Global financial markets closed last week with the main focus on the inflation data series, including the US CPI and PPI, which overall confirmed that price pressures still exist but did not show a sudden surge.
The inflation readings in line with expectations have eased market concerns about the possibility of a more aggressive monetary stance by the Fed in the near future, thus limiting the large movements of the US dollar.
Entering this week, the economic calendar is seen to be less busy than the previous week. However, several key data releases that are about to be released still have the potential to influence market sentiment, particularly regarding the direction of US economic growth, consumer spending, and monetary policy developments in Japan.
THURSDAY (January 23, 2026)
GDP Annualized (QoQ) (9.30 PM) – It is expected to remain stable at 4.3%, the same as the previous reading. This figure reflects the US economic growth momentum that is still strong despite facing high interest rates.
If the actual reading is in line with expectations, the impact on the US dollar is expected to be neutral to slightly positive, as it reinforces the resilient economic narrative without adding new pressure on the Fed's monetary policy. Conversely, a weaker reading could trigger selling pressure on the USD.
US Personal Income (9.30 PM) – Market analysts are forecasting the number to rise at a slower pace, at 0.3% compared to 0.4% in the previous month. The slowdown in personal income growth signals that consumers may be facing cost of living pressures, thus limiting spending room.
From a market perspective, a lower reading in line with expectations could put moderate pressure on the USD, especially if accompanied by signs of a broader economic slowdown.
US Personal Spending (9.30 PM) – Expectations are for a slight increase to 0.5%, reflecting the resilience of consumer spending despite the moderation in income growth. This increase in spending is important as it is a key driver of the US economy.
If this figure is stronger than expected, the US dollar could find short-term support as it signals that economic activity is still active. However, the combination of lower income and higher spending could also raise questions about the sustainability of consumer spending in the coming period.
FRIDAY (24 January 2026)
Bank of Japan (BoJ) Rate Decision & Outlook Report (8.30 AM) – Markets expect the BoJ to keep interest rates at 0.75%, with the Japanese central bank opting to assess the impact of rate hikes in December and January before tightening policy further. This cautious approach is expected to maintain the monetary policy divergence between Japan and the United States.
From a currency perspective, the BoJ’s decision to maintain current policy could potentially support the US dollar against the Japanese yen, as the interest rate differential still favors the USD. However, any more hawkish signal in the BoJ’s survey report could strengthen the yen and limit the dollar’s strength.
Overall, despite a quieter week in terms of data volume, several key releases are still capable of shaping the near-term direction of the currency market. Investors are expected to remain cautious as they assess the true strength of the US economy and developments in global monetary policy.
