USD Slides Ahead of Tentative US Trade Deals
AUD
The Aussie Dollar has benefited from broad USD weakness on worries that US President Trump's touted trade deals have yet to materialise. On Sunday, Trump indicated that some trade deals would be announced this week, with investors currently waiting for more details. Asian equities ticked higher again with the Hang Seng +0.7%, the Shenzhen +1.0% while the Nikkei was closed. The ASX 200 meanwhile finished -0.1% as healthcare tumbled -1.9%. No local data for the remainder of the week. On Saturday morning, we'll see Chinese consumer and producer inflation figures. China's economy is navigating turbulent waters as US tariffs choke off exports and force unsold goods to be redirected into its already-saturated domestic market, contributing to the mounting deflation risk. China's Consumer Price Index, after barely staying positive in 2023 and early 2024, dipped into negative territory in February and March 2025. Saturday's figure is expected to show continued deflation at -0.1% y/y.
USD
AUDUSD opens at 0.6508, the highest point since late November 2024, with the USD trading lower amid market jitters over hoped-for US trade deals this week. Consecutive negative sessions on Wall St. saw the Dow Jones close -1%, the Nasdaq -0.9% and the S&P 500 -0.8%. Overnight, the Federal Reserve will head into its closely watched policy decision with a strong incentive to do absolutely nothing. Markets are pricing in an interest rate hold at 4.5%. Faced with unresolved questions over President Trump's tariffs and an economy that is signaling both significant strength and weaknesses, policymakers can do little for now except sit and wait as events unfold. If anything is to tip the needle, it will be Fed Chair Powell's commentary at the accompanying Press Conference.
EUR
AUDEUR touched fresh 1-month highs of 0.5750 this morning, pulling back a little to open at 0.5734. This comes despite the Euro extended gains after the German parliament elected conservative leader Freidrich Merz as chancellor. Investors are waiting for further details on trade deals the Trump administration has said it is negotiating with other countries, with the AUD benefiting from USD weakness. The DAX and CAC each gave up -0.4% yesterday. There are no major data releases in the Eurozone calendar this week, with the focus on some European Central Bank speakers instead, although ECB commentary hasn't added too much colour of late, and there has been little pushback against market speculation for rates to fall to 1.5% from the current 2.25%.
GBP
AUDGBP opens a little higher at 0.4872. The FTSE closed flat yesterday. The monthly UK Construction PMI will be released this evening. Tomorrow evening, the Bank of England will hold the key 6-weekly interest rate decision, BOE Monetary Policy Report and Press Conference. Markets expect a 25bps cut to 4.25%.
NZD
After two weeks of fairly consistent gains, AUDNZD has pulled back to open at 1.0811. NZ labour data surprised this morning, with the Unemployment Rate holding steady at 5.1% (short of 5.3% expectations). The RBNZ forecasts the peak at 5.2% in the current cycle, which was the peak during the Covid-19 pandemic and the highest level since 2016. Employment ticket up 0.1% in Q1, in line with expectations. The new RBNZ Governor Hawkesby will be speaking on financial stability later this morning.