AUD Flounders with Trump to 2x Chinese Tariffs
AUD
The Aussie Dollar opens lower against most majors as US President Trump reiterates plans to double tariffs on China from 10% to 20%. A quiet day in local releases with Company Operating Profits q/q and Commodity Prices y/y both outperforming forecasts. Asian equities were upbeat to start the month, the Nikkei up +1.7%, the Hang Seng +0.3% while the Shenzhen remained flat. The ASX climbed +0.9%, with all sectors finding green. Commodities closed mixed with Gold and Silver both down -0.3%, and -0.6% respectively, Iron Ore and Copper on the other hand saw increases of 0.8% and 0.7% respectively. Later this morning we'll see the RBA's Monetary Policy Meeting Minutes. These will be closely scrutinized for clues on the future direction of interest rates after the central bank delivered Australia's first interest rate cut in over four years, two weeks ago. Domestic Retail Sales m/m are expected to show a 0.3% uptick. Tomorrow we will get the main event of the week with GDP q/q forecasted to increase by 0.5%, and also potential stimulus announcements from the National People’s Congress in Beijing.
USD
The AUDUSD opens slightly higher this morning at 0.6222 after a disappointing US ISM Manufacturing index release early this morning at 50.3 from 50.9 (consensus was 50.7) in February, while January construction spending fell 0.2% month-on-month rather than the 0.1% decline expected with big drops in new orders and employment. Tariff uncertainty is also playing a role and is certainly prompting companies to factor in the risks within their pricing, with Trump reiterating his plan to double his China tariff this morning. Wall Street remained weak on the close with the Dow Jones -1.5%, S&P 500 -1.0%, and the Nasdaq -2.3%. No further releases out of the US today, however, tomorrow at 1pm we will be hearing from President Trump as he is due to deliver an address to a joint session of Congress at the Capitol Building, in Washington DC.
EUR
The AUDEUR opens lower this morning at 0.5932, hitting near 1.5-year lows after the Euro rebounded on Monday as hopes for a Ukraine peace deal improved. Eurozone inflation also eased to 2.4% in February but came in slightly above forecasts. Eurozone equities saw a strong close with the DAX and CAC both +2.6%, and +1.1% respectively. No major releases set for today with only French Gov Budget Balance and Eurozone Unemployment Rate. Focus will be set on Friday's ECB Main Refinancing Rate with forecasts expecting a 25bps cut.
GBP
AUDGBP opens lower this morning at 0.4898, reaching fresh 5-year lows of 0.4891 after Net Lending to Individuals m/m, and M4 Money Supply m/m outperformed. The Final Manufacturing PMI came through better than forecasted at 46.9, although still showed a downturn in UK manufacturing output and new orders, leading to steepest job losses since mid-2020. UK equities saw the FTSE close in the green +0.7%. No major releases out of the UK today with only BRC Shop Price Index y/y later this morning, and possibly the 30-y Bond Auction.
NZD
The AUDNZD coupling opens lower this morning at 1.1076 after this morning’s NZ Building Consents results showed the seasonally adjusted number of new dwellings consented rose 2.6 percent, after falling 5.6 percent in December 2024. No further news from our Kiwi neighbours today, however, tomorrow we will see ANZ Commodity Prices m/m at 11am, and possibly their GDT Price Index.