Dollar Unmoved by Record-Long State of the Union Address
February 25, 2026
Aside from a 0.5% overnight rise against the yen and a 0.5% drop versus the Australian dollar, the U.S. currency is narrowly mixed, and the DXY weighted dollar index is unchanged from Tuesday’s closing value.
Major U.S. equity index rises of about 0.5% in pre-open futures trading show smaller increases than many other stock exchanges. Share prices had risen 2.2% in Japan, 2.1% in Taiwan, 1.9% in South Korea, 1.2% in Australia and 0.7% in China and Hong Kong, while in the British, Spanish and Spanish markets are currently 0.9%.
Geopolitical uncertainties remain extremely elevated, and it shows in the prices for Bitcoin, WTI oil, gold and silver, which overnight climbed 3.2%, 0.8%, 0.5% and 0.9%.
Last night’s one hour 47 minute U.S. State of the Union Address not broke a 26-year-old record for length but came off as bizarre when juxtaposed against opinion polls that have been highlighting mounting voter concern about affordability, the management of immigration policy, and the extreme polarization of the country that has incited fear of a coming civil war. In the rebuttal words of Virginia Governor Spanberger, Trump “did what he always does: he lied, he scapegoated, and he distracted. He also offered no real solutions to our nation’s pressing challenges.” President Trump doubled down on the pursuit of the highest tariffs in a century, one source of continuing above-target inflatio, admitted no mistakes, maintained a defiant tone on many other issues, and painted political opponents as enemies of the nation.
The ten-year Treasury yield is three basis points higher today, while -comparable German, Swiss, French, Italian and Spanish sovereign debt yields are either flat or merely one basis point firmer. The 3-bp uptick comes in spite of other news that the 30-year fixed mortgage rate slid eight basis point last week to its lowest level (6.09%) since the week of September 9, 2022.
U.S. consumer price inflation peaked at 9.1% in mid-2022 and, although now hovering in the mid-2% range, has exceeded the 2.0% objective for almost five years without exception. The spike in 2021-22 mirrors a trend shared by a majority of economies around the world. However, unlike in the United States, inflation has returned to 2% and sustained that drop in many places. There were more reminders of this today. For example, in Austria, where CPI inflation reached 11.2% in the first month of 2023, such printed at 2.o last month. Hong Kong CPI inflation in January was today reported at a 4-month low of 1.1% versus 4.4% in September 2022. Core consumer price inflation in Thailand has slowed from 3.2% at the end of 2022 to 0.6% now. In Euroland, CPI inflation peaked at 10.6% in October 2022 but printed at only 1.7% last month. Within the euro area, the latest French and Italian inflation measurements are 0.4% and 1.0%. Spanish producer price inflation has swung from a peak of 47% early this decade to -2.9% last month. Likewise Swedish PPI inflation of -2.0% last month is down from 25.6% in mid-2022, and Czech producer price inflation over that same span has imploded from 28.5% to -3.0%.
Political pressure from President Trump and others in his Administration on the Fed to cut interest rates more aggressively has not let up. Nor has resistance to that interference from a majority of Federal Reserve policymakers, not just Chairman Powell. The latest defenders of the current monetary policy stance have been Boston Federal Reserve President Collins, who observes an improved labor market yet persistent inflationary risks from tariffs and other factors and Richmond Fed District President Barkin, who asserted that policy is well-positioned to handle current economic trends and risks.
In other central banking news, officials at the People’s Bank of China again left their 1-year and 5-year Loan Prime Facility rates unchanged at 3.0% and 3.5%, respectively. These have not been adjusted since a 10-basis point cut in them last May. On the other hand, the benchmark interest rate at the Bank of Thailand was cut to 1.0% today from 1.25%. This cut had not been anticipated by analysts, since a 25-bp cut had been also done at the prior policy review in December. The new rate level is the lowest since October 2022. The decision to cut was not made unanimously. The vote was 4 in favor to 2 votes of dissent. The majority felt comfortable lowering the rate again after revising when they expect restored in-target sustained inflation of 1-3% until after mid-2027 from an earlier estimate of that happening earlier in the year.
In other data news this Wednesday, German consumer confidence remains quite low at -24.7 following readings of -24.2 in the prior month and -26.9 two months ago. In contrast to readings of around 10 before Covid, such has been sub-zero since the end of 2021 and as low as -42.8 in October 2022. The best recent reading was -18.6 in the summer of 2024.
French consumer sentiment edged a point higher to 9.1 this month. That’s a 10-month high but not far from the recent low of 87 and well below its long-term average score of 100.
GDP in Hong Kong grew 1.0% on quarter in 4Q 2025 and posted the largest year-on-year rise, 3.8%, in two years.
Euroland GDP growth last year was confirmed at its preliminary estimates of +0.3% on quarter and +0.4% year-on-year. The on-year reading matches a ten-quarter high in the second quarter of 2025.
Investor sentiment toward Switzerland swung from -4.7 in January to a 3-month high of +9.8 this month.
Unemployment rates last month in Iceland (7.3%) and Norway (4.5%) represented a 57-month high and a 4-month high, respectively.
The Austrian manufacturing purchasing managers index rebounded to a 3-month high in February of 49.4 from January’s 7-month low of 47.2 but remained below November’s 40-month peak of 50.4, which was the only reading above the 50 neutral level in that stretch.
Chinese foreign direct investment contracted 9.5% last year following drops of 27.1% in 2024 and 8.0% in 2023.
Japanese corporate service price inflation of 2.6% in January matched December’s 18-month low.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: 2026 state of the union address, Bank of Thailand, Euroland CPI, Peoples Bank of China
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