economically sensitive sectors leading gains as manufacturing activity expanded for the first time in 12 months. Technology shares participated modestly in the advance, while small-cap stocks outperformed, reflecting optimism that a manufacturing recovery could broaden economic growth.

The ISM manufacturing PMI surged to 52.6 in January, dramatically exceeding the 48.2 consensus and marking the strongest reading since August 2022. The report showed expansion across key components, with new orders jumping to 57.1 from 47.7 and production rising to 55.9 from 50.7. Survey respondents highlighted post-holiday restocking and pre-tariff purchasing as drivers behind the demand spike, though employment remained in contraction at 48.1 despite improving from December’s 44.9. The magnitude of the surprise likely contributed to the equity market’s enthusiasm, as traders interpreted the data as evidence that manufacturing was emerging from a prolonged downturn.

WTI crude oil declined roughly 5.00% to settle near $62.0, surrendering recent gains in the session’s most dramatic move. The selloff appeared to correlate with Trump’s weekend comments that Iran was “seriously talking” with Washington, signaling a de-escalation of tensions that had driven oil to multi-month highs last week on fears of potential U.S. military strikes. The easing of geopolitical risk premium likely overshadowed OPEC+’s Sunday confirmation that March output would remain steady, a decision already announced in November and offering no guidance beyond the first quarter. The return of previously shut-in production from the U.S. and Kazakhstan, combined with expectations of oversupply throughout 2026, added to the bearish sentiment as traders refocused on fundamental supply-demand dynamics.

Gold continued its slide from last week’s historic rout, falling 1.50% to trade around $4,651. The precious metal’s weakness appeared to reflect ongoing position unwinding following Friday’s near-10% plunge that was triggered by Trump’s nomination of Kevin Warsh as the next Fed chair. Markets view Warsh as more hawkish on the Fed’s balance sheet than other candidates, undermining the currency debasement narrative that had propelled gold to record highs above $5,600 just days earlier. The strong ISM manufacturing data likely added pressure to gold, as improving economic activity reduces safe-haven demand while reinforcing expectations that the Fed can maintain higher rates for longer.

Bitcoin rallied 1.76% to trade near $78,251, reversing earlier weakness as the cryptocurrency stabilized following last week’s correction. The move appeared disconnected from traditional risk assets, possibly reflecting technical support levels or renewed interest from traders viewing recent weakness as a buying opportunity. Despite the rebound, Bitcoin remained well below its recent highs as the broader narrative around alternative assets continued to face scrutiny following the precious metals selloff.

Treasury yields rose 0.87% to approximately 4.28% on the 10-year note. Yields climbed steadily through the session, accelerating following the 10:00 am ET ISM release as traders reduced expectations for near-term Fed rate cuts. The bond market reaction likely reflected reassessment of the Fed’s policy trajectory in light of the manufacturing sector’s surprising strength, which reduces the urgency for monetary easing. The move higher in yields occurred despite Warsh being viewed as potentially dovish on short-term rate policy, suggesting that immediate growth concerns now outweigh longer-term Fed leadership considerations.

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FX Market Behavior: U.S. Dollar vs. Majors

The U.S. dollar posted a strong performance on Monday, closing as the best-performing major currency on a daily basis after navigating a session characterized by major economic data releases and geopolitical developments that reinforced the greenback’s appeal.

During the Asian session, the dollar traded choppy and mostly sideways against the major currencies, arguably posting a net bullish lean heading into the London session. The overnight price action likely reflected cautious positioning ahead of the European and U.S. data releases scheduled for later in the day, with traders appearing reluctant to take aggressive directional bets. The BOJ Summary of Opinions released during Asian hours showed policymakers increasingly concerned about the need for timely rate hikes to address yen-driven inflation pressures, though this hawkish tilt generated limited immediate yen strength as markets awaited more concrete signals about the timing of the next policy move.

The London session brought the morning’s first significant data, with European manufacturing PMI finals confirming modest improvements but no dramatic shifts in the regional economic outlook. The dollar pulled back during the morning London hours before rebounding slightly heading into the U.S. session. The euro area HCOB manufacturing PMI final registered 49.5, still in contraction territory despite improving from December’s 48.8, while Germany’s reading of 49.1 similarly remained below the 50 expansion threshold. U.K. manufacturing PMI final came in at 51.8, showing continued modest expansion. The mixed European data provided little support for the euro or pound, allowing the dollar to stabilize after its early pullback as traders positioned for the U.S. ISM release.

The U.S. session marked the decisive shift, with the dollar continuing to rebound against the major currencies following the blockbuster ISM manufacturing report before stabilizing and trading choppy through the rest of the afternoon. The 52.6 reading significantly exceeded expectations and represented the strongest manufacturing expansion since 2022, sparking immediate dollar strength as traders reassessed the Fed’s policy trajectory. The surge in new orders to 57.1 from 47.7 and production’s rise to 55.9 suggested manufacturing was emerging from its prolonged slump, reducing the likelihood of aggressive Fed rate cuts in 2026.

The dollar’s strength through the U.S. afternoon appeared to reflect not just the manufacturing data but also the broader risk-on environment that typically supports the greenback during periods of U.S. economic outperformance. The Trump-Modi trade deal announcement, which included India’s commitment to stop buying Russian oil and purchase over $500 billion in U.S. goods, likely provided additional support by highlighting renewed U.S. trade momentum and economic diplomacy.

At the Monday close, the dollar was the top-performing major currency on a daily basis, and its broad-based strength likely reflected growing market conviction that U.S. economic resilience and the Fed’s policy stance continue to differentiate the greenback from its major counterparts.

Upcoming Potential Catalysts on the Economic Calendar

• New Zealand Building Permits for December 2025 at 9:45 pm GMT
• Japan Monetary Base for January 2026 at 11:50 pm GMT
• Australia Building Permits & Housing Approvals Prel for December 2025 at 12:30 am GMT
• Australia RBA Interest Rate Decision for February 3, 2026 at 3:30 am GMT
• Australia RBA Press Conference at 4:30 am GMT
• France Inflation Rate Prel for January 2026 at 7:45 am GMT
• New Zealand Global Dairy Trade Price Index for February 3, 2026
• U.S. Fed Barkin Speech at 1:00 pm GMT
• U.S. JOLTs Job Openings & Quits for December 2025

Tuesday’s calendar is headlined by the Reserve Bank of Australia’s policy decision at 3:30 am GMT, where markets are watching for any signals about the timing of potential rate cuts given recent economic data showing resilience in the Australian economy. The RBA has maintained a relatively hawkish stance compared to other major central banks, though softening inflation pressures may eventually open the door to policy easing later in 2026.

The U.S. JOLTs report will provide crucial insight into labor market dynamics following Monday’s ISM manufacturing employment component showing continued contraction at 48.1, albeit improving from December’s 44.9. Traders will scrutinize job openings data for evidence that the labor market remains healthy enough to support the Fed’s current stance, particularly after the manufacturing sector’s surprising strength suggested economic momentum may be building.

Fed Governor Thomas Barkin’s speech at 1:00 pm GMT could offer additional perspective on how policymakers are interpreting recent economic data, including Monday’s blockbuster ISM reading. Any commentary on the manufacturing sector’s turnaround and its implications for monetary policy could spark volatility, especially if Barkin addresses whether the Fed sees the strength as sustainable or merely a temporary post-holiday rebound driven by pre-tariff positioning.

Stay frosty out there, forex friends!

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