US dollar plummets as Trump is sworn into office

Philip McHugh January 21st 2025 - 2 minute read

Pound (GBP) pressured by BoE rate cut bets

The pound (GBP) stumbled yesterday amid growing expectations the Bank of England (BoE) will cut interest rates next month.

While the prospect of rate cuts provided some stability to Sterling last week amid the volatility in the UK bond market, conditions have since normalised, leaving GBP vulnerable to fresh selling pressure. 

Today’s session kicked off with the publication of the UK’s latest jobs report. While GBP investors welcomed an acceleration in wage growth, Sterling weakened as unemployment also rose in November.

Euro (EUR) firms amid USD weakness

The euro (EUR) rallied on Monday, supported primarily by the single currency’s strong negative correlation with the US dollar (USD).

This allowed EUR exchange rates to trend broadly higher, despite rising European Central Bank (ECB) rate cut bets.

Germany will publish its latest ZEW economic sentiment index later this morning, with the euro potentially rising if morale continues to improve this month.

US dollar (USD) plummets as Trump takes office

The US dollar was met by sharp losses at the start of this week as USD investors sought to book their profits ahead of Donald Trump’s inauguration, amid reports Trump would not impose tariffs on his first day back in office.

These losses were exacerbated by thin trading conditions in the ‘greenback’ as US markets closed for Martin Luther King Jr. Day.

Looking ahead, USD investors will be keeping a close eye on Trump’s first moves in office, with his policy priorities potentially infusing further volatility into the US dollar.

Canadian dollar (CAD) undermined by falling oil prices

The Canadian dollar (CAD) edged lower on Monday as the appeal of the commodity-linked currency was dampened by falling crude prices.

Coming up, the release of Canada’s consumer price index could pull the ‘loonie’ lower today, as an expected cooling of inflation may stoke Bank of Canada (BoC) interest rate cuts.

Australian dollar (AUD) slides as Trump tariff concerns begin

The Australian dollar (AUD) retreated overnight on Monday, as Trump spooked markets as he openly mulled potential tariffs on China, Mexico and Canada.

New Zealand dollar (NZD) pressured by weak data

The New Zealand dollar (NZD) also trended lower in overnight trade as New Zealand’s latest PMIs revealed private sector growth contracted for the tenth consecutive month in December.


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Written by
Philip McHugh

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