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AUD/USD remains range-bound near 0.65, despite USD gains against major European currencies. Global equity markets appear unfazed by the escalating Ukraine-Russia conflict. President Trump’s re-election has bolstered equity markets, supporting risk-sensitive currencies like AUD/USD. However, if global economic concerns emerge, AUD/USD may face further downward pressure.
The USD’s strength stems from the deteriorating situation in Ukraine and rising US yields. US Treasury yields continue their two-month upward trajectory. Market sentiment suggests optimism about the economic impact of Trump’s second term. Projections indicate a US tax increase in 2025, followed by a larger cut in 2026. Recent economic indicators present a mixed picture, with lower jobless claims but weakening manufacturing surveys.
AUD/EUR has risen due to the worsening Russia-Ukraine conflict. Russia’s deployment of a new long-range missile against Ukraine has pushed European gas prices up by over 4%. This dynamic highlights Australia’s position as a major gas exporter in contrast to Europe’s status as a significant importer.
AUD/NZD has surpassed 1.11, reaching levels not seen since late July. The Reserve Bank of New Zealand’s aggressive rate-cutting strategy, with an expected 50bp cut to 4.25% next week, contrasts with Australia’s steady cash rate of 4.35%. The RBNZ’s February 2025 meeting guidance will be crucial for the AUD/NZD pair’s future movement.
AUD/JPY has eased to around 100.50. Japan’s upcoming national CPI data is expected to slightly exceed the Bank of Japan’s 2% target. A potential BoJ rate hike to 0.50% next month could push AUD/JPY below 100.0.
AUD/GBP has lifted to approximately 0.5170. The imminent release of UK retail sales data, while not typically a major currency mover, will provide valuable insights into the economic landscape ahead of the UK’s expansionary budget.
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6510 |
| AUD/NZD | 1.1112 |
| AUD/JPY | 100.61 |
| AUD/CNH | 4.7243 |
| AUD/EUR | 0.6215 |
| AUD/GBP | 0.5172 |
| AUD/HKD | 5.0663 |
Chart of the day
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