Nigeria’s easing inflation reading and expectations of an imminent interest rate cut are expected to dominate investor sentiment this week, even as global markets brace for fresh signals from the United States and renewed geopolitical tensions tied to energy prices, Senior Market Analyst at FXTM, Lukman Otunuga, said.

Latest data showed that headline inflation fell to 15.1 per cent year-on-year in January, down from 15.2 per cent recorded in December, defying analysts’ median expectations of 19.5 per cent by a considerable margin.

The easing has been largely attributed to a moderation in food prices, which have for years been the most stubborn driver of Nigeria’s inflationary burden on ordinary citizens.

Market analysts say the inflation slowdown, combined with the naira’s appreciation of roughly eight per cent against the dollar since the start of the year, gives the MPC more room to adjust rates. The central bank had held its benchmark rate at 27 per cent in its last meeting in November, citing the need to stabilise prices and the currency.

According to the senior Market Analyst at FXTM, Lukman Otunuga, the focus is no longer on whether rates will be cut, but by how much. He noted that a reduction could offer relief to businesses grappling with elevated borrowing costs, while also testing the resilience of the currency and foreign investor appetite.

Beyond Nigeria, global markets are entering the week in a cautious mood, he said, adding that the dollar has traded in a tight range, oil prices are searching for direction and cryptocurrency markets are remaining volatile after sharp year-to-date losses.

Attention is turning to diplomatic talks between the United States and Iran, a development that could influence crude oil prices, which have already climbed more than 10 per cent this year on geopolitical risk.

Bitcoin, which has fallen more than 20 per cent since January, is hovering around the $70,000 mark, with analysts warning that further weakness could trigger accelerated sell-offs, Otunuga said.

Reports cited by Bloomberg indicate that $60,000 has emerged as a key liquidation level being closely watched by traders.

The week’s major economic highlight will come from the United States, where investors are awaiting minutes from the last policy meeting of the Federal Reserve alongside the Personal Consumption Expenditures (PCE) inflation report and a delayed fourth-quarter GDP release, the analyst noted.

The PCE index, the Fed’s preferred inflation gauge, is expected to provide deeper insight into consumer behaviour and the strength of price pressures in the world’s largest economy.

Recent softer than expected US inflation data has increased speculation that the U.S. policymakers could begin cutting rates sooner than previously expected.

Should upcoming figures reinforce this narrative, analysts said the dollar may weaken further, potentially boosting gold and equity markets.

“Gold has emerged as one of the defining investment stories of the year. Prices ended last week above the psychologically significant $5,000 per threshold.

“For Nigeria and other emerging markets, the combination of easing domestic inflation and shifting global monetary expectations may shape capital flows in the weeks ahead, setting the tone for investor confidence as the first quarter unfolds,” the projection said.