FXTRADING Economic Data Summary (Asia-Pacific | 02/13)

UK growth shows structural divergence

UK GDP rose only slightly in December on a monthly basis, falling short of market expectations and pointing to weak overall growth momentum. The services sector remained the main support, with output continuing to expand, but manufacturing and construction weakened noticeably, weighing on the overall performance. In particular, the decline in industrial activity, combined with softer demand related to housing and infrastructure, suggests that the pace of recovery remains fragile. From a quarterly and annual perspective, the UK economy is still operating at a low growth rate. Fourth-quarter expansion was limited, services were broadly stagnant, and construction contracted significantly. Full-year growth was driven mainly by services, while manufacturing ended its previous decline but showed only modest improvement, leaving the overall recovery weak. The structural divergence indicates that internal growth momentum remains insufficient. FXTRADING analysis believes that the UK economy is unlikely to accelerate meaningfully in the short term, with the growth trend expected to remain subdued and policymakers more likely to stay cautious and data-dependent.

Cost pressures at Japans production level become more uneven

Japans PPI growth eased slightly year-on-year in January, indicating that the pace of cost increases at the corporate level is slowing and overall price pressures at the production stage have moderated. From an aggregate perspective, inflation pass-through pressures have not intensified further, and business operating conditions show signs of relative stabilization compared with earlier periods. Structurally, however, energy prices fell sharply and dragged down the headline figure, while prices for non-ferrous metals and agricultural products rose significantly, keeping food costs elevated. At the same time, import prices measured in yen increased, reflecting the ongoing impact of exchange rate fluctuations on raw material and energy costs. External factors therefore continue to create uncertainty for corporate profit margins. FXTRADING analysis believes that inflation risks in Japan have not fully dissipated, and the combination of cost divergence and currency effects means that price trends could remain volatile going forward.

Bank of Canada shifts toward a risk-focused approach

Minutes from the Bank of Canada‘s latest meeting show that the policy focus has moved beyond domestic economic data toward a broader assessment of external risks. Against a backdrop of rising global uncertainty, policymakers agreed on the need to retain greater flexibility to respond to potential shocks. Keeping the policy rate unchanged reflects a strategy that balances caution with optionality. Officials specifically highlighted geopolitical conflicts, shifts in the global trade environment, and institutional uncertainties as increasingly important factors shaping the economic outlook. The direction of US trade policy was identified as a key source of risk, while any reassessment of the North American trade framework could affect Canada’s export performance and investment expectations. Policy discussions have clearly shifted from cyclical concerns toward structural uncertainty. FXTRADING analysis believes that with external risks dominating the outlook, the Bank of Canada is likely to keep policy steady in the near term, with the future rate path highly dependent on global developments.

RBA maintains a hawkish policy stance

The Reserve Bank of Australia remains firm in its approach to inflation, with the Governor stating that further tightening cannot be ruled out as long as price levels remain above the target range. Demand continues to exceed supply, which remains a key driver of persistent inflation. Although economic growth faces constraints from weak productivity, the labor market remains resilient, giving policymakers room to act. The central bank has already raised rates, and recent data show core inflation picking up again. Markets widely expect the possibility of additional rate hikes, with policy clearly focused on controlling prices rather than easing conditions prematurely. At this stage, anchoring inflation expectations remains the top priority. FXTRADING analysis believes that the RBAs policy direction remains biased toward tightening, and if inflation does not ease as expected, there is still a risk of further rate increases, with interest rate differentials likely to continue supporting the Australian dollar in the near term.