Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD dominates over break
The US dollar continued to dominate over the holiday break with the USD index climbing to the highest level since October 2022.
The USD’s gains were most significant last week with greenback up sharply versus major European currencies. The GBP/USD fell to nine-month lows while EUR/USD fell to more than two-year lows.
In Asia last week, the USD index strengthened 0.8%, with AUD/USD declining 0.1% and NZD/USD falling 0.3%. The USD/SGD gained 0.9% while USD/CNH rising 0.8%.
The AUD/USD and NZD/USD both slipped to two-year lows over the holiday break.

CPI numbers, Fed minutes and jobs to drive markets
Looking forward, FX markets will be monitoring critical economic data releases this week, with particular attention on US employment figures, inflation readings from multiple economies, and central bank speakers.
Inflation readings across major economies will be closely watched, with Australian CPI on Wednesday the highlight.
Also, we have inflation data from Germany, France, and the broader Eurozone due. China’s CPI and PPI data on Thursday will also be important, with CPI expected at 0.1% YoY and PPI at -2.4% YoY.
Multiple Fed speakers are scheduled throughout the week, including Governor Cook, Richmond Fed President Barkin, Governor Waller, Governor Bowman, Philadelphia Fed President Harker, and Kansas City Fed President Schmid. The FOMC minutes release on Thursday will also draw attention.
The US labor market will be in focus with Friday’s December employment report expected to show 153,000 jobs added and unemployment ticking up to 4.2%. This follows ADP employment data and weekly jobless claims earlier in the week.

Eurozone HICP inflation forecast with upside risks
This Monday and Tuesday will see the release of the HICP preliminary inflation figures for the Euro Area, Germany, France, and Italy.
We project the December flash estimate of euro area HICP inflation to be 2.3% year-over-year.
The EUR/USD broke below key support at the two-year lows last week and any rebound might see short-term resistance between 1.0453 and 1.0470.
In other markets, the euro fell significantly last week, with the AUD/EUR and NZD/EUR both at three-week highs.

Aussie, kiwi at two-year lows
Table: seven-day rolling currency trends and trading ranges

Key global risk events
Calendar: 6 – 11 January

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.