Hubpay FX Weekly Report: 28th Jan 2025

This week's FX report focuses on significant currency movements driven by US President Donald Trump's shifting stance on tariffs, the impact of economic data releases, and central bank policy decisions. Markets saw the dollar tumble following expectations of lower tariffs, while several Asian currencies appreciated. Meanwhile, the Euro and Sterling strengthened against the US Dollar, and emerging market currencies displayed mixed trends.

Key Points:

• The US Dollar experienced its worst week in over a year, falling 1.65% against a basket of major currencies, amid expectations that US tariffs may be lower than feared.
• The Chinese Renminbi surged by 1.1% following Trump's softened approach on tariffs, while the Japanese Yen and Australian Dollar also strengthened, reflecting optimism in the global trade outlook.
• The Indian Rupee saw its largest weekly gain in over a year, supported by a relief rally in Asian forex markets, although portfolio flows remained weak.
• The South African Rand rose 1.8%, buoyed by stronger retail sales, but is now watching closely for the upcoming interest rate decision from the SARB.
• European currencies saw gains with the Euro rising 2% and Sterling strengthening 2.5%, supported by positive economic data and a softer US Dollar.
• The Turkish economy garnered interest from foreign investors, as the central bank’s interest rate cuts and easing inflation spark optimism in the emerging market.

Currency markets remain volatile with changing geopolitical dynamics and policy decisions from major central banks. As we approach another eventful week, stay informed on these developments and their potential impacts on the FX landscape.

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