Home Daily Commentaries AUD whipsaws as markets react to rising inflation and geopolitical headlines

AUD whipsaws as markets react to rising inflation and geopolitical headlines

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Thursday 13 February, 2025

Daily Currency Update

There is plenty to digest this morning as markets react to stronger than expected US inflation data and a shifting geopolitical landscape. US headline CPI for January rose 0.5%, driving an increase in the annual rate of inflation to 3%, its highest level in 7 months. The stronger print follows an uptick in wages in last week's US non-farm payroll print, forcing markets to further pare back Fed rate cut expectations. We are pricing just one Fed rate adjustment this year, likely in December. US yields rallied following the data, dragging the USD higher. With the US dollar on the front foot, the AUD fell to intraday lows at US$0.6235 before finding support. The AUD then rallied following a post from President Trump on Truth Social, announcing that he and Russian President Vladimir Putin have agreed to open talks to end the war in Ukraine. Risk sentiment surged and the AUD bounced through US$0.63 marking session highs at US$0.6309 before settling nearer US$0.6290.

Our attentions turn now to US PPI number, UK Q4 GDP data and geopolitical headlines for direction. Any commentary surrounding tariffs will prove key in shaping near term direction.

Key Movers

There is plenty to absorb this morning. The US dollar surged overnight following stronger than expected January inflation data. The CPI print forward markets to pare back Fed rate cut expectations, driving US yields higher and the DXY index upward. The rally was short-lived, with markets paring gains following reports President Trump and Russian President Vladimir Putin would open talks to end the War in Ukraine. The euro immediately surged, jumping three tenths of a percent and pushing back toward 1.04. In contrast, the yen was the day's big looser unable to recover losses suffered following US CPI and the subsequent surge in yields, giving up near 1.5% on the day and allowing the USD to trade just shy of 154.50.

Our attentions today turn to UK GDP data and US PPI numbers, while further developments in Russia/US/Ukraine talks and tariff headlines will guide sentiment.

Expected Ranges

  • AUD/USD: 0.6220 - 0.6320 ▼
  • AUD/EUR: 0.5980 - 0.6080 ▼
  • GBP/AUD: 1.9600 - 2.0000 ▲
  • AUD/NZD: 1.1080 - 1.1150 ▼
  • AUD/CAD: 0.8920 - 0.9020 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.