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

Eurozone economy shows resilience at year-end

After repeated volatility in the first three quarters, the euro area economy showed signs of repair toward the end of 2025. Fourth-quarter GDP grew by 0.3% quarter-on-quarter, slightly above earlier cautious market expectations and broadly in line with overall EU performance. From a short-term perspective, this provided a relatively positive backdrop to close out the year, suggesting that economic activity did not deteriorate further despite a high interest rate environment.

However, on a year-on-year basis, growth momentum remained subdued. Full-year growth in the euro area came in at 1.3%, compared with 1.4% for the EU as a whole, marking a slight deceleration from the previous quarter and highlighting the familiar pattern of a “slow and uneven” recovery. Divergence among member states remained pronounced: some smaller economies posted solid growth, while others that rely more heavily on cross-border capital flows and external demand continued to face pressure. FXTRADING analysis suggests that the year-end data point more to stabilisation than to a genuine acceleration, indicating that while resilience persists, a more sustained recovery will still depend on concurrent improvements in financial conditions, fiscal coordination, and external demand.

US producer prices rise sharply

Inflation dynamics in the United States sent another firm signal toward the end of the year. December producer prices recorded a notable month-on-month increase, well above market expectations, with the bulk of the upward pressure coming from the services sector. In contrast to largely flat goods prices, persistent cost increases in services underscored the role of demand and labour costs in supporting the overall price structure.

More importantly, after excluding more volatile components, core PPI has continued to rise steadily for several consecutive months, indicating that price pressures are not merely a short-term disturbance. Year-on-year measures also moved higher, reinforcing the view that inflation remains sticky and may continue to pass through to the consumer level over time. FXTRADING analysis notes that the key inflation challenge in the US currently lies not in goods prices, but in sustained increases in service-sector costs, a dynamic that is likely to constrain a rapid shift in monetary policy and reinforce expectations that interest rates will remain elevated for longer.

Canadian economic momentum remains constrained

Canada‘s economy showed clear signs of softening in November, with overall growth close to stagnation. The drag was concentrated in the goods-producing sectors, particularly manufacturing and resource-related industries, highlighting the ongoing impact of external demand conditions and the industrial cycle. This also reflects the Canadian economy’s high sensitivity to changes in the global trade environment.

At the same time, the services sector continued to expand modestly, with retail, education, and logistics providing limited support to overall activity. From an industry perspective, the coexistence of expansion and contraction suggests that the economy has not entered a broad-based downturn, but underlying growth momentum remains weak. Preliminary data point to a mild rebound in December, though the scale of improvement appears limited. FXTRADING analysis concludes that Canada is currently in a low-growth, fragile equilibrium: while downside risks remain contained in the near term, a return to more robust expansion will require a simultaneous recovery in manufacturing and investment.

New Zealand business confidence retreats early in the year

Business confidence indicators published by ANZ eased from elevated levels, but remain strong by historical standards, indicating that overall corporate sentiment has not fundamentally reversed. Expectations for firms own activity also cooled, reflecting a normal correction after a period of sharp rebound rather than a decisive shift in the outlook.

Compared with confidence measures, price-related signals carry greater policy significance. Firms‘ intentions to raise prices and their expected price increases both moved higher, pushing inflation expectations back toward recent highs. While wage pressures have not yet accelerated meaningfully, changes on the cost side are sufficient to prompt a reassessment of the future inflation trajectory. FXTRADING analysis suggests that New Zealand’s core challenge at present is not growth itself, but the renewed rise in inflation expectations, which will complicate the central banks policy trade-off between supporting growth and containing price pressures.