Trump Resumes Tariff Threats
AUD
Risk-off sentiment drives the AUD lower. Softer commodities prices didn’t lend a helping hand, with Iron Ore -1.2%, Copper -1.1% while Gold and Silver were basically flat. Asian equities started the week mixed, the Nikkei managed +0.3% while the Shenzhen and Hang Seng slid -0.2% and -0.6%, respectively. The ASX closed +0.2% higher with utilities the outperformer, up +3.2%. Quiet on the local data front so far this week. Australia’s January monthly CPI print is due tomorrow morning. Consumer inflation bottomed last September and October at 2.1%. It rose in November and December to finish the year at 2.5% and is expected to land at 2.6% tomorrow. Last January, the figure was 3.4%. While the RBA lowered the Cash Rate for the first time in over four years last week, the central bank sounded cautious. Currently, markets aren’t fully pricing in another interest rate cut until July.
USD
AUDUSD is dragged lower by risk-off sentiment, opening at 5-day lows of 0.6345. A mixed evening on Wall St. saw the Dow Jones trading +.5%, the Nasdaq -.5%, and the S&P 500 unchanged entering the final hours of the North American session. No major US data so far this week, although a jam-packed Wednesday through Friday. Overnight will bring CB Consumer Confidence. Q4 GDP will print on Thursday. The Core PCE Index will be released on Friday evening. We should see the discussion on Mexico and Canada tariffs returning to center stage as the deadline for the delayed tariffs is a week away. This morning, Trump said the tariffs are 'on time' and 'moving along very rapidly' following an initial delay, even as a US official cautioned the schedule could be less certain.
EUR
AUDEUR falls to 0.6063 after the Euro welcomed the German election result, seeing a small boost from the CDU/CSU being able to form a coalition with only the SPD, without any third party. The Euro reacted positively as a two-party government is deemed more stable given the unsuccessful three-party experience of the outgoing government. The German DAX gained +0.6%. The French CAC fell -0.8%. This evening, we’ll see German GDP figures. The European Central Bank’s Schnabel will also be speaking.
GBP
AUDGBP flirts with the 0.5020 to 0.5030 support range, opening a little lower than yesterday at 0.5027. The FTSE was flat yesterday. Little UK data at the moment. Overnight, Bank of England Chief Economist Pill will deliver closing remarks at the 2025 BEAR Conference at the BoE, in London.
NZD
AUDNZD touched 1.1062 lows this morning before retracing a little to open at 1.1071, around the mid-point over the past month. No Kiwi data in the near-term.