EBC Markets Briefing | Aussie dollar pops; health insurers in big trouble

The dollar was grappling with a "crisis of confidence" on Wednesday after Trump brushed off its recent weakness, lifting the Australian dollar to its highest level since February 2023.

Australia's inflation ran at a faster-than-expected pace in Q4, adding to a recent slew of hot economic data that has investors baying for an interest rate hike as soon as next week.

Headline CPI saw the biggest jump since July as the expiry of government rebates drove electricity prices higher and holiday demand boosted travel and accommodation costs.

Swaps now imply a 70% probability for an RBA hike in February, compared with 60% before. Three-year government bond yields hit a two-year top of around 4.34%.

Robust consumer spending, record-high housing prices and a recovery in business investment signals faster recovery, with a surprise fall in the unemployment rate to a 7-month low for December.

Asian equity markets are attracting global investors, according to senior executives at JPMorgan and Goldman Sachs. The renewed interest comes amid persistent geopolitical uncertainty.

The Aussie dollar fell back below $0.7, while remaining in the overbought area. We see it weaken further towards $0.6940, though uptrend is still intact in the longer term.

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Asset recap

As of market close on 27 January, among EBC products, silver led gains. However, according to two leading analysts, this upward trend could reverse sharply in the days or weeks ahead.

The health insurance sector saw a deep sell-off, led by a plunge in UnitedHealth Group shares, as the Trump administration proposed a lower-than-expected increase to 2027 Medicare Advantage plans.

The World Nuclear Association projects nuclear capacity will increase by over 87% from June 2025 to 2040 in its reference scenario, which provides the foundation for uranium's long-term demand trajectory.

EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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