Australian dollar (AUD) fluctuates amid Trump tariff announcement
The Australian dollar (AUD) initially stumbled on Monday, following renewed concerns over US trade policy, as Donald Trump threatened to impose tariffs on all steel and aluminium imports.
However, the ‘Aussie’ managed to claw back these losses through the session amid hopes that Australia could once again secure exemptions from these tariffs, as it did during Trump’s first term in office.
Coming up, this morning sees the publication of Australia’s latest consumer and business confidence indexes. Will a weakening of sentiment pull the ‘Aussie’ lower?
New Zealand dollar (NZD) wavers amid cautious market mood
The New Zealand dollar (NZD) was also infused with volatility at the start of this week amid the whiplash to Trump’s latest tariff announcement.
In the absence of any notable domestic data, it’s likely the ‘kiwi’ will remain sensitive to market risk dynamics through today’s session.
Pound (GBP) pressured by BoE rate cut expectations
The pound (GBP) trended broadly lower during yesterday’s session as investors continued to price in additional interest rate cuts from the Bank of England (BoE) this year.
On the other hand, Sterling was largely able to shrug off concerns over Trump’s new tariffs on the expectation they would have a limited impact on UK GDP.
BoE Governor Andrew Bailey is scheduled to speak later today. If he reiterates the dovish messaging that followed last week’s policy meeting, the pound may come under pressure.
Euro (EUR) muted on ECB warning
The euro (EUR) came under pressure on Monday as an official at the European Central Bank (ECB) warned of the impact of Trump’s protectionist trade policies.
ECB Vice-President Luis de Guindos suggested the latest tariffs will create greater economic uncertainty in the Eurozone and warned against an EU-US trade war.
EUR data is in short supply today. This may see the euro struggle to find direction.
US dollar (USD) shaky amid tariff uncertainty
The US dollar (USD) got off to a mixed start this week as markets digested Trump’s latest tariff threats.
While this bolstered demand for safe-haven assets – propelling gold to record highs – the US dollar’s gains were capped by concerns over how the tariffs might impact the US economy.
Coming up, Federal Reserve Chair Jerome Powell is set to testify before Congress later tonight. If Powell signals the bank may need to maintain higher rates in the face of persistent inflationary pressures, the US dollar is likely to rally.
Canadian dollar (CAD) pressured by metal tariff fears
The Canadian dollar (CAD) stumbled on Monday amid fears that Trump’s new tariffs could hit Canada the hardest due to the US being a key market for Canadian steel exports.
Coming up, any further losses for the ‘loonie’ could be tempered if oil prices continue to appreciate today.
Data releases
09:30 AUD Consumer Confidence (Feb)
10:30 AUD Business Confidence (Jan)
22:15 GBP BoE Bailey Speech
01:00 USD Fed Powell Testimony