AUD Drops Off Reignited US-China Trade War

AUD

The Aussie Dollar takes a sizable hit against the majors, reeling from the US-China Trade tensions with new trade policies announced on both sides. Chinese exports of rare earth metals are subject to new controls across the board, while Trump announced 100% tariffs on Chinese imports effective from 1 November. Commodities opened mixed, with Crude Oil and Copper -4.2%, but Gold +0.9% and Silver +1.5%. Asian equities were down, with the ASX -0.1% and Shanghai Comp -0.9%. Today may have Chinese New Loans released, expected to nearly triple from 590B to 1460B. Later this week will have Aussie employment data this Thursday, which is a key factor in the RBA’s last interest rate decision for 2025.
 

USD

The AUDUSD opens at 0.6496, plummeting off an escalation in the US-China trade war and losing the 0.6500 handle for the first time in five weeks. Wall Street closed poorly, with the DOW JONES -1.9%, S&P 500 -2.7% and the NASDAQ -3.6%. President Trump is expecting to add an extra 100% tariff to exports from China, after China further restricted its rare earth exports. Friday night saw the release of Prelim UoM Consumer Sentiment, slightly lower than previous, and their Inflation Expectations dropped 4.6% from 4.7%. It is Columbus Day today in the US, with Fed Chair Powell set to speak on Tuesday night, where he may give colour whether these tariffs will affect the Fed’s forecasting.
 

EUR

The AUDEUR opens this morning at 0.5599, seeing the pair lose the 0.5600 this weekend for the first time in 2 weeks. European equities closed down, with the DAX and CAC -1.5% each. Italian Production came in lower on Friday at -2.4% against expectations of -0.3%. It will be a quiet week of economic data, with the German ZEW Economic Sentiment set to be released tomorrow night (current expectations of 41.7).

GBP

The AUDGBP opens at 0.4869, losing almost 2% due to Aussie Dollar weakness from tariff-related escalations. British equities finished in the red, with the FTSE closing down 0.9%. There were no news to finish last week, but MPC member Greene will speak tonight. Thursday afternoon will see the release of their GDP m/m, with current expectations of a slight increase (0.1%).

NZD

The AUDNZD opens at 1.1334, falling from it’s near 3-year highs last week. This morning saw the release of the BusinessNZ Services Index, increased to 48.3 from 47.6. Visitor Arrivals m/m also fell from 2.7% to 2.2%.
No further data today and nothing until Thursday, when FPI m/m is released.