New Year, same old story; AUD under pressure through start of 2025
Written by
Daily Currency Update
The Australian dollar has faced significant headwinds through the first 2 weeks of 2025, testing a four year low on Friday. Stronger than expected US non-farm payroll numbers and a decline in the underlying US unemployment rate forced investors to wind back expectations for Fed rate pricing through 2025. The AUD tumbled as a result, crashing through US$0.6150 and touching $US0.6141, its lowest level since April 2020. A paring of US rate cut bets and the threat of a new US/China trade war have forced investors away from the AUD. Growing uncertainty surrounding Trump's trade platform will continue to weigh on the dollar ahead of his inauguration on January 20th. The AUD risks further losses should the US pursue an aggressive tariff program. The CNY is hanging on by a thread as Chinese authorities attempt to hold firm ahead of any tariff announcement. If President Elect Trump delivers on his election promises and issues up to 60% import tariffs on Chinese goods, then we could see the AUD slide below US$0.60.With little of note on today’s ticket we look to China trade data ahead of US inflation indicators Wednesday and local employment data Thursday as key markers for direction through the week.
Key Movers
The US dollar outperformed again through Friday trade following stronger than expected December non-farm payroll numbers. The unemployment rate fell back to 4.1% as 223,000 new jobs were added to the economy through the Festive season, a read well above consensus estimates. The strong read drove rate cut expectations back, with the first full rate cut for 2025 now not expected until at least September. With US treasuries surging the dollar advances against all major counterparts with he exception of the Yen. The Yen rallied following a report indicating the Bank of Japan will lift its inflation forecasts raising expectations they will follow through with a rate hike later this month. While commodity currencies remain on the back foot the British Pound was the worst performing major last week down near 2%.Our attention this week turn to UK CPI on Wednesday ahead of US Senate confirmation hearings Fed commentary and US retail sales data.
Expected Ranges
- AUD/USD: 0.6100 - 0.6200 ▼
- AUD/EUR: 0.5930 - 0.6080 ▲
- GBP/AUD: 1.9700 - 2.0000 ▼
- AUD/NZD: 1.1000 - 1.1100 ▼
- AUD/CAD: 0.8780 - 0.8920 ▼