AUD Jumps as Trump Delays Tariffs on Canada
AUD
The Aussie Dollar opens a little stronger against the majors, having experienced a volatile 24 hours at the whim of Trump’s tariff talks and concerns surrounding a potential global trade war. After weakening throughout the course of yesterday, the AUD broadly strengthened this morning as Trump agreed to delay tariffs on Canada for at least 30 days. Back from the Lunar New Year Holiday and following Trump’s weekend tariff announcements, China’s Shenzhen and Hang Seng equity indices closed -0.4% and flat respectively, while Japan’s Nikkei was punished -2.7%. The ASX 200 also struggled -1.8% as healthcare and consumer discretionary fared the worst. No local of Chinese economic data today. Tomorrow will bring China’s Caixin Services PMI.
USD
AUDUSD has had a volatile 24 hours. The pair gapped down to 0.6158 on yesterday’s open, then fell further to near-5-year lows of 0.6088 on talks of Trump’s plans to slap Canada, Mexico and China tariffs, calling them necessary to curb immigration and narcotics trafficking. The pair has since climbed by 2.2%, making notable moves this morning as Trump agreed to pause tariffs on Canada for at least 30 days. AUDUSD opens at 0.6218. A volatile session on Wall St. had settled late in the day and saw the Nasdaq trading -.7%, the S&P 500 -.4%, and the Dow Jones unchanged. Overnight, the ISM Manufacturing PMI landed at 50.9, marking only the second period of expansion in the US manufacturing sector in the past 26 months. Tonight, we’ll see JOLTS Job Openings data, marking the first of a few heavy-hitting US labour figures in the back end of the week.
EUR
AUDEUR tanked nearly 1% to 0.5956 in yesterday’s session on Trump’s tariff talks before reclaiming ground in the evening, kicking off today a little higher at 0.6017. The DAX and CAC gave up -1.4% and -1.2% respectively. Data overnight showed Eurozone inflation has risen to hotter-than-expected 2.5% in January, accelerated by energy costs. The Core metric, which strips out food, energy, alcohol and tobacco prices, came in at 2.7% and has remained unchanged since September. Given inflation in the services sector remains rather elevated, the European Central Bank will likely prefer to loosen policy in smaller steps. Only low-tier Eurozone data for the remainder of the week. The Euro will likely be the whim of news from the US and any further developments in a global trade war.
GBP
AUDGBP opens flat at 0.5001, having stooped to 0.4962 lows in the early afternoon on Trump tariff concerns, before recovering a little in the evening, moving sideways overnight, then strengthening this morning on news that Trump will delay tariffs on Canada for at least 30 days. The FTSE ended yesterday -1.0%. There’ll be no UK data released today. Eyes will be on the Bank of England interest rate decision this Thursday evening. A near-unanimous decision to lower the key interest rate by 25bps to 4.5% is expected.
NZD
AUDNZD made steady moves higher in yesterday’s session, moving in a near-straight line to open at 1.10543. No Kiwi data yesterday. This morning, Building Consents m/m printed at-5.6%, down from +4.9% last month. The main Kiwi event this week will be tomorrow’s employment data, including the Unemployment Rate and Employment Change q/q. The robust employment growth seen in 2022 and 2023 has given way to a significant reduction in workforce expansion. The Unemployment Rate is expected at 5.1%, up from the previous 4.8%, with the RBNZ shifting its gaze from inflation to the labour market’s performance.