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Trump's apparent demolition of the post-war European security architecture is having a paradoxical impact in currency markets. It is forcing Europe, and Germany in particular, to embrace massive increases in defense spending, to be financed apparently via deficit spending and additional debt.
The dollar is trading higher across the board this afternoon after President Trump cooked up another storm on his Truth Social account, proclaiming that tariffs aimed at Canada and Mexico would go ahead as planned next week.
The US dollar has rallied against almost every currency in the world overnight, as investors digest the news of the big outperformance in the polls from Donald Trump.There was a broad consensus among market participants and political pundits that this year’s election would be one of the closest run races in living memory.
The soft second quarter GDP report out of China had a disproportionately large bearish impact on the Aussie dollar last week, as is typical given the close economic ties between the two countries.
AUD once again outperformed its New Zealand peers last week, as the dovish RBNZ announcement emphasised the growing rate divergence between the two nations. Australian inflation has continued to surprise to the upside, and investors remain convinced that the Reserve Bank of Australia won’t even begin contemplating cuts until 2025.
AUD posted fresh gains against most major currencies again last week, edging towards its highest level in six months on the greenback.
The rising cost of hedging the Aussie dollar.This week saw the AUD fall close to 3% to below 0.66c against the USD - while also seeing simil...
Can the Aussie dollar recover from its recent lows?The Aussie dollar hit the key level of US$0.7150 just four short weeks ago, but since then it's collapsed to 0.674.
How the AUD will react to the strength of retailersWalmart's dominant market position makes it a gauge of retail strength, and James Swerling of Ebury notes that sales are expected to reach 4% higher y/y, healthy but lagging on inflation.Walmart's weak guidance may be a portend of slowing growth ahead and perhaps a more dovish Fed.
Move over King Dollar... the AUD is backIt's been a massive week with central bank news with the BOE, the ECB, and the FED all having their first meetings of the year.Patrick Idquival from Ebury says Powell did his best to be hawkish in his speech when the Fed raised rates by 23bps, but markets weren't convinced.
A strong CNY leading up to CNY (Chinese New Year)Patrick Idquival from Ebury Partners shares his views on the strength of the CNY leading up to CNY (Chinese New Year).He mentions that the big shift in the Chinese Yuan is due to two things, a correction in the USD on the back of the Fed and the Chinese Reopening story.
US dollar rides the Fed's wave.Trading volumes are still quite low, but likely to pick up in coming weeks.James Swerling from Ebury says the US dollar has been moving with the Fed; initially up on the hopes that they were almost done hiking rates, and now cooling off on jobs data.
