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Last updated: august 13, 2026 at 1:35 pm

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The week begins with political developments in Japan taking center stage. In a snap election held on February 8, Prime Minister Sanae Takaichi and her Liberal Democratic Party (LDP) secured a landslide victory, reclaiming a total majority in the government. This win is significant as it allows Takaichi—Japan’s first female leader to push forward her “Japan First” agenda. Her coalition now holds a two-thirds supermajority, making it easier to pass major changes to defense policy and economic reforms. Opposition parties’ lost ground, reducing their influence. For ordinary citizens, the immediate impact may be seen on policies such as planned cuts to the consumption tax on food, aimed at easing the cost of living. Overall, the result signals a shift toward a more assertive and conservative direction for Japan’s future.

Monday, February 9

The week starts on a quiet note with no major economic releases scheduled. Markets are likely to focus on risk sentiment and geopolitical headlines.

Tuesday, February 10

US Core Retail Sales

Core retail sales data for December is expected to show a modest 0.4%–0.5% gain. This release offers a snapshot of consumer spending during the crucial holiday shopping period. While slightly lower than the previous month’s strong rebound, a gain of this size would confirm that the holiday season ended on a resilient note. Higher borrowing costs and tight household budgets are expected to keep growth moderate. A stronger-than-expected print could support the dollar and suggest resilient consumer demand, while a weaker number might indicate slowing household spending.

Wednesday, February 11

Chinese Inflation

China will release January CPI and PPI figures. Headline CPI rose 0.8% year-on-year in December, a 34-month high largely driven by food prices, while core CPI held at 1.2% and PPI remained in deflation at -1.9%. January is expected to see CPI cool to 0.5% as Lunar New Year effects weigh on prices, while PPI is forecast to remain negative at around -1.3% amid firmer commodity prices. Analysts note that underlying demand remains weak, with factory overcapacity and continued deflation at the producer level likely to limit the impact of these readings on policy expectations.

Non-Farm Payroll and Unemployment Rate

All eyes are on the US labor market this week as Non-Farm Payrolls and the unemployment rate are released. Analysts expect modest job gains of around 70,000 and an unemployment rate holding near 4.4%. However, any surprise to the upside payroll print or a drop in unemployment would reinforce the picture of a resilient labor market.

This data takes on extra significance following Chair Powell’s remarks at the last Fed meeting, where he emphasized that risks now sit on both sides of the dual mandate: inflation and employment. Strong payrolls coupled with low unemployment would confirm the Fed’s recent decision to hold rates steady, signaling that tight policy remains appropriate to keep inflation in check. Markets are likely to interpret robust job gains as a signal that the Fed can maintain its cautious stance, keeping rate cuts off the table for now.

Thursday, February 12

UK GDP

The UK economy is projected to show modest growth of 0.1%–0.2% for the latest quarter, with annual growth around 1.1%–1.3%. A stronger than expected print would suggest the economy is more resilient, supporting the pound, while a weaker result would highlight persistent challenges such as low investment and cautious consumer spending. Overall, the data is expected to show slow, steady growth rather than any sudden change.

Friday, February 13

US CPI

January CPI is shaping up to be a critical test for the Fed. Headline and core inflation are expected to rise by about 0.3% month-on-month. Should inflation come in hotter than expected, it would reinforce concerns about sticky price pressures and strengthen the Fed’s commitment to its current policy path.

Taken together with the labor market data, a stronger CPI reading would validate Chair Powell’s recent call to hold rates steady, showing that inflation remains elevated even as the labor market remains tight. Conversely, a softer than expected reading could provide a window for market speculation about easing later in 2026—but any upside surprise will likely keep the hawkish narrative alive, supporting the dollar and US yields while reminding markets that the Fed is in no rush to cut rates.

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