Australian dollar (AUD) fluctuates amid uneven market mood
The Australian dollar (AUD) initially faced some pressure on Friday as Donald Trump’s latest tariff threat rippled through the market.
However, the ‘Aussie’ later managed to stage a recovery as a cautiously upbeat market mood began to take hold.
Turning to this week’s session, the Australian dollar may meet some resistance if China’s latest Caixin PMI reports activity in the Chinese factory sector remained weak in January.
New Zealand dollar (NZD) wavers amid shifting sentiment
The New Zealand dollar (NZD) also fluctuated at the end of last week, as it tracked the shifts in market risk appetite.
Expect this trend to persist through the start of this week, with movement in the ‘kiwi’ remaining tied to market risk dynamics amid a lull in notable domestic data.
Pound (GBP) rangebound amid lack of data
The pound (GBP) was left to trade sideways on Friday in the absence of any notable UK economic data.
GBP investors also appeared reluctant to place any aggressive bets on Sterling amid uncertainty over the Bank of England’s (BoE) upcoming interest rate decision.
UK economic releases are in short supply at the start of this week, which may leave the pound without direction again today.
Euro (EUR) undermined by lacklustre German data
The euro (EUR) faced headwinds at the end of last week after Germany’s latest consumer price index reported a surprise cooling of inflation last month.
This was compounded by the German retail sales release earlier on Friday, which revealed an alarming slump in consumer spending at the end of last year.
Today sees the publication of the CPI figures for the Eurozone as a whole. If the bloc’s preliminary CPI figures for January also fall short of expectations it’s likely to drag on EUR.
US dollar (USD) firms on Trump tariff threat
The US dollar (USD) closed last week’s session on strong footing, with the currency initially firming as President Trump reaffirmed his plans to impose tariffs on Mexico and Canada from Saturday.
These gains were then reinforced by the latest core PCE price index, as the Federal Reserve’s preferred indicator for inflation remained stubbornly high in December.
Coming up, the release of the latest ISM manufacturing PMI may act as a headwind for the US dollar later tonight as January’s index is expected to report the US factory sector remained in contraction last month.
Canadian dollar (CAD) struggles on mixed GDP figures
Trade in the Canadian dollar (CAD) was uneven on Friday in response to mixed domestic GDP figures, which reported a larger-than-expected contraction of growth in November, before rebounding at a healthy pace in December.
In the absence of any notable domestic data, movement in the ‘loonie’ may be tied to oil price dynamics at the start of this week, potentially leading to losses if prices continue to soften.
Data releases
20:00 EUR Inflation Rate (Jan)
01:00 USD ISM Manufacturing (Jan)