The euro rose in European trading on Friday against a basket of global currencies, moving into positive territory versus the US dollar ahead of key inflation data from Germany, the largest economy in the euro area.

These figures are expected to provide further clues about the path of European interest rates this year, especially after Christine Lagarde emphasized that future monetary policy decisions will be data-dependent and assessed on a meeting-by-meeting basis rather than following a fixed path.

Price Overview

• Euro exchange rate today: the euro rose 0.15% against the dollar to $1.1813, from an opening level of $1.1797, recording a session low at $1.1789.

• The euro closed Thursday down 0.1% against the dollar, pressured by Lagarde’s testimony before the European Parliament in Brussels.

Christine Lagarde

ECB President Christine Lagarde delivered key remarks yesterday before the European Parliament’s Committee on Economic and Monetary Affairs, highlighting the following points:

• Efforts to reduce inflation are beginning to bear fruit, with headline inflation declining from 2.5% in January to 2.3% in February.

• Inflation is expected to stabilize around the ECB’s 2% target over the medium term, specifically by the first quarter of 2026.

• She defended the bank’s decision to keep interest rates unchanged, stressing that future decisions will depend on incoming data at each meeting, without pre-committing to a rate-cut path.

European interest rates

• Money markets are currently pricing a roughly 25% chance that the European Central Bank will cut rates by 25 basis points in March.

• Traders have shifted expectations from keeping rates unchanged throughout the year to pricing in at least one 25-basis-point rate cut.

• Investors are awaiting Germany’s February inflation data later today, which could reshape these expectations.

Outlook for the euro

Our expectation: if German inflation data comes in stronger than market forecasts, the probability of ECB rate cuts this year could decline, which would likely support further gains in the euro against a basket of global currencies.

The Japanese yen rose in Asian trading on Friday against a basket of major and secondary currencies, extending its recovery for a second consecutive session from a two-week low versus the US dollar, after data showed Tokyo core inflation rising at a pace above market expectations.

The currency was also supported by more hawkish remarks from Kazuo Ueda, Governor of the Bank of Japan, which opened the door for further monetary tightening in the country, as markets await more evidence on the timing of potential Japanese interest rate hikes.

Price Overview

• Japanese yen exchange rate today: the US dollar fell against the yen by 0.35% to 155.54 yen, from an opening level of 156.09 yen, recording a session high at 156.22 yen.

• The yen closed Thursday higher by 0.2% against the dollar, marking its first gain in the last three sessions, as part of a recovery from a two-week low at 156.82 yen.

Tokyo core inflation

Data released in Japan today showed that Tokyo’s core consumer price index rose 1.8% year-on-year in February, above market expectations of 1.7%, after recording a 2.0% increase in January.

Higher-than-expected price readings in Japan are likely to intensify inflationary pressure on monetary policymakers at the central bank, reinforcing the likelihood of additional Japanese interest rate hikes this year.

Kazuo Ueda

In an interview with the Yomiuri newspaper, Kazuo Ueda said that the bank’s baseline stance is to continue raising interest rates if the probability of achieving its economic and inflation forecasts increases.

Ueda added that the central bank will carefully review incoming data during the upcoming monetary policy meetings in March and April before deciding on any further rate increases.

He also pointed out that the outcome of this year’s annual wage negotiations could be a decisive factor. If wage gains come in stronger than expected and encourage companies to raise prices more quickly, the 2% inflation target could be achieved sooner than anticipated.

Ueda explained that core inflation has not yet sustainably reached the 2% target, but the bank will steer policy to ensure the goal is met without excessive overshooting, emphasizing that the bank is not “behind the curve” in addressing inflation risks.

Japanese interest rates

• Following the above data and comments, markets are pricing the probability of a quarter-point rate hike at the March meeting at around 15%.

• Pricing for a quarter-point rate hike at the April meeting stands near 45%.

• In the latest Reuters survey, the Bank of Japan is expected to raise interest rates to 1% by September.

• To reprice these expectations, investors are awaiting المزيد of data on inflation, unemployment, and wage growth in Japan.

Wheat prices rose during Thursday trading on the Chicago Board of Trade, supported by technical buying and strong demand for grains.

Saudi Arabia has issued a tender to purchase 655,000 metric tons of wheat, according to an announcement by the Saudi government authority responsible for grain procurement.

Delivery of the wheat is scheduled between May and July, according to the General Food Security Authority.

Market traders in Europe said the deadline for submitting price offers is February 27, with results expected to be announced on March 2.

Traders added that the shipments will be delivered عبر 11 maritime consignments, including one vessel to Jazan port, three shipments to Dammam, three to Yanbu, and four to Jeddah.

According to the details, up to 240,000 tons are requested for delivery to Jeddah between May 1 and July 15, 180,000 tons to Yanbu for arrival between May 15 and June 30, 180,000 tons to Dammam between May 1 and July 15, and 55,000 tons to Jazan between June 1 and June 15.

Traders noted that shipments to Jeddah, Dammam, and Yanbu were requested in batches of 60,000 tons each. They also indicated that final purchases could exceed the announced tender volume of 655,000 tons.

In its previous tender dated January 19, the authority purchased approximately 907,000 tons of hard wheat.

In trading activity, May wheat futures rose 0.7% to $5.74 per bushel at 19:20 GMT.

Years before trade wars and tariffs erupted, China had already secured industrial dominance through السيطرة on the rare earth supply chain — a strategic reality that has pushed the United States and its allies to pledge more than $8.5 billion today in an effort to regain control over this critical industry.

Over the past two decades, as global manufacturing expanded, rare earth processing gradually disappeared from Western supply chains due to high capital costs, technical complexity, and limited short-term profitability. China, however, maintained and systematically expanded its capabilities while others pulled back.

Libby Sterenheim, CEO of REE Alloys, said China did not win simply through mining, but by building the entire ecosystem — separation, refining, metal production, and magnet manufacturing — in a fully integrated way. As others exited the sector, control effectively became uncontested.

She added that North America lost control of the most critical stage: converting oxides into usable metals and alloys. According to Sterenheim, her company is currently the only one in North America capable of refining heavy rare earths and producing alloys and magnets, while competitors remain years away from commercial production.

The Real Bottleneck: Conversion

To make rare earth materials usable in motors, magnets, and defense systems, they must be converted into metals and alloys. This stage — rather than mining itself — determines who truly controls the supply chain.

REE Alloys is working in partnership with the Saskatchewan Research Council to rebuild conversion capacity within North America, allowing materials to remain within Western supply chains until they become finished defense-ready products.

The company has also signed a long-term, non-binding supply agreement with Altyn Group, linked to the Kokbulak project in Kazakhstan, where rare earth-containing materials — including dysprosium and terbium — are extracted from existing iron ore operations.

Ohio Facility and Defense Production

The company operates a facility in Euclid, Ohio, which it describes as the only industrial-scale site in North America capable of converting heavy rare earth materials into metals and alloys. The site is already producing specialized materials for US government clients.

These developments come as new US regulations set to take effect in 2027 aim to restrict the use of Chinese rare earth materials in defense programs and federally supported manufacturing.

Official US Response

Washington held talks this week with allied countries to reduce China’s grip on critical mineral supply chains, reflecting a shift from industrial competition toward national security priorities.

China has already used export restrictions as leverage. In late 2025, it imposed a direct ban on exporting certain materials and processing technologies linked to military applications. Earlier, in 2010, China restricted exports to Japan during a diplomatic dispute, causing major supply disruptions.

In response, the US Department of Defense has activated authorities under the Defense Production Act to support domestic processing, investing in companies such as MP Materials to expand local production of metals and magnets.

The US government has also launched a $12 billion initiative to build a strategic reserve of critical minerals, including rare earth elements, lithium, nickel, and cobalt, aiming to reduce reliance on China and secure supply for defense and advanced technology sectors.

A Race Against Time

While government action continues through policy channels and long-term projects, REE Alloys argues that it is already operating at the most sensitive stage of the chain — conversion into metals and alloys — where real control lies.

According to the company, building similar facilities requires years of permitting, financing, and qualification with defense clients, making short-term competition nearly impossible.