Australian dollar (AUD) falls as tariff fears sour mood
The Australian dollar (AUD) weakened yesterday as a gloomy mood swept markets, thereby dampening the risk-sensitive currency’s appeal.
News that US tariffs on Canada, Mexica and China will go ahead next week – dashing hopes of another delay – saw the ‘Aussie’ come under additional pressure in the evening.
Today, market-moving Australian data is in short supply. Therefore, AUD exchange rates may remain driven by market risk dynamics.
New Zealand dollar (NZD) slips despite rising business confidence
The New Zealand dollar (NZD) also fell yesterday, despite a larger-than-forecast improvement in New Zealand business confidence, as the risk-off mood weighed on the ‘kiwi’.
This morning, New Zealand’s latest consumer confidence index showed a slight uptick in household morale this month. Could this support NZD through today’s session?
Pound (GBP) unfazed by trade concerns
The pound (GBP) strengthened against many of its peers yesterday amid hopes that the UK is less vulnerable to US tariffs than other economies.
US trade policy is expected to have a notably negative impact on China, the EU and Canada. Meanwhile, GBP investors are hopeful that the UK economy will be relatively unharmed.
Turning to today, a speech from Bank of England (BoE) Deputy Governor Dave Ramsden could impact GBP. If Ramsden indicates that more interest rate cuts could be on the way, the pound may weaken.
Euro (EUR) dented by EU-US trade war fears
The euro (EUR) faced pressure yesterday as Trump threatened the EU with tariffs of up to 25%, potentially hurting the Eurozone economy.
However, despite these fears EUR was able to hold steady or even inch higher against some of its weaker peers, such as AUD and NZD.
Germany’s latest inflation figures could drive EUR exchange rates this evening. Signs of stubborn inflation in the Eurozone’s largest economy could support the euro, while a softer reading may dent it.
US dollar (USD) leaps as Trumps says tariffs will go ahead
The US dollar (USD) surged higher yesterday evening as US President Donald Trump confirmed that delayed tariffs would come into effect next week.
Markets expect tariffs to drive up US inflation and weigh on global growth. Therefore, the prospect of elevated US interest rates and a risk-off market mood both supported the US dollar.
Looking ahead, the spotlight falls on the latest core PCE price index from the US. The Federal Reserve’s preferred measure of inflation could dent USD if easing price pressures last month revive Fed rate cut bets.
Canadian dollar (CAD) mixed amid tariff fears and rising oil
The Canadian dollar (CAD) fell against its stronger rivals yesterday following Trump’s tariff announcement, although rising oil prices helped the crude-linked ‘loonie’ rise against weaker rivals.
Canada’s GDP figures for the fourth quarter of 2024 are out later tonight. An expected slowdown in growth could put pressure on the Canadian dollar.
Data releases
07:00 NZD ANZ Roy Morgan Consumer Confidence (Feb)
17:00 GBP BoE Ramsden Speech
23:00 EUR German Inflation Rate (Feb)
23:30 CAD GDP Growth Rate (Q4)
23:30 USD Core PCE Price Index (Jan)