Australian dollar (AUD) flat amid RBA speculation
The Australian dollar (AUD) wavered at the end of last week, with the currency’s previous momentum being tempered amid interest rate uncertainty.
Friday saw a modest repricing of market-implied rate-hike expectations for the Reserve Bank of Australia (RBA) amid speculation that the bank may maintain a cautious approach to policy through the first half of 2026.
Coming up, China’s latest GDP data will be a key focus for AUD investors today. If growth slowed as forecast in the last quarter of 2025, it may reflect negatively on the ‘Aussie’ due to Australia’s close trading relationship with China.
New Zealand dollar (NZD) buoyed by cautious optimism
The New Zealand dollar (NZD) appreciated on Friday, underpinned by an uptick in market risk appetite.
Looking ahead, the ‘kiwi’ may also be vulnerable to a slowdown if Chinese GDP weakens market sentiment.
Pound (GBP) recovers post-GDP losses
The pound (GBP) attracted modest support at the end of last week, with the currency able to claw back a portion of Thursday’s losses.
This rebound suggested the selloff that followed November’s stronger-than-expected GDP figures had been overzealous.
In the continued absence of any UK economic data of note, movement in the pound is likely to be limited today, particularly as GBP investors brace for some high-impact releases later in the week.
Euro (EUR) sidelined by Greenland rhetoric
The euro (EUR) was flat through Friday’s trading session, with the single currency continuing to face resistance as a result of fresh US rhetoric on Greenland.
Speaking to Fox News, Jeff Landry, US special envoy to Greenland, said US President Donald Trump is ‘serious’ about controlling Greenland and that a ‘deal should and will be made’.
With December’s finalised inflation figures unlikely to deliver any surprises, movement in the euro may continue to be influenced by Greenland developments through the start of this week.
US dollar (USD) dented by positive risk flows
The US dollar (USD) ticked lower at the end of last week, as a modest improvement in risk appetite sapped safe-haven demand.
However, the downside remained limited as the latest US industrial production figures outpaced forecasts.
Turning to the start of this week, limited US data is likely to see movement in the US dollar primarily influenced by safe-haven demand, with a drop in risk sentiment potentially buoying USD.
Canadian dollar (CAD) underpinned by rebound in oil prices
The Canadian dollar (CAD) held steady on Friday as a rebound in oil prices helped to offset fresh concerns about Canada’s increasingly dour trade relationship with its closer neighbour, the US.
Canada will publish its latest CPI figures later today. Economists predict a modest cooling of inflation in December, but with this unlikely to shift the Bank of Canada’s (BoC) thinking on interest rates, the impact on CAD exchange rates may be negligible.
Data Releases
20:00 EUR Inflation Rate (Dec)
23:30 CAD Inflation Rate (Dec)