Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
US tariffs due on Tuesday
The Australian and New Zealand dollars were stuck at recent lows on Monday as markets waited for news on the implementation of new US tariffs.
US president Donald Trump last week confirmed that his new 25% tariffs on Canada and Mexico, along with a new 10% tariff on China, would be launched at midnight, Tuesday, 4 March (EST).
However, markets are on edge, with previous announcements on trade being subject to last-minute delays or changes.
For now, the Aussie and kiwi have been pressured by these trade worries, with the AUD/USD down 0.4% on Friday and losing 2.2% over the week.
The NZD/USD was down 0.6% on Friday and lost 2.5% over the week.
We saw a similar story in Asia with the USD higher on trade worries. The USD/SGD gained 0.2% on Friday and climbed 1.3% over the week.
The USD/CNH slipped 0.1% on Friday but climbed 0.6% over the week.
EUR/USD hit by Ukraine worries, but euro gains in other markets
The EUR/USD fell sharply on Friday due to growing tensions between US president Donald Trump and Ukraine president Volodymyr Zelensky. However, the euro has been stronger in other markets.
The AUD/EUR and NZD/EUR both traded toward seven-month lows. The EUR/SGD neared two-week highs.
Ahead of this week’s European Central Bank meeting, HICP inflation for the Euro region will be announced today.
HICP inflation looks likely to have slowed somewhat by 10 basis points to 2.6%, while euro area HICP inflation decreased slightly to 2.3% year over year from 2.5% in January.
We believe that the softening of services prices is mostly responsible for the easing of core price pressures; services HICP inflation will drop to 3.8% from 3.9% earlier.
Aussie looks to retail sales, GDP
The Australian dollar faces a pivotal week with key data releases, including Q4 GDP and January retail sales.
Weakness in these figures could extend the AUD/USD’s decline, especially after a prior -0.1% retail sales contraction.
The RBA’s February meeting minutes released this Tuesday may reinforce a cautious stance, weighing further on the AUD if growth concerns persist.
In the US, February’s US Nonfarm Payrolls and ADP employment data will drive USD volatility. Strong job growth could revive bets on Fed tightening, buoying the dollar against peers like EUR and JPY. ISM Manufacturing and factory orders will also test sentiment toward the US economy.
The ECB’s rate announcement is expected to cut by 25-basis points, but any shift in policy guidance could sway EUR pairs. A dovish tilt may pressure EUR/USD, particularly if Q4 GDP revisions disappoint.
China’s February CPI and PPI releases loom over regional FX. Soft PPI and subdued CPI could signal persistent deflation risks, denting CNH and APAC proxies like AUD and NZD.
USD/SGD, USD/CNH push back to highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 3 – 7 March
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.