Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Aussie pressured by commodity sell-off
The US dollar was higher overnight, rebounding from two-month lows, as a sell-off in commodities hit currencies like the Australian dollar.
Crude oil fell to the lowest level of the year so far on worries about US growth while natural gas dropped more than 6.0% overnight.
Copper dropped 1.0% as US president Donald Trump launched a probe into copper imports sparking fears of new tariffs as seen on aluminum and steel.
Across FX markets, the Australian dollar was hit the hardest, with the AUD/USD down 0.7% as it fell to two-week lows.
The NZD/USD fell 0.6% as this pair hit one-week lows.
In Asia, the USD/SGD climbed 0.2%, nearing one-week highs, while USD/CNH also gained 0.2% as it also reached one-week highs.
USD GDP revision to drive greenback moves
Tonight, the second estimate of the US Q4 GDP will be released at 12.30am AEDT. We anticipate that the 2.3% real GDP growth in Q4 will be reduced to 2.1% q-o-q
Our forecasts for PCE and inventory investment decreased as a result of retail sales and corporate inventories coming in lower than the Bureau of Economic Analysis (BEA)’s original projections.
Furthermore, trade data indicates that net exports were somewhat lower than BEA had initially predicted.
The US Dollar Index (DXY) rebounded slightly yesterday, climbing from two-month lows, as the market expects Trump’s higher tariffs will lead to higher inflation woes, which may keep Fed higher for longer. A stronger GDP number tonight could push the USD further higher.
GBP defies soft business mood
This Friday will see the publishing of the UK Lloyds business barometer.
The headline balance of this poll was 37 in January, which is much less than the 50 reported just six months prior, even if it is higher than the pre-pandemic average of 30.
This study will also focus on the pricing expectations balance, which is still quite high at 59 compared to its prepandemic average of 38, and the staffing levels balance, which has also been declining.
The British pound has been recently stronger, but the GBP/USD faces key resistance through the 1.27-28 region.
This GBP strength has seen big moves in other markets – the AUD/GBP and NZD/GBP are both near the 2025 lows while GBP/SGD is at six-week highs.
Aussie, kiwi tumble to the lower end of the range
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 24 February – 1 March
All times AEDT
Have a question? [email protected]
*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.