AUD Dips as Markets React to Tariff Uncertainty

AUD

The AUD trended lower overnight amid a broader risk-off tone, despite relatively muted movement across the other majors. Market volatility rose as investors weighed geopolitical risks and growth concerns linked to evolving US trade policy. The primary driver of the drop is the market uncertainty surrounding President Trump’s potential new tariff plans. Asian equities started the week mixed; the Nikkei fell -1.1%, the Hang Seng gained +2.5%, and Shenzhen remained closed for the Lunar New Year break. Locally, the ASX 200 shed -0.6% as Technology (-4.5%) and Healthcare (-2.4%) led the losses. Risk aversion supported haven assets, with Gold rising above US$5,220 per ounce. Upcoming, tomorrow we have CPI y/y and Trimmed Mean m/m. Governor Bullock is expected to speak shortly after, providing clues regarding the expected rate hike in May and the mid-March rate decision. 
 

USD

AUDUSD opened down this morning at 0.7059 as traders evaluated tariff policies following the U.S. Supreme Court’s decision to strike down President Trump’s tariffs. Markets are also monitoring rising tensions with Iran regarding nuclear treaty negotiations. The risk of military conflict between the U.S. and Iran adds a layer of ambiguity to markets; as a top oil producer, any strikes on Iran would likely ripple across crude markets. A soft start to the week on Wall St. saw the Dow Jones trading -1.6%, the Nasdaq -1.2%, and the S&P 500 -1.1%. U.S.10-year yields fell 5bps to 4.03%, while Brent Crude fell .6% to $71.40 a barrel. Early tomorrow morning we have the Richmond Manufacturing Index which is currently forecasted at -8 and CB Consumer Confidence which is forecasted at 87.4

EUR

AUDEUR opened in the red, slightly dipping below the .60 mark at 0.5988. European equity markets closed down; the DAX was the standout loser -1.1%, while the CAC closed at -0.2%. Yesterday saw some minor data with the Germany February IFO business confidence index printing higher than market expectations at 88.6 (Est. 88.3). Notably, the European Parliament decided on Monday to postpone a vote on the EU-US trade deal due to the new import tax. Tomorrow data wise, we have Eurozone Final Core CPI y/y and German Final GDP q/q.

GBP

AUDGBP dipped overnight opening at 0.5230, but remains at a strong spot holding at levels not seen since July 2024. It began the week on a firmer footing as traders digested the fallout from the U.S. tariff ruling and broad-based Dollar weakness. For equities, the FTSE has closed flat at 0% with no movement. After a quiet few days for the UK, the focus now shifts entirely to Wednesday’s Monetary Policy Report hearings. This will be the main driver for Sterling this week as the market looks for any clues on the Bank of England's next move.
 

NZD

AUDNZD has remained firm opening flat at 1.1851 as the Reserve Bank of New Zealand downplayed the chance of a rate hike, signaling that interest rates will stay low for the time being. Following yesterday’s Credit Card Spending y/y data, which landed at 1%, the market now enters a quiet period as we look ahead to mid-March for the next round of significant economic reporting and data releases.