The euro edged slightly higher in the European market on Wednesday against a basket of global currencies, trading within a narrow range against the US dollar, as investors refrained from building new positions ahead of the release of key inflation data in Europe and very important economic data from the United States.

Despite easing price pressures in Germany during December, markets continue to rule out any retreat by the European Central Bank from current interest rate levels this year, supported by the resilience of economic activity in the euro area, which has recently delivered performance exceeding expectations.

Price overview

• Euro exchange rate today: The euro rose by around 0.15% against the dollar to 1.1703, from the day’s opening level of 1.1688, after recording a low of 1.1684.

• The euro ended Tuesday’s trading down about 0.3% against the dollar, resuming losses that had paused the previous day during a recovery from a four-week low at 1.1659.

• These losses were attributed to data showing a sharper-than-expected slowdown in inflation in Germany and France, which eased inflationary pressure on policymakers at the European Central Bank.

US dollar

The US dollar index fell by 0.1% on Wednesday, reflecting a decline in the US currency against a basket of major and secondary currencies, as investors avoided opening new long positions ahead of key economic data from the United States.

Later today, a series of US data releases are due, including private sector employment figures for December, job openings at the end of November, and the Institute for Supply Management’s survey on services sector activity in December.

These data are expected to provide further evidence on the likelihood of the Federal Reserve continuing to cut US interest rates over the course of this year.

European interest rates

• Money markets continue to price the probability of a 25 basis point cut in European interest rates in February at below 10%.

• Traders expect the European Central Bank to keep interest rates unchanged throughout this year, especially if inflation remains close to its 2% target.

Inflation in Europe

To reassess the above expectations, investors are awaiting the release later today of headline inflation data for Europe for December, which will clarify the extent of inflationary pressures facing policymakers at the European Central Bank.

By 10:00 GMT, the annual consumer price index for Europe is due. Market expectations point to a rise of 2.0% in December, down from 2.1% in November, while core inflation is expected to remain at 2.4%, in line with the previous reading.

Euro outlook

Here at Economies.com, we expect that if inflation data come in cooler than currently anticipated by markets, the likelihood of European interest rate cuts this year will increase, which would imply renewed downward pressure on the euro’s exchange rate in the foreign exchange market.

The Australian dollar rose in the Asian market on Wednesday against a basket of global currencies, extending its gains for a fourth consecutive day against its US counterpart and reaching its highest level in 15 months, supported by a surge in global commodity and base metal prices.

These gains came despite data released today in Sydney showing a slowdown in inflation in Australia during November, easing inflationary pressure on policymakers at the Reserve Bank of Australia.

Price overview

• Australian dollar exchange rate today: The Australian dollar rose by 0.45% against the US dollar to 0.6767, the highest level since October 2024, from the day’s opening level of 0.6736, after recording a low of 0.6717.

• The Australian dollar ended Tuesday’s trading up 0.35% against the US dollar, marking its third consecutive daily gain, amid US stock indices climbing to new record highs.

Global commodity prices

Global commodity and metal prices are currently witnessing a fresh wave of record gains, driven by rising demand from major economies led by China and the United States, alongside geopolitical tensions that have reinforced investors’ shift toward base metals as a safe haven.

This rise is reflected positively on the Australian economy, which is one of the world’s leading exporters of iron ore, coal, and gold, as it helps boost the trade surplus and increase revenues for companies operating in the mining sector.

It also provides strong support to the government budget through higher fee and tax revenues, giving the Australian economy greater flexibility to cope with global inflationary pressures while maintaining stable growth rates.

Inflation in Australia

Data released on Wednesday by the Australian Bureau of Statistics showed that the headline consumer price index rose 3.4% year on year in November, below market expectations of a 3.6% increase, compared with a 3.8% reading in October.

The slowdown in Australian inflation exceeded expectations in November.

These data point to a slight easing of inflationary pressures on policymakers at the Reserve Bank of Australia. However, inflation remains above the bank’s medium-term target range of 2%–3%, which reduces the likelihood of an Australian interest rate cut in February.

Australian interest rates

• Following today’s data, market pricing for a 25 basis point cut in Australian interest rates in February remained steady around 33%.

• To reassess these expectations, investors are awaiting further data on inflation, employment, and wages in Australia ahead of the April meeting.

US stock indices rose during Tuesday’s trading session, extending their gains as technology and energy stocks rebounded amid ongoing assessment of the situation in Venezuela.

Richmond Federal Reserve President Thomas Barkin said that any upcoming decisions on interest rates will require clear and precise economic data, given the risks surrounding the central bank’s dual mandate of price stability and maximum employment.

Meanwhile, Federal Reserve member Steven Miran stated that the central bank will need to cut interest rates by more than 100 basis points during 2026, arguing that current monetary policy remains restrictive and is weighing on economic activity.

Markets are now awaiting the release of the US monthly jobs report for December, due on Friday, for further signals on the future direction of Federal Reserve policy.

In trading, the Dow Jones Industrial Average rose by 0.5%, or 241 points, to 49,218 as of 16:49 GMT. The broader S&P 500 gained 0.2%, or 16 points, to 6,918, while the Nasdaq Composite advanced by 0.2%, or 38 points, to 23,433.

Copper prices surged to a new record high on Tuesday, as ongoing supply disruptions and trade uncertainty in the United States continued to fuel a powerful rally in base metals at the start of the year.

Benchmark three-month copper contracts on the London Metal Exchange rose 1.8% to $13,225 per metric ton during the official open-outcry session, after jumping as much as 3.1% earlier in the day to an all-time high of $13,387.50 per ton. The red metal has gained about 6.6% so far in 2026, having broken above the $13,000 level for the first time on Monday, following a strong 42% rise last year.

Nickel prices also climbed, reaching levels close to a roughly 15-month high and moving above $18,000 per ton, supported by production restrictions imposed by Indonesia.

Albert Mackenzie, a copper analyst at Benchmark Minerals, said the bullish momentum in copper began to take shape in late 2025, when prices recorded their largest annual increase in dollar terms in at least a decade. He added that a significant portion of this move occurred in December, when copper prices jumped about 14%, quickly surpassing the $12,000 and then the $13,000 levels within just a few weeks.

Mackenzie noted that supply concerns have been a key driver of prices, alongside expectations that artificial intelligence and the energy transition will boost long-term demand.

A strike at Capstone Copper’s Mantoverde copper-gold mine in northern Chile has renewed concerns over potential supply disruptions, while China’s Tongling Nonferrous has announced delays to the second phase of Ecuador’s Mirador mine, which has been affected by conflict.

Market participants have also pointed to US rhetoric surrounding potential tariffs on copper, which has led to flows of the metal into the United States and disrupted global supply chains, further adding to upward price pressure.

However, the pace of the rally has prompted some traders to question whether current price levels are justified, according to Mackenzie. As prices climb, debate is intensifying over whether sentiment and speculative flows are beginning to outpace underlying market fundamentals, even as supply risks persist and demand trends remain broadly supportive.