US dollar tumbles as Trump argues for lower US interest rates
Philip McHugh January 27th 2025 - 2 minute read
Pound (GBP) underpinned by stronger-than-expected PMIs
The pound (GBP) firmed at the end of last week, as the UK’s latest services PMI outpaced expectations in December.
GBP investors were particularly focused on the rising inflationary pressures within the services sector, amid suggestions it might complicate an expected interest rate cut from the Bank of England (BoE) next month.
UK economic data is in short supply this week. As a result, movement in the pound may be tied to wider market trends. A prevailing risk-off mood could see Sterling sink.
Euro (EUR) strengthens as Eurozone returns to growth
The euro (EUR) rallied on Friday, bolstered by both its negative correlation with the US dollar (USD) and upbeat Eurozone PMIs.
January’s preliminary PMIs revealed the Eurozone’s private sector unexpectedly returned to growth, much to the relief of EUR investors.
This week opens with the publication of Germany’s latest business climate index. If sentiment continues to deteriorate this month, the euro may open the session on the back foot.
US dollar (USD) slumps on Trump comments
The US dollar ended last week’s session on the defensive after Donald Trump argued the Federal Reserve should drop interest rates immediately.
These losses were then compounded by the latest US PMIs as they reported private sector activity slowed to a nine-month low this month.
Turning to the start of this week, it seems safe to assume that the US dollar will continue to take its cues from the Oval Office, potentially leading to further volatility.
Canadian dollar (CAD) slips as oil prices soften
The Canadian dollar (CAD) trended lower on Friday as a softening of oil prices reflected poorly on the commodity-linked currency.
In the absence of any domestic data, movement in the ‘loonie’ may remain tied to oil price dynamics today. Expect to see CAD exchange rates weaken if prices continue to fall.
Australian dollar (AUD) falters in uncertain trade
The Australian dollar (AUD) trended lower in overnight trade, with the appeal of the risk-sensitive currency being sapped by a cautious market mood.
New Zealand dollar (NZD) slips amid bearish mood
The New Zealand dollar (NZD) also weakened through the Asian trading session as investors shied away from the risk-sensitive currency.
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Written by
Philip McHugh