Australian dollar (AUD) accelerates as risk appetite improves
The Australian dollar (AUD) was initially trapped in a narrow range at the start of this week amid an uncertain market mood.
However, the ‘Aussie’ then accelerated in overnight trade, as a pullback in the US dollar (USD) helped to revive risk appetite.
Coming up, Australia’s latest business confidence figures could lift the ‘Aussie’ this morning if morale recovered last month following the sharp drop in November.
New Zealand dollar (NZD) fluctuates in mixed trade
The New Zealand dollar (NZD) fluctuated on Monday, tracking the shifts in risk appetite through the session.
Movement in the ‘kiwi’ may remain tied to market risk dynamics today, potentially leading to more headwinds if a cautious mood prevails.
Pound (GBP) muted amid Labour infighting
The pound (GBP) was confined to a narrow range yesterday amid the absence of any UK data of note.
Sterling sentiment was also suppressed by signs of Labour party infighting after Prime Minister Keir Starmer’s allies moved to block Andy Burnham from standing as an MP and potentially challenging Starmer in a leadership challenge in the future.
UK economic releases remain in short supply today, which leaves the pound to trade without a strong directional bias.
Euro (EUR) bolstered by softer USD
The euro (EUR) rallied on Monday, drawing the bulk of its support from its strong negative correlation with the US Dollar (USD).
However, these gains were capped after Germany’s IFO business climate index fell short of expectations, dampening hopes for a strong start to the year for the Eurozone’s largest economy.
EUR data is also thin on the ground today, potentially limiting liquidity in the euro.
US dollar (USD) slips on tariff and shutdown concerns
The US dollar opened this week on the defensive, striking fresh multi-month lows amid US tariff and shutdown uncertainty.
This selloff then accelerated later in the session, despite upbeat data showing a larger-than-expected rebound in US durable goods orders in November.
Coming up, the latest ADP weekly employment figures could add to the pressure on the US dollar today, if they raise fresh concerns over US labour market resilience.
Canadian dollar (CAD) undermined by tariff threat
The Canadian dollar (CAD) stumbled on Monday in response to US President Donald Trump’s threat to impose a 100% tariff on Canadian goods if Canada makes a trade deal with China.
Unless we see another U-turn from Trump, these tariff concerns may continue to weigh on the ‘loonie’ today.
Data Releases
10:30 AUD Business Confidence (Dec)
23:15 USD ADP Employment Change Weekly