USD Weakens as Dust Settles on Tariff Pause

AUD

AUD opens mixed against the majors with continued volatile conditions overnight with trade war fears continuing to weigh on risk sentiment. The ASX 200 was up +4.5% yesterday with Asian equites following the same route, rallying sharply with the Hang Seng +2%, Nikkei +9.1% and Shanghai Comp +1.2%. Commodities were mixed, biggest movers being Copper at +4.4% and Crude Oil at -3.4%. China released CPI y/y and PPI y/y coming in at -0.1% and -2.5% both missing expectations slightly. With Chinese consumer prices contracting for a second straight month, plus producer prices becoming further entrenched, Chinese exporters brace for more pain amid an escalating trade war with the US. Yesterday, we also had Melbourne Institute Inflation expectations out at 4.2% up from 3.6%. Today, and over the weekend, there is no data for the Aussie. The real key for the Aussie will be statements and movements on Tariffs from the US and China.

USD

AUDUSD opens higher with the Greenback softening following Trumps Tariff pivots yesterday, opening at 0.6224. On Wall St. the Nasdaq closed -4.3%, the S&P 500 -3.5%, and the Dow Jones -2.5%.  Big night of day of data out yesterday for the US with Core CPI m/m coming in at 0.1% (expected at 0.3%), CPI m/m and CPI y/y both missing expectation at -0.1 and 2.4%. The pleasant surprise from US inflation isn't expected to last long, with higher prices from tariffs and supply chain disruptions on the way. Unemployment Claims followed at 223k up from previous 219k. Tonight out of the US will have Core PPI, PPI, Prelim UoM Consumer Sentiment and Prelim UoM Inflation Expectations. Big data points though seem to be in the dark with trade war tensions in the spotlight.
 

EUR

AUDEUR opens down slightly with the Euro strengthening after the ease on reciprocal tariffs, opening at 0.5529. European equites saw some upside with the DAX up 4.5% and the CAC 3.8%. All in all, it was a rather quiet week for data coming out of Europe, we saw Italian Industrial Production m/m out at expectation -0.9 down from 2.5% previous and will have German Final CPI m/m out today previous 0.3%.
 

GBP

AUDGBP opens flat at 0.4794, flirting with the 0.48 handle yesterday and overnight. The FTSE rose 3.0% bouncing back from yesterday’s -2.9%. Today at 4pm will see the major datapoint for the currency with GDP m/m expected at 0.1% from previous -0.1%, following that, we'll see Goods Trade Balance, Industrial Production m/m and Manufacturing Production m/m.
 

NZD

AUDNZD opened down slightly at 1.0827, as both currencies stand in similar positions following Trumps 90-day tariff delay and strong chance of global economic slowdown if a trade war truly kicks off. Major news hit Wednesday with the RBNZ Official Cash Rate lowering 25bps to 3.50%. Today’s release was BusinessNZ Manufacturing Index at 53.2