Australian dollar (AUD) rocked by ‘metals meltdown’
The Australian dollar (AUD) got off to a mixed start this week, with the commodity-linked currency initially faltering amid the meltdown seen in the metals market.
However, expectations for an impending interest rate hike from the Reserve Bank of Australia (RBA) helped to put a floor under the ‘Aussie’, leaving it well positioned to recover when metal prices rebounded from their lows later in the session.
Unsurprisingly, the RBA’s rate decision will be centre stage today. Most AUD investors have priced in a 25bps hike, but there is room for the Australian dollar to rally if this is accompanied by hawkish guidance.
New Zealand dollar (NZD) slips in downbeat trade
The New Zealand dollar (NZD) was subdued on Monday, with the risk-sensitive currency falling afoul of a cautious market mood.
In the absence of any notable NZD economic indicators, movement in the ‘kiwi’ is likely to remain tied to market risk dynamics today.
Pound (GBP) underpinned by positive manufacturing PMI
The pound (GBP) traded with modest support at the start of this week, following the release of the UK’s latest manufacturing PMI.
Factory sector growth was revised higher in January’s finalised figures, with the index striking its best levels since August 2024.
UK economic data is thin on the ground today, which could leave the pound to trade without a directional bias.
Euro (EUR) falters on soft German retail data
The euro (EUR) ticked lower on Monday as retail sales data from Germany failed to counter pressure from a stronger US dollar (USD).
While sales returned to growth in December, they remained weak, raising concern about the resilience of consumer spending in Europe’s largest economy.
Eurozone data is in short supply today, likely leaving the euro to trade sideways ahead of the bloc’s inflation print on Wednesday.
US dollar (USD) bolstered by market volatility
The US dollar opened this week on positive footing, extending the recovery seen through the end of last week’s session.
This was driven in part by volatility in commodity and equity markets, which drove bids for the safe-haven currency, with this upside then being reinforced by a surprise rebound in the ISM manufacturing PMI.
Coming up, the latest JOLTs job openings report could temper USD demand later today, if it signals the US labour market cooled in December.
Canadian dollar (CAD) pressured by oil price rout
The Canadian dollar (CAD) stumbled on Monday as easing tensions between the US and Iran triggered a roughly 5% drop in oil prices.
Expect the ‘loonie’ to remain on the defensive if this correction in oil prices persists through today’s session.
Data releases
13:30 AUD RBA Interest Rate Decision
01:00 USD JOLT Job Openings (Dec)