Australian dollar (AUD) slides in risk-off trade
The Australian dollar (AUD) tumbled at the end of last week’s session as a risk-off mood prevailed.
This followed a sharp rise in the US dollar (USD) in response to some upbeat US economic data, as well as ongoing concerns over Donald Trump’s tariff plans.
Turning to the start of this week, the focus for AUD investors will be on China’s latest trade figures. Another decline in import growth could pull the ‘Aussie’ lower.
New Zealand dollar (NZD) weakens amid downbeat mood
The New Zealand dollar (NZD) also softened on Friday as market risk appetite waned.
In the absence of any notable domestic data, movement in the ‘kiwi’ is likely to remain tied to market risk dynamics today. Will lacklustre data out of China lead NZD exchange rates to weaken?
Pound (GBP) retreats amid renewed debt concerns
The pound (GBP) came under renewed selling pressure at the end of last week, as UK borrowing costs began to rise again.
This revived concerns over the UK’s fiscal strength. The rising cost of borrowing could undermine economic growth by forcing the UK government to raise taxes or cut spending.
Expect Sterling to remain on the defensive this week if the UK’s bond crisis persists.
Euro (EUR) pressured by USD strength
The euro (EUR) struggled to attract support on Friday as the currency was undermined by its strong negative correlation with the US dollar.
Adding to the pressure on the single currency was growing confidence that the European Central Bank (ECB) will deliver another interest rate cut later this month.
Eurozone data is thin on the ground today, potentially leaving the euro to trade without direction.
US dollar (USD) bolstered by robust payroll print
The US dollar closed last week’s session on a high note, following the release of the latest US non farm payroll figures.
Friday’s figures reported the US economy added 256,000 jobs in December, smashing forecasts for an increase of 160,000 and trimming Federal Reserve interest rate cut bets.
Looking ahead, the momentum from the payroll figures may carry over into the start of this week’s session as USD investors continue to reprice their expectations for the Fed.
Canadian dollar (CAD) climbs as unemployment falls
The Canadian dollar (CAD) also strengthened on Friday as the currency was underpinned by a surprise decline in domestic unemployment last month, in addition to a sharp rise in oil prices.
While Canadian data is in short supply today, the ‘loonie’ may be able to extend its gains if oil prices continue to accelerate.