Australian dollar falls due to RBA interest rate decision
On the 10th of December, the Australian dollar (AUD) continued to fall against all major currencies as the Reserve Bank of Australia (RBA) decided to maintain the Official Cash Rate (OCR) at 4.35% in its final policy meeting this year – falling below its five-month low.
US dollar strengthens following PMI data publishing and Fed rate decision
Following the publishing of US Global Composite and S&P Global Services PMI data on the 16th of December, the US dollar strengthened against the euro, Japanese yen (JPY), Pound Sterling (GBP), Canadian dollar (CAD), Swedish krona (SEK), and Swiss franc (CHF). According to economic analysts, the US services economy is booming. Output has been growing at its highest rate since the reopening of the economy after the COVID lockdowns three years ago.
The US dollar advanced against other currencies on the 18th of December despite the Federal Reserve cutting interest rates as it indicated that it would limit further cuts in the future. Following the decision, the Pound Sterling weakened 0.98% against the USD, hitting a three-week low.
Mixed market reactions to GBP following PMI data and BoE decisions
The Pound Sterling rose against major currencies despite mixed PMI data in December. The Pound Sterling strengthened by 0.37% against the USD following the PMI data release on the 16th of December.
However, GBP edged down by 0.17% against the USD following the Bank of England’s decision to leave the policy rate at 4.75% on the 19th of December, despite strengthening against most other major currencies.
On the 30th of December, the Pound Sterling continued to decline, especially against the US dollar as more interest rate cuts are anticipated from the Bank of England.
Euro weakens after ECB interest rate decision despite better-than-expected PMI results
On the 16th of December, the euro stabilised against the US dollar following the Eurozone PMI data release. The Eurozone Manufacturing PMI remained at 45.2 against a 45.0 estimate, while the Services PMI rose to 51.4 against an expected 49.4.
However, the euro had weakened against the US dollar and the Pound Sterling following the European Central Bank’s decision to lower key rates by 25 basis points on the 12th of December.
JPY strengthens amid BoJ policy meeting summary and Tokyo CPI inflation data release
On the 27th of December, the Japanese yen (JPY) rose from a five-month low against the USD following the release of the summary of the policy meeting held on the 19th of December, which indicated increasing confidence from policymakers in an imminent rate increase. In the policy meeting on the 19th of December, the Bank of Japan maintained interest rates at 0.25%.
The release of the Tokyo Consumer Price Index inflation data on the 27th of December further strengthened the JPY against the USD. The CPI inflation data increased to 3.0% in December from 2.6% in November.
Chinese yuan set to end the year on a 14-month low
On the 30th of December, the Chinese yuan weakened against the USD - an almost 14-month low - due to rising US bond yields and tariff threats from US President-elect Donald Trump.
Canadian dollar weakened due to political instability in Canada
On the 11th of December, the Canadian dollar rose slightly against the USD despite an interest rate cut by the Bank of Canada to 3.25% in response to a statement indicating a slowdown in rate cuts.
However, political instability weakened the Canadian dollar to a near five-year low after Deputy Prime Minister Chrystia Freeland quit on the 16th of December, citing disagreement with Prime Minister Justin Trudeau over US tariff threats.
On the 19th of December, the Canadian dollar experienced its weakest intraday level since March 2020 due to US trade tariffs, Federal Reserve cuts in interest rates and Canadian political uncertainty.
Key dates – January 2025
- January 2nd: Releasing of HCOB Manufacturing PMI data in Europe (euro), Releasing of S&P Global Manufacturing PMI data in Canada and the US (CAD, USD)
- January 6th: Releasing of HCOB Composite PMI data and HCOB Services PMI data in Europe (euro), Releasing of S&P Global/CIPS Composite PMI data and S&P Global/CIPS Services PMI data in the UK (GBP), Releasing of S&P Global Composite PMI data and S&P Global Services PMI data in the US (USD)
- January 7th: Releasing of S&P Global/CIPS Construction PMI data in the UK (GBP)
- January 8th: Releasing of the Eurozone Economic Sentiment Indicator, a composite indicator measuring confidence in the industrial, services, construction and retail trade sectors, and among consumers (EUR)
- January 15th: US Federal Reserve releases the Beige Book reporting on the current US economic situation (USD), China Industrial Production Year-on-Year (CNY)
- January 16th: ECB releases monetary policy meeting accounts (EUR)
- January 20th: The People’s Bank of China announces interest rate decision (CNY)
- January 24th: Bank of Japan announces interest rate decision (JPY)
- January 29th: US Federal Reserve announces interest rate decision (USD), Bank of Canada announces interest rate decision (CAD)
- January 30th: ECB releases its monetary policy statement (EUR)
The contents of this article do not constitute financial advice and are provided for general information purposes only.
