Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Reciprocal tariffs delay weighs on dollar
The greenback extended its decline after President Trump announced a delay in implementing reciprocal tariffs until April, pushing the USD index down near the psychological 107.00 level.
The euro emerged as a key beneficiary, with EUR/USD climbing above crucial 1.0460 resistance amid news that Ukraine’s President Zelenskiy won’t engage in talks with Russia at the upcoming Munich Conference.
The Australian dollar showed strength with AUD/USD reaching 0.6320, while USD/JPY settled at 152.80 as broader USD weakness persisted.
USD/CAD notably broke below key 1.4280 support to end at 1.4190.
In equities, the S&P 500 rose 1% to close above 6100 while the Nasdaq Composite surged 1.50%, approaching 19950, buoyed by lower US yields and clarity on tariff implementation.
Treasury yields declined broadly, with the 10-year falling 9bps to 4.53%, as markets digested the tariff delay news and nuanced PPI data.
Retail sales slump tests dollar resilience amid tariff shadow
Due to a drop in auto sales, US headline retail sales, which are released tomorrow, probably fell 0.2% month-over-month in January after declining 0.4% month-over-month in December.
Our estimate of the retail deflator indicates that real retail sales probably decreased by 0.5% month over month.
Retail sales, excluding vehicle sales, probably increased by 0.5% month over month. Sales of building materials probably increased after three consecutive months of declines, and the month saw an uptick in food services.
Dollar index now fell below its key 50-day MA support of 107.65 and the next key support level sits at 200-day MA of 105.55.
Ringgit outshines on trade surplus boost
With stronger manufacturing output and trade-related services driving the upward revision, we anticipate GDP growth to be revised higher today to 4.9% y-o-y in Q4 from the advance estimate of 4.8%, easing more modestly from 5.3% in Q3.
This is consistent with higher electronics-led export growth in December amid the global tech uptrend.
Ringgit outperformance in Asia is supported by Malaysia’s improved trade balance, which is over the break-even point for a positive basic Balance of Payments.
USD/MYR now hovering on key 50-day MA support of 4.469, still below the 200-day MA resistance of 4.4789.
AUD/USD rebounded on tariff delay
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 9 – 15 February
All times AEDT
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
