Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD lowest in more than a month across APAC, but bounces early Monday
The Australian and NZ dollars’ recent move to one-month highs reversed in early Monday trading as markets worried about the potential for new trade tariffs.
Last week, new US president Donald Trump said he was considering a 10% tariff on Chinese-made goods, while over the weekend, a tit-for-tat sequence of tariffs between the US and Columbia also illustrated the risk of new tariffs in the post-Trump world.
The Australian and NZ dollars, both closely tied to sentiment around trade, fell from recent moves to one-month highs.
On Friday, these pairs had gained strongly, with AUD/USD up 0.5% and NZD/USD up 0.6%, providing the best value for USD buyers in over a month.
USD/SGD at six-week lows ahead of jobs
Looking around the region, unemployment rate in Singapore is due today.
We expect the unemployment rate to stay at 1.9% in Q4, unchanged from Q3 and still below the pre-pandemic 2.2%, in line with normalizing labour market conditions and earlier surveys showing positive hiring expectations of firms.
Given its economy’s reliance on trade, Singapore’s monetary policy is very susceptible to outside influences.
An increase in international tariffs can have a detrimental effect on growth and perhaps cause the S$NEER policy band to loosen.
However, favourable internal circumstances—such as strong GDP, high wages, and a thriving real estate market—oppose relaxation.
USD/SGD has broken the key 50-day EMA support level and the next support will be at 20-day EMA at 1.3387, where USD buyers may look to take advantage.
Fed in focus this week, but unlikely to cut again
FX markets this week will be driven by central bank decisions and key economic data releases. The Federal Reserve, European Central Bank, and Bank of Canada are set to announce policy decisions, while inflation, GDP, and employment data from major economies will also be closely monitored.
The Federal Reserve’s FOMC meeting on Thursday will be the highlight of the week. Markets will focus on any signals regarding the Fed’s future rate path, particularly in light of recent economic data. Key US data releases include durable goods orders, consumer confidence, Q4 GDP, and the employment cost index. These will provide further insights into the health of the US economy and inflationary pressures.
The ECB will announce its policy decision on Friday. The focus will be on the ECB’s forward guidance amid slowing growth and persistent inflation. Additionally, Eurozone Q4 GDP and December unemployment data will provide further context for the region’s economic outlook.
Australia’s Q4 CPI will be a key focus for AUD traders. The market expects a quarterly increase of 0.4%.
Japan will release a slew of economic data this week, including December retail sales and Tokyo CPI.
Aussie , kiwi slip from recent highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 27 Jan – 1 Feb
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.
