AUD – Australian dollar
The Aussie dollar closed for the week higher after some softer Retail Sales figures and Unemployment Claims in the US on Thursday night as well as stronger GDP, Industrial Production and Retail Sales figures in China on Friday afternoon. Presently, AUD against the USD is trading at levels not seen since October 2022 around the US$0.62 mark. Over the weekend Israel agreed to a ceasefire where it would include troops being pulled out from areas in Gaza and Palestinians are allowed to return, paving a way for a possibility to end the war. Trump and Xi also had a constructive call on Friday evening claiming “they will solve many problems together and make the world more peaceful and safe”. These remarks come ahead of the Trump inauguration on Tuesday morning at 4 am AEST, where Beijing may encounter uncertainties on Trade and Tariffs for the next four years. The threat of tariffs slightly subsided in the USD after the Trump team explored the possibility of making a more measured move with monthly tariff increments.
Bank of Japan Governor Kazuo Ueda will consider raising interest rates in Japan, dependent on the potential turbulence caused by the first few days of the presidency. Consequently, the AUD has declined against the yen, dropping from a high of ¥99 to the week’s close of ¥96.78 and going as low as ¥96.08. The USD/JPY cross also fell from a high of just under ¥159 to the week’s close of ¥156.29 after touching a low of ¥155.00.
Key Movers
The yen was last week’s strongest currency relative to a basket of major currencies as a result of softer than expected US Core CPI 0.2% vs forecast of 0.3%, Core Retail Sales and Retail sales 0.4% vs 0.5% forecast and 0.4% vs 0.6% forecast respectively and as well as US Unemployment 217K vs 210K forecast consequently softening the US rate hike pressures and as well as the Bank of Japan Governor Ueda starting to look at raising rates later this week on Friday.
The Great British pound has however continued to slide vs a basket of the major currencies notably vs USD, where it fell from a peak of US$1.2300 to close at US$1.2168 and as well as the GBP/JPY falling from a peak of ¥193.07 to close last week at ¥190.20. Softer UK CPI YoY 2.5% vs 2.6% forecast, GDP MoM 0.1% vs 0.2% forecast and Retail Sales MoM -0.3% vs 0.4% have added further fuel for a further Bank of England rate cut in February. The AUD consequently rose over the week against the GBP to close just shy of £0.5100.
The main news this week would be the inauguration of Trump on Tuesday morning and the Bank of Japan rate decision on Friday. Today however, Chinese 1y and 2y Loan Prime Rate, Japan Revised Industrial Production, Tertiary Industry Activity, German PPI, Swiss PPI, Eurogroup meetings and WEF Annual meetings flowing until Friday.
Expected Ranges
AUD/USD: 0.6120 – 0.6250 ▼
AUD/EUR: 0.5980 – 0.6070 ▲
GBP/AUD: 1.9500 – 1.9800 ▼
AUD/NZD: 1.1040 – 1.1130 ▲
AUD/CAD: 0.8900 – 0.9000 ▲