Greenback Jumps on Talks of Trade War De-Escalation

AUD

The Aussie Dollar opens mixed against the majors this morning as there are talks of a possible de-escalation of US-China tensions. Asian equities closed the day fairly flat, SHANGHAI COMP 0.3%, NIKKEI -0.2%, and locally the ASX unchanged. Commodities were mixed, Gold -1.2%, Iron Ore 0.2% and Copper 2.5%. There was no data locally or in China yesterday. This morning, locally we had Flash Manufacturing and Services PMIs, printing at 51.7 and 51.4 respectively. The figures show business activity in Australia expanded at the start of Q2 2025, driven by new business inflows. Improvements in both the manufacturing & services sectors le to the fastest rise in new works since April 2022. No major Aussie data for the remainder of the week.
 

USD

AUDUSD hit 4-month highs of 0.6438 yesterday before falling off to open lower at 0.6375 this morning. This comes as there are now talks of a de-escalation of US-China tensions which saw the DXY (USD strength index) jump 0.6% after reaching lows not seen since March 2022. Overnight, US Treasury Secretary Scott Bessent said he believes there will be a de-escalation in the trade war. He stated America and China sees the status quo as sustainable, adding that the Trump administration's goal wasn't to decouple the world's two largest economies. Wall Street was up, DOW JONES 2.7%, S&P 500 2.5% and NASDAQ 2.7%. The US has mainly low tier data in the calendar today with a couple of Fed members speaking as well as Flash PMIs.
 

EUR

AUDEUR opens up at 0.5611 this morning after hitting lows of 0.5560 yesterday. European equities were both up, DAX 0.4% and CAC 0.6%. The Euro had their Flash Consumer Confidence figures overnight which came in slightly worse than expectations at -16.7. Later today they have their Flash PMIs as well as Balance of Trade data.
 

GBP

AUDGBP opens flat at 0.4798 this morning after hitting lows of 0.4771 earlier this morning. The FTSE closed the day in the green at 0.6%. The UK has both their Flash Manufacturing and Services PMIs tonight. The manufacturing slump is expected to continue, while the services sector is expected to continue expanding. Looking ahead they have their Retail Sales M/M on Friday, expected to decrease from 1% growth last month to -0.4%.
 

NZD

The AUDNZD rate opens lower at 1.0687 this morning. The Kiwis had their Balance of Trade figure come out yesterday above expectations at $0.97B. No major data for the rest of the week.