AUD starts 2025 near 5-year low

Briefly in today’s #5in5withANZ podcast below:

ANZ Research has pulled forward its forecast for Australia’s first rate cut to February from May after soft inflation data. But US rates expectations have risen after strong US jobs growth. That combination has dragged the AUD down to post-Covid lows.

5 things to know in 5 minutes:

1. US jobs growth of 256,000 in December beat expectations, driving up US interest rates and the US dollar. ANZ Group Chief Economist Richard Yetsenga saw the jobs result as consistent with a slower pace of Fed easing in 2025. The Aussie dollar begins the year at 61.45 USc, its lowest point since March 2020.
2. ANZ Research has changed its call for the next cash rate change by the Reserve Bank of Australia to February from May after soft inflation data last week, says ANZ Australia Senior Economist Catherine Birch .
3. ANZ Research still sees two cuts in 2025 by the RBA, with a pause between the cut in February and one in August.
4. Australian retail spending in November was weaker than expected, but ANZ Australia Economist Madeline Dunk says some seasonal revisions complicate the picture.
5. Maddy says dining and takeaways spending in Australia looked relatively strong in November.

In our first bonus deep dive interview for 2025:

ANZ’s Chief Economist for Greater China Raymond Yeung 楊宇霆 explains why China’s economy may well achieve its 5% growth target for 2024.

Cheers

Bernard

PS: Watch out tomorrow for a deep dive interview with ANZ NZ Chief Economist Sharon Zollner on the New Zealand economic outlook for 2025.