Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Aussie recovered Monday’s losses
The Australian dollar and other risk-sensitive currencies were initially lower on Monday after US President Donald Trump announced plans for new tariffs on steel and aluminum but markets mostly recovered these losses and ended flat on the day.
However, President Trump has pushed forward with this new tariff plan, signing an executive order early Tuesday (APAC time) that would introduce these tariffs on 4 March.
The AUD was supported by a report that the US might consider providing an exemption for Australian goods. The AUD/USD was flat.
On the other hand, the kiwi remained weaker, with the NZD/USD down 0.5%.
The USD/SGD and USD/CNH were both 0.1% higher easing back after more substantial gains.
Sticky US inflation to test USD bulls
Looking forward, Wednesday night sees the announcement of US consumer prices. Core CPI inflation probably increased from 0.225% in December to 0.302% month over month in January.
A slight slowdown in the inflation of rent-related components was countered by an anticipated recovery in lodging-away-from-home costs and a reasonable increase in car prices.
The US Dollar Index (DXY) strengthened this past week, reversing earlier losses, as trade tensions between the US and China ratcheted higher again.
The near-term short-term support can be seen for the dollar index is at 50-day MA of 107.6.
We retain positive bias towards the dollar index.
EUR/USD tests key resistance amid industrial slump
This Thursday, Euro Area Industrial Production, December will be made available.
We forecast euro area industrial output to decline by 0.6% m-o-m, and our forecast for a modest decline in Germany’s industrial production.
EUR/USD carves out a range after the Sep-Jan slide decelerated near the 1.02 Sep 2022 61.8% retrace.
Important medium-term resistance levels are still grouped around 1.06.
For EUR/SGD, important ST resistance can be seen at 50-day MA of 1.4099.
EUR/SGD is now near at September 2022 monthly lows of 1.3714, where EUR buyers may look to take advantage.
Kiwi underperforms
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.
