Australian dollar (AUD) slips despite rising inflation
The Australian dollar (AUD) came under pressure during yesterday’s session, despite Australia’s latest monthly CPI indicator reporting a stronger-than-expected uptick in inflation.
Instead, the ‘Aussie’ was pressured by growing fears of a potential US-China trade war and a souring market mood.
Australia will publish its latest trade figures later this morning. Expect to see AUD exchange rates weaken if we see export growth slow in November.
New Zealand dollar (NZD) dented by risk-off flows
The New Zealand dollar (NZD) also faced headwinds on Wednesday as investors shied away from risk-sensitive assets.
New Zealand economic data is in short supply today, likely leaving movement in the ‘kiwi’ to be tied to market risk dynamics.
Pound (GBP) stumbles amid UK debt jitters
The pound (GBP) came under pressure yesterday as concerns mounted over the implications of rising UK bond yields on the nation’s fiscal health.
GBP investors fear the recent uptick in borrowing costs could inflate the UK’s debt burden, forcing Chancellor Rachel Reeves to impose new tax hikes to avoid potentially breaching the government’s own fiscal rules.
Expect Sterling to remain on the defensive if these concerns persist through today’s session.
Euro (EUR) dented by worrying German industrial data
The euro (EUR) was undermined on Wednesday as data from Germany’s vital industrial sector revealed that factory orders plummeted in November.
The single currency faced additional pressure as a result of its negative correlation with the US dollar (USD), although it was still able to rise against some of its more risk-sensitive peers.
Coming up, the euro may be able to mount a recovery today, if Germany’s latest trade figures report an expansion of the nation’s trade surplus.
US dollar (USD) soars on Trump tariff fears
The US dollar surged yesterday, on the news that Donald Trump is considering declaring a national economic emergency upon returning to office.
This will allow Trump to invoke the International Emergency Economic Powers Act (IEEPA), granting him broad authority to impose his plans for widespread tariffs on US imports.
Looking ahead, the US dollar may maintain a positive trajectory today, as investors turn cautious ahead of the latest US non-farm payroll report.
Canadian dollar (CAD) buoyed by USD strength
The Canadian dollar’s (CAD) positive correlation with the US dollar gave it a lift on Wednesday, despite Trump’s tariff plans potentially hitting Canada hard.
In the absence of any notable domestic data today, we may see the commodity-linked ‘loonie’ influenced by oil price movements.
Data releases
10:30 AUD Trade Balance (Nov)
17:00 EUR German Trade Balance (Nov)
20:00 EUR Retail Sales (Nov)