Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Global markets weaken led by tech shares
The Australian dollar was the biggest loser overnight after US president Donald Trump warned of another round of 10% tariffs on Chinese goods entering the US and said tariffs on Mexico and China would be introduced from next week.
The tariff news hit already shaky US markets with tech stocks leading the losses as AI chipmaker Nvidia fell 8.5% despite a strong earnings report.
The tech-focused Nasdaq fell 2.8%, the S&P 500 lost 1.6% while the Dow Jones index lost 0.5%.
The AUD/USD fell 1.2% with the pair at three-week lows – a sharp turnaround from the two-month highs seen at the start of the week.
The NZD/USD lost 1.1% with the pair now down 2.5% from last week’s highs.
Inflation fears support EUR
In Europe, the euro and British pound were both sharply lower.
Looking forward, today we see the release of the Euro Area ECB Consumer Expectations Survey.
Since their September 2024 lows, the 1y and 3y forward median inflation predictions have increased. Currently, they are 2.8% and 2.4%, respectively.
In order to prevent inflation expectations from rising and running the danger of de-anchoring, the ECB will be regularly monitoring them.
Even though we think that the impact of US tariffs and Europe’s retaliatory tariffs on European inflation would be minimal, consumer inflation expectations might nonetheless rise slightly as a result.
In APAC, the euro’s been mixed, down near three-year lows versus the Singapore dollar, but mostly stronger against the Australian dollar.
USD/SGD, USD/CNH jump on tariff news
The overnight moves in the US dollar saw big shifts in Asia FX, with regional pairs highly sensitive to news around tariffs.
The USD/SGD jumped 0.7% as it neared the 1.3500 level, while USD/CNH gained 0.5% towards 7.3000.
Over the weekend, China’s official PMI will be made public. Given the pent-up demand for the consumer trade-in program, we anticipate that the official manufacturing PMI will increase from 49.1 in January to 50.2 in February.
As USD/CNH recovers from support, further upward momentum is possible.
Aussie dollar limbo – how low can you go-go?
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 24 February – 1 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.