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February 4, 2026
Euro traded at 1.1797 against USD at 9:00 AM PST
Eurozone inflation fell below the 2% target in January due to declining energy prices and a stronger euro. The HICP rose 1.7% yearly in January following December's 2.0% increase. Excluding volatile prices of energy, food, alcohol, and tobacco, core inflation slowed marginally to 2.2% from 2.3% a month ago.
The update comes a day before the European Central Bank's (ECB) interest rate decision. In December, the ECB kept its policy rate unchanged and raised its inflation projection for next year, as policymakers forecast that services inflation would ease more slowly than expected earlier. The benchmark deposit rate was retained at 2%. Previously, the Eurozone interest rates were revised in June, when they were lowered by a quarter point.
Services’ costs registered the biggest annual increase in January, up 3.2%. This was followed by a 2.7% rise in food, alcohol, and tobacco prices. Meanwhile, energy prices declined at a faster pace of 4.1%. Non-energy industrial goods prices posted an annual growth of 0.4%.
Month-on-month, the HICP was down 0.5% in January. January PMI results in increases in both input costs and output charges, accelerating to rates that were more than respective averages. The Euro area private sector logged its weakest growth in January due to the weakening of growth in services activity. The final composite output index posted 51.3 in January, the lowest score since last September.
The ECB is not currently particularly concerned about inflation, as the inflation target of 2% appears to have been achieved. However, it is still worth keeping a close eye on services inflation, as it remains quite sticky, and if energy prices rise again, as they are currently doing due to the cold weather, the calm could quickly come to an end. In this respect, policymakers will be a bit concerned by the significant rise in cost inflation in the services sector and the visible increase in sales price inflation that was signaled by the PMI.
Producer prices continued to fall in December. Producer prices slid 2.1% year-on-year after easing 1.4% in November. Monthly, producer prices dropped 0.3%, reversing November's 0.7% increase. 02/04/2026 - 07:52:00 (RTTNews)
British Pounds traded at 1.3649 against USD at 9:00 AM PST
The U.K. service sector grew the most in five months in January amid strong growth in output and new work. The final services PMI advanced to 54.0 in January from 51.4 in December. The flash score was 54.3. The reading has remained above the 50.0 threshold for the ninth consecutive month. Moreover, the reading was the highest since August 2025.
Total new business grew at the fastest pace in three months. Rising export orders supported overall new business gains. Employment numbers decreased each month since October 2024. Input prices increased in January, but the rate was slower than December's seven-month high. At the same time, the rise in output charges was the steepest since August 2025.
The service sector’s optimism hit its highest since October 2024. Service providers typically noted improved sales pipelines due to more upbeat sentiment among clients and investment spending. Further, there was stronger growth momentum across the U.K. private sector economy. At 53.7, up from 51.4 in December, the composite index hit its highest level since August 2024. 02/04/2026 - 07:01:00 (RTTNews)
China’s service sector growth improved in January, driven by stronger growth in new business. Services PMI rose to 52.3 from 52.0 in December. The latest rise in services activity was the strongest in three months.
There was a stronger rise in new business, due to successful promotional activities and greater client interest. External demand conditions rose for the second time in the past three months, partly due to new product launches. Headcounts increased for the first time in six months in January. With greater labor capacity, outstanding business accumulated at a marginal pace despite an acceleration in new business growth.
Regarding prices, input costs of service providers continued to increase. However, the rate of cost inflation eased to a five-month low, indicating only a slight rise in costs. Average output charges were broadly stable in January.
Business sentiment in the service sector remained positive in January as companies were hopeful that business expansion plans and better market conditions would help to drive continued growth in sales and activity over the coming twelve months.
Overall, private sector activity logged faster growth at the start of the year. The composite output index posted above the 50.0 no-change threshold at 51.6 in January, up from 51.3 in December. 02/04/2026 - 00:54:00 (RTTNews)
The private sector in Hong Kong continued to strengthen in January and at a faster pace on Tuesday, with a services PMI score of 52.3. That's up from 51.9 in December, and it moves further above the line of 50 that separates expansion from contraction.
Business activity across the private sector increased for the sixth successive month during January. The rate of growth was unchanged from December and solid overall. The service sector led the expansion, according to sub-industry data, followed by wholesale and retail firms. Activity levels, meanwhile, fell in the manufacturing and construction sectors.
New orders also increased at a marked pace, with the rate of expansion being the second steepest since April 2023. 02/03/2026 - 19:41:00 (RTTNews)
The private sector in Singapore continued to strengthen in January, and at a faster pace. Services PMI score of 56.8 on Tuesday. That's up from 54.1 in December, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.
Stronger demand, successful promotional events, and positive responses to new product launches contributed to the fastest rise in new business in 16 months. This spurred an acceleration in output growth at the start of the year, showing the sharpest rise in activity in the real estate and business services sector.
Consequent with greater new work inflows, the level of outstanding business continued to increase in January. This was despite companies expanding their workforces at the quickest pace since last October. 02/03/2026 - 19:43:00 (RTTNews)
This market update is prepared by Cathay Bank for informational purposes only and does not constitute any form of legal, tax or investment advice, nor should it be considered an assurance or guarantee of future exchange rate movements or trends. This information is provided without regard to the specific objectives, financial situations or needs of any recipient. Cathay Bank does not make any representations or warranties about the accuracy, completeness or adequacy of this market update.
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