US dollar nosedives amid Trump tariff relief
Philip McHugh January 7th 2025 - 2 minute read
Pound (GBP) muted as services PMI revised lower
The pound (GBP) struggled to attract support yesterday, following the release of the UK’s latest services PMI.
Fresh concerns over the UK’s economic trajectory were raised after December’s finalised index was revised lower.
Lingering UK economic concerns may act as a headwind for Sterling today, in the absence of any notable UK data.
Euro (EUR) buoyed by rising German inflation
Germany’s latest consumer price index helped to underpin the euro (EUR) on Monday.
December’s stronger-than-expected uptick in inflation was seen as trimming European Central Bank (ECB) interest rate cut bets, although an expected January rate cut limited the upside in the single currency.
The spotlight today will be on the release of the CPI figures for the Eurozone as a whole. If Germany’s sharp acceleration in inflation is mirrored across the bloc, the euro may rally.
US dollar (USD) tumbles on Trump tariff hopes
The US dollar (USD) got off to an abysmal start this week, after a report suggested that Donald Trump’s advisers are reportedly only seeking to impose tariffs on critical imports, rather than the widespread tariffs outlined by the President-elect during his campaign.
While Trump later refuted the report, it still curbed some of the US dollar’s recent strength, which has been driven by expectations that his proposed tariffs would drive up inflation and limit Federal Reserve interest rate cuts.
The ‘greenback’ may look to claw back some of these losses later today, as the latest ISM services PMI is expected to report the US service sector accelerated last month.
Canadian dollar (CAD) muted amid Canadian political uncertainty
The Canadian dollar (CAD) was subdued on Monday, amid reports of the imminent resignation of Canadian Prime Minister Justin Trudeau.
Canada will publish its latest Ivey PMI later today, with the ‘loonie’ likely to rise if December’s index reports an acceleration in private sector activity.
Australian dollar (AUD) firms as risk sentiment improves
The Australian dollar (AUD) trended broadly higher overnight on Monday, underpinned by positive market sentiment.
New Zealand dollar (NZD) strengthens amid optimistic market mood
The New Zealand dollar (NZD) also climbed in overnight trade, courtesy of the uptick in risk appetite.
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Written by
Philip McHugh