AUD Slides on Tariff Fears Ahead of RBA Meeting

AUD

The AUD opens lower against all majors except the Kiwi amid renewed global trade concerns. There is an increased risk that Trump will reinstate higher tariffs on countries with 'anti-American' trade policy. Asian equities ended the day lower, with the Nikkei -0.6%, Shenzhen -0.4% and Hang Seng -0.1%. Locally the ASX finished lower -0.2%, with materials and consumer discretionary leading losses at -0.9% and -0.7%. No major data yesterday. Today sees the RBA rate cut decision at 2:30pm with markets currently pricing an 83% chance of a 25bps cut. Forecasts that a slowing economy and lessened inflationary pressure may prompt the Reserve Bank of Australia to ease monetary policy. Economists see this shift as being driven by inflation falling faster than expected.
 

USD

AUDUSD fell to a 1.5-week low of 0.6485 this morning before opening the session slightly higher at 0.6501. Overnight, Trump announced 25% tariffs on Japan and South-Korea, prompting concerns of increased additional tariffs on large global economies. On Wall St. the S&P 500 closed -1%, while both the Nasdaq and the Dow Jones closed -0.9%. No data yesterday. Overall, a quiet week ahead for US data. Thursday will see US central bank meeting minutes and weekly Unemployment Claims released.
 

EUR

AUDEUR continued its decline to an almost 3-month low sitting at 0.5525 before creeping higher to 0.5538. Overnight, the EU dodged a US tariff letter as European sources say they may be nearing an agreement with the Trump Administration. The DAX was up 1.2%, CAC up 0.4% as EU maintains its posture amid new confidence in US negotiations. Yesterday saw EU Retail Sales m/m release at -0.7%, slightly higher than the forecast of -0.8%, Today sees minor data as German and French trade balance is released. The rest of the week appears quiet.
 

GBP

AUDGBP continues slightly down to a weekly low of 0.4769, only rising marginally to 0.4774 to then trade flat. The FTSE was slightly down at -0.2%. No news from the UK today. Tomorrow evening will have the Bank of England Financial Stability Report and FPC Meeting Minutes.
 

NZD

AUDNZD opens flat at 1.0828, making a steady gain of more than 0.6% over the past week. Tomorrow, the Reserve Bank of New Zealand will release the Official Cash Rate decision. Economists' consensus is that the OCR will remain unchanged at 3.25%. The RBNZ is expected to wait for more data and US tariff clarity, with opinions divided over how many more rate cuts are to come.