Pips for Breakfast: February 4, 2026

The PBOC set a midpoint for the yuan that basically told the market its estimates were cute, but wrong.

On This Day

In 2019, the market spent most of the session wondering if Brexit was actually happening or if it was just an elaborate performance art piece. Most traders spent the day watching the British pound do a whole lot of nothing while the rest of the world looked for a spark. It turns out, early February is often just the quiet prologue to a very loud mid-month drama.

The Play

The Long JPY Squeeze: Japan's services PMI just hit an 11-month high, yet USD/JPY is still lounging comfortably above 156. If the ADP numbers at 08:15 UTC come in even slightly soft, we could see a fast trip back toward 154.50. It's a classic case of the fundamentals saying "buy yen" while the price action is still finishing its first cup of tea.

The Euro Fade: Core CPI is expected to stay sticky at 2.3% today. If it surprises to the downside, EUR/USD will likely lose its grip on current levels faster than a novice trader losing their cool on a Friday afternoon. Watch the 05:00 UTC print closely, as the market is looking for any reason to sell the common currency.

What's on Deck

05:00 UTC EUR: CPI Flash Estimate. Inflation is still the guest that won't leave the party, though the headline is expected to drop to 1.7% from 2.0%.

08:15 UTC USD: ADP Non-Farm Employment Change. It's the NFP's younger, less reliable sibling, but the market still listens when it shouts. The forecast is a modest 46K.

10:00 UTC USD: ISM Services PMI. The forecast is 53.5. If this misses, the "soft landing" narrative gets a few more cracks in the windshield and the dollar might actually feel some gravity.

The Data Behind the Patterns View Packages →

Quick Pips

AUD/USD: China's services PMI is at a three-month high, which usually means the Aussie dollar should be celebrating. It isn't. Keep an eye on 0.6600 for a potential breakout if the risk-on mood holds.

USD/KRW: South Korea's pension fund is weighing dollar bond issuance. This is giving the won a rare moment of confidence in an otherwise dollar-heavy world.

USD/CNY: The PBOC midpoint at 6.9533 is a clear signal. They aren't ready for a runaway yuan devaluation just yet, regardless of what the offshore speculators think.

Why Your P&L Cares

History shows us that the first week of February is the "testing phase" for January's trends. In previous years, the dollar has spent this week pretending it was going to collapse, only to pull a U-turn that left shorts questioning their entire career path.

The seasonal pattern suggests we should see trends continue today, but don't get too comfortable. The mid-month reversal is a recurring character in the February script. If the USD strength feels a bit too obvious after the ISM data today, that's usually the market setting the stage for a surprise.

The Bottom Line

The data is heavy, the PBOC is drawing lines in the sand, and USD/JPY is flirting with levels that make central bankers reach for their phones. Trade the numbers, but don't marry the trend. Now go make some pips. You're fed.