Economic impact trumps geopolitical fears
The US dollar ended lower on Monday as markets reversed their initial risk‑off move that pushed safe‑haven assets higher and instead focused on the negative impact of tariffs on US growth.
US President Donald Trump announced new tariffs on eight European countries over the weekend as he pushed for “the complete and total purchase of Greenland”.
European equities plunged, with the German DAX down 1.3% and the French CAC 40 down 1.7%. The UK’s FTSE 100 slipped 0.3%.
In currency markets, the USD initially strengthened but, as we saw last year, expectations of tariff‑driven pressure on the US economy ultimately pushed the currency lower.
The AUD/USD rose 0.5% to a one‑week high, while the NZD/USD gained 0.8% to a two‑week high.
In Asia, the USD/JPY fell 0.4%. USD/CNH slipped 0.2%, and USD/SGD lost 0.3%.
USD/JPY leads losses as BoJ looms
Japan’s core machinery orders plunged 11% in November, far worse than the expected 5% decline and reversing October’s 7% increase. It was the steepest monthly fall since April 2020.
On an annual basis, orders fell 6.4%, missing the forecast for a 4.9% rise and following a strong 12.5% increase previously.
The slump points to weakening corporate sentiment and a softer demand outlook, which could weigh on wages, household spending, and overall growth.
The BoJ is widely expected to remain on hold at Friday’s meeting.
USD/JPY now sits near a one‑week low, around 1% below its recent peak of 159.45 reached on January 14.
Key support levels include the 50‑day EMA at 156.00, followed by the 100‑day EMA at 153.95.
USD buyers may look to take advantage near those support lines.
China growth hits 5% but December stumbles
China’s economy expanded 5% in 2025, driven by exports and meeting the government’s official growth target. Fourth‑quarter GDP rose 4.5% year on year, easing from 4.8%.
Quarter‑on‑quarter, output increased 1.2%, slightly above the 1.1% forecast.
However, December data showed renewed softness. Retail sales rose just 0.9%, missing expectations and slowing from 1.3%, underscoring fragile domestic demand even as inflation climbed to a 21‑month high.
Industrial production was a bright spot, rising 5.2% versus expectations of 5% and November’s 4.8%.
USD/CNH slipped to a twelve‑month low. Key resistance sits near the 21‑day moving average at 6.9884, followed by the 50‑day moving average at 7.0275.
USD reverses as tariff worries weigh
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 19 – 24 Jan
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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.
