US dollar volatile on weaker GDP and fresh tariff threats

Pound (GBP) quiet as data thin on the ground

The pound (GBP) was mostly muted yesterday amid an ongoing absence of UK economic data.

However, easing UK government borrowing costs and recently announced pro-growth measures from Chancellor Rachel Reeves helped to provide the pound with some support.

The lack of UK economic data persists into today’s session, potentially leaving the pound to move without a clear trajectory through to the end of the week.

Euro (EUR) fluctuates amid ECB decision

The euro (EUR) was choppy yesterday, initially weakening as the Eurozone’s fourth-quarter GDP figures showed that the bloc’s economy unexpectedly stalled at the end of last year.

EUR was then able to shrug off a widely expected interest rate cut from the European Central Bank (ECB). A data-dependent stance from the ECB helped to cushion the euro, while a falling US dollar (USD) also aided the common currency in the afternoon.

Germany’s preliminary inflation rate could impact EUR this afternoon. If inflation in the Eurozone’s largest economy held steady in January, this could dampen bets on further ECB rate cuts.

US dollar (USD) fluctuates as Trump announces tariffs

The US dollar faced some selling pressure yesterday afternoon as the US GDP results for the fourth quarter of 2024 showed a steeper-than-expected slowdown in economic growth.

However, the ‘greenback’ rebounded in the evening as US President Donald Trump said he will go ahead with implementing 25% tariffs on imports from Canada and Mexico on Saturday.

Looking forward, the latest US core PCE price index is the focus. If the Fed’s preferred measure of inflation shows that price pressures remain stubborn, USD could climb.

Canadian dollar (CAD) wavers as oil rises and USD dips

The Canadian dollar (CAD) faced volatility yesterday afternoon as a rise in oil prices and the drop in the US dollar both impacted the ‘loonie’. CAD then weakened on Trump’s tariff announcement.

This afternoon, Canada’s latest GDP figures are due out. Could weak economic growth see the Canadian dollar stumble?

Australian dollar (AUD) buoyed by risk positive trade

After initially softening, the Australian dollar (AUD) then found some success overnight as a cautiously upbeat market mood aided the risk-sensitive ‘Aussie’.

New Zealand dollar (NZD) recovers as risk appetite rebounds

The New Zealand dollar (NZD) also slipped before rebounding last night, with the recovery in risk sentiment supporting the ‘kiwi’.

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