The US dollar faced notable volatility last week, after investors were unsettled by news that the US Department of Justice had launched a criminal investigation into Federal Reserve Chair Jerome Powell, widely seen as ‘politically motivated’.
Last week’s key rate movements
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GBP/EUR – Unchanged on the week
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GBP/USD – Down 0.3% on the week
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EUR/USD – Down 0.3% on the week
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AUD/USD – Unchanged on the week
Pound (GBP)
GBP investors will be kept on their toes this week with the publication of the UK’s latest inflation and employment figures. If these releases help dampen expectations for a Bank of England (BoE) interest rate cut next month, the pound (GBP) is likely to firm.
Euro (EUR)
The euro (EUR) will likely remain sensitive to Greenland developments this week, with EUR investors waiting to see how EU leaders will respond to US President Donald Trump’s latest tariff threat.
US dollar (USD)
In addition to Trump’s Greenland rhetoric, the publication of the Federal Reserve’s preferred indicator for inflation, the core PCE price index, will be a key focus for USD investors this week. If November’s data points to price resilience, it may ease dovish Fed bets and lift the US dollar (USD).
Australian dollar (AUD)
The Australian dollar (AUD) may come under pressure later this week if another weak domestic jobs report tempers Reserve Bank of Australia (RBA) rate hike bets.
South African rand (ZAR)
Movement in the South African rand (ZAR) is set to be driven by domestic inflation figures this week as ZAR investors look for more clues on how the South African Reserve Bank (SARB) will shape monetary policy this year.
Canadian dollar (CAD)
Movement in the Canadian dollar (CAD) may remain tied to oil price dynamics this week, potentially leaving the ‘loonie’ vulnerable if crude prices continue to retreat from their recent highs.
New Zealand dollar (NZD)
The New Zealand dollar (NZD) may catch bids later this week if a rise in domestic inflation in the last quarter of 2025 reinforces the view that the Reserve Bank of New Zealand’s (RBNZ) cutting cycle is over.
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