Australian dollar (AUD) unable to hold gains amid market uncertainty
The Australian dollar (AUD) initially rose yesterday, with the ‘Aussie’ climbing in tandem with the Chinese yuan.
However, AUD slipped as the European session got underway, trimming or relinquishing its gains against many of its peers, as tariff uncertainty infused markets with volatility.
Turning to today, if Westpac’s leading economic index for Australia rose 0.3% in December, as expected, it could support AUD. Elsewhere, risk appetite could impact the ‘Aussie’.
New Zealand dollar (NZD) boosted by upbeat data
The New Zealand dollar (NZD) strengthened yesterday as the latest composite PMI showed that domestic business activity expanded at its fastest pace in over three years in December.
New Zealand data is absent from the calendar today, therefore market risk appetite may be the defining factor for NZD exchange rates.
Pound (GBP) fluctuates amid mixed jobs data
The pound (GBP) was uncertain yesterday, trading in a wide range amid wider market volatility and a mixed UK jobs report.
New data showed that the British unemployment rate unexpectedly held at a multi-year high in November, despite a larger-than-forecast rise in employed people over the same period.
Turning to today, focus shifts to the UK’s latest consumer price index. If inflation edged up in December, Sterling could strengthen.
Euro (EUR) jumps as German data beats forecasts
The euro (EUR) leapt to multi-week highs yesterday, with the currency initially underpinned by its strong inverse relationship with the embattled US dollar (USD).
EUR received a further boost thanks to Germany’s ZEW economic sentiment index, which smashed forecasts to surge to its highest level since July 2021.
Later today, European Central Bank (ECB) President Christine Lagarde is due to speak. Any comments on how tariffs could impact the Eurozone economy or inflation could affect EUR.
US dollar (USD) continues to slide amid tariff threats
The US dollar continued to decline yesterday, with USD close to striking a year-to-date low, as President Donald Trump’s latest tariff threats weighed heavily on the currency.
Investors fear that if Trump levies new tariffs on European partners, the EU may retaliate with its own tariffs, denting the US economy, while European investors may reduce their purchases of US Treasuries.
US data is in short supply today, potentially leaving the ‘greenback’ subdued if tariff anxiety continues to pressure the currency.
Canadian dollar (CAD) recoups losses as oil prices rise
The crude-linked Canadian dollar (CAD) initially weakened yesterday, although it managed to bounce back against some peers in the evening thanks to an uptick in oil prices.
Oil price movements could influence the commodity-linked ‘loonie’ again during today’s session. Could an uptick in crude reflect positively on CAD?
Data releases
10:00 AUD Westpac Leading Index (Dec)
17:00 GBP Inflation Rate (Dec)
17:30 EUR ECB President Lagarde Speech