FX weekly forecast: Trump inauguration to herald new era of currency volatility?

Pound (GBP)

This week will see the publication of the UK’s latest jobs report. The pound (GBP) may come under pressure if November’s employment and wage growth figures both fall short of expectations.

Euro (EUR)

The release of the Eurozone’s latest PMIs will be the primary focus for EUR investors this week. If December’s preliminary figures point to continued weakness in the bloc’s private sector, the euro (EUR) is likely to weaken.

US dollar (USD)

USD investors will be closely watching Donald Trump’s policy priorities following his inauguration this week. If he seeks to immediately implement his tariff plans upon returning to office, it may spook markets and bolster the US dollar (USD). However, a softer approach to tariffs could dent USD.

Australian dollar (AUD)

The Australian dollar (AUD) may face headwinds this week with the release of Australia’s latest PMI figures. Economists forecast December’s preliminary figures will report growth in the country’s private sector remains weak.

South African rand (ZAR)

In addition to potential volatility stemming from Trump’s return to office, the South African rand (ZAR) will also be influenced by domestic inflation figures this week. Another uptick in inflation may buoy the rand if it weakens South African Reserve Bank (SARB) interest rate cut expectations.

Canadian dollar (CAD)

Canada will publish its latest consumer price index this week. If December’s CPI figures report inflation continued to cool, it may stoke Bank of Canada (BoC) rate cut bets and drag on the Canadian dollar (CAD).

New Zealand dollar (NZD)

New Zealand will also publish its latest CPI release this week. Annual inflation is forecast to have slowed in the last quarter of 2024. The New Zealand dollar (NZD) may weaken in response, as this is likely to stoke Reserve Bank of New Zealand (RBNZ) rate cut expectations.

Matthew Andrews

Contact Matthew Andrews


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