FX weekly forecast: Fresh tariff turmoil and sticky US inflation set to boost the US dollar
Philip McHugh February 10th 2025 - 2 minute read
The US dollar looks poised to rise this week as the latest tariff threats from US President Donald Trump and upcoming US inflation data look set to further undermine Federal Reserve interest rate cut expectations.
Pound (GBP)
This week sees the publication of the UK’s latest GDP figures, which could pull the pound (GBP) lower if they reveal that economic growth stalled or even contracted in the last quarter of 2024.
Euro (EUR)
Barring a revision to the Eurozone’s fourth-quarter GDP figures, notable EUR data is in short supply this week, which may leave the euro (EUR) driven by wider market trends.
US dollar (USD)
In addition to the uncertainty surrounding Donald Trump’s latest tariff threats, the US dollar (USD) is likely to be influenced by the latest US consumer price index this week. Signs of sticky inflation are likely to further dampen Federal Reserve interest rate cut bets and bolster USD demand.
Australian dollar (AUD)
This week sees the publication of Australia’s latest consumer and business confidence figures. If they report that sentiment continues to deteriorate, the Australian dollar (AUD) could face headwinds through the first half of the week.
South African rand (ZAR)
In the absence of any notable domestic data, movement in the South African rand (ZAR) is likely to track market risk dynamics this week. This could see the emerging-market currency face headwinds as a result of Trump’s plans to impose tariffs on all steel and aluminium entering the US.
Canadian dollar (CAD)
The Canadian dollar (CAD) also looks vulnerable to Trump’s latest tariff threat this week as the US is a key market for Canadian steel exports.
New Zealand dollar (NZD)
NZD data is thin on the ground this week. As a result, movement in the New Zealand dollar (NZD) is likely to remain sensitive to market risk appetite, potentially leaving the ‘kiwi’ vulnerable amid the latest tariff turbulence.
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Written by
Philip McHugh