Australian dollar (AUD) falls amid anxious market mood
The risk-sensitive Australian dollar (AUD) fell yesterday, reversing Monday’s gains, after US President Donald Trump once again hinted at tariffs on China, Mexico and Canada.
Markets fear that escalating trade wars could damage global growth and lead to elevated international borrowing costs. These worries soured the market mood and weighed on AUD.
The ‘Aussie’ could remain on the back foot today, if market anxiety continues through today’s session.
New Zealand dollar (NZD) dented by downbeat PMIs
The New Zealand dollar (NZD) also declined yesterday, with New Zealand’s latest PMI surveys showing a deepening contraction in private sector activity last month.
NZD could continue to extend its losses today, after data this morning showed another cooldown in New Zealand inflation in the fourth quarter of 2024.
Pound (GBP) softens following mixed jobs data
The pound (GBP) trended lower during yesterday’s European session following a mixed labour market report for the three months to November.
Although British wage growth accelerated, as forecast, the UK unemployment rate unexpectedly rose from 4.3% to 4.4%, raising concerns about the fragile health of the country’s economy.
Turning to today, UK economic data is in short supply. As a result, movement in Sterling may be limited.
Euro (EUR) buoyed despite weak German data
The euro (EUR) managed to rise against its weaker rivals yesterday, despite a sharper-than-expected deterioration in German economic sentiment this month.
The limited upside came as cautious investors opted for the safer single currency rather than its riskier peers.
Overnight, European Central Bank (ECB) President Christine Lagarde is due to speak. Any hints that more interest rate cuts are on the way could dent EUR exchange rates.
US dollar (USD) fluctuates amid Trump’s policy blitz
The US dollar (USD) witnessed notable volatility yesterday, rebounding from Monday’s overnight slump before retreating once again.
The turbulence came as Donald Trump was sworn in as US President and immediately signed a flurry of executive orders.
All eyes remain on the Oval Office today, as Trump could continue to make waves with any further executive orders.
Canadian dollar (CAD) slumps as Trump signals tariffs
The Canadian dollar (CAD) plunged yesterday after Trump said he could impose 25% tariffs on Canada as soon as 1 February. Such tariffs could seriously damage the Canadian economy.
Worries about incoming tariffs could continue to pressure CAD today. Oil price movements may also impact the crude-linked ‘loonie’.
Data releases
07:45 NZD Inflation Rate (Q4)
01:15 EUR ECB President Lagarde Speech