Australian Dollar Steadies on Easing US-China Trade Tensions

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  • Australian Dollar Steady on US-China trade Optimism – RBA rate cut speculation limits gains however.
  • Pound Slips from Highs – Sterling undermined by gloomy UK retail sales figures.
  • US Dollar Muted Following Sharp Drop in Consumer Sentiment – Confidence at 2-year low.
  • Canadian Dollar Fluctuates Following Surge in Inflation – CAD unable to hold on to gains as jump attributed to changes in how data is measured.

Australian Dollar Stabilises on US-China Trade Hopes

The Australian Dollar found support at the start of Friday’s session following reports the US was considering lifting some tariffs against China. However the ‘Aussie’ ultimately ended the session flat amid speculation the Reserve Bank of Australia (RBA) may be headed towards a rate cut in the face of gloomy housing data.

AUD investors are likely to keep a close eye out for any additional signs that US-China trade tensions may be easing this week, with the Australian Dollar potentially advancing if this appears to be the case.

Pound Slumps Following Lacklustre UK Retail Sales

After soaring early on Friday, the Pound fell back during the European session following the release of the UK’s latest retail sales figures. According to the Office for National Statistic UK sales slumped from 1.3% to -0.9% in December as shopping habits continue to shift, with most consumers spending big in November to take advantage of the Black Friday sales.

The start of this week’s session is likely to see the focus shift back to Brexit as UK Prime Minister Theresa May discusses her government’s next steps in a speech to Parliament later on Monday.

Euro Stalls as Eurozone Slowdown Concerns Mount

The Euro was flat at the end of last week’s session as the single currency continued to wrestle with concerns regarding a slowdown in the Eurozone, amid speculation that the European Central Bank (ECB) will acknowledge these concerns in its policy meeting later this week.

The release of Germany’s latest PPI figures may also drag on Euro at the start of this week, if producer prices are shown to have contracted last month as expected.

US Dollar Subdued as Consumer Confidence Drops to Two-Year Low

The US Dollar also remained subdued on Friday as the appeal of the US currency was limited by a gloomy outlook from consumers. The University of Michigan’s consumer sentiment index slumped to its lowest levels since October 2016 amid concerns of an economic slowdown in 2019.

US economic data will also remain thin on the ground this week due to the shutdown, likely continuing to limit any upside in the US Dollar.

Canadian Dollar Steady Following Upswing in Inflation 

The Canadian Dollar spiked at the end of last week, as it was driven higher by surprise rise in domestic inflation in December. However the ‘Loonie’ quickly relinquished these gains and settled close to its starting rate as it was revealed the jump was down to a change in how the data is read.

Looking to the week ahead, the CAD exchange rate may suffer at the start of the week if crude prices dip as a result of weaker Chinese GDP appearing to weaken demand for oil.

New Zealand Dollar Flat on US-China Trade Reports

The New Zealand Dollar was also strengthened by the reports that the US may lift some Chinese trade tariffs on Friday, but failed to carry through these gains the end of the session following a rebuttal from the White House.

Data Released

January 21st 11:30 AUD     New Home Sales (DEC) 3.6%
January 21st 18:00 EUR     Germany PPI (DEC)       -0.2%

Post by TorFX

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