Australian dollar (AUD) pressured by US-China trade tensions
The Australian dollar (AUD) closed last week’s session on the defensive after China retaliated against US President Donald Trump’s latest tariffs.
The latest escalation saw Beijing raise tariffs on US goods to 125%, dragging on AUD exchange rates amid fears the spillover of this trade war will impact Australia’s economy.
Domestic data is in short supply at the start of this week, resulting in the ‘Aussie’ being tied to market sentiment. Expect AUD exchange rates to weaken if investors remain on edge.
New Zealand dollar (NZD) shrugs off trade concerns
Despite the skittish market mood, the New Zealand dollar (NZD) maintained a positive trajectory against most of its peers on Friday.
The ‘kiwi’ may struggle to replicate this success at the start of this week if investors remain wary of risk-sensitive assets.
Pound (GBP) buoyed by upbeat GDP figures
The pound (GBP) trended broadly higher at the end of last week after the UK’s latest GDP figures reported the economy expanded by 0.5% in February.
However, analysts warned that February’s data doesn’t accurately reflect the economic realities of global trade under Trump, capping Sterling’s gains.
The UK will publish its latest jobs data in the first half of this week. Could signs of a strong UK labour market temper Bank of England (BoE) interest rate cut speculation and lift the pound?
Euro (EUR) jumps amid USD selloff
The euro (EUR) accelerated on Friday as it was pushed higher by its strong negative correlation with the US dollar (USD).
Amid the US dollar’s growing challenges, investors looked to other safe-haven assets like the single currency to ride out the current market volatility.
Assuming the USD selling bias remains in place, expect the euro to stay in vogue at the start of this week.
US dollar (USD) punished by US policy concerns
The US dollar tumbled to a three-year low at the end of last week as sentiment in the dollar continued to evaporate.
In addition to recent tariff uncertainty, concern over Federal Reserve independence further eroded confidence, following reports that President Donald Trump petitioned the Supreme Court to grant him the authority to fire Fed Chair Jerome Powell.
The US dollar will likely remain at the mercy of Trump at the start of this week, with USD exchange rates at risk of striking new lows if he continues to undermine US policy credibility.
Canadian dollar (CAD) pressured by softer oil prices
The Canadian dollar (CAD) slipped on Friday, with the commodity-linked currency falling in tandem with global oil prices.
In the absence of any notable domestic data, the ‘loonie’ may continue to track movement in oil prices.