Trump Tariffs Spark Fresh AUD Lows

AUD

The AUD has tanked against the majors, dragged lower by souring global risk sentiment and trade-war fears in the aftermath of steeper-than-expected tariffs imposed by US President Trump, as well as retaliatory tariffs from China. Trump announced an additional 34% tariff on imports from China, taking the effective tariff to 54%, while China retaliated by placing a 34% tariff on imports from the US. As a Chinese Yuan proxy, as well as high sensitivity to risk, the Aussie Dollar sank. Risk-aversion also saw a global stock sell-off, wiping over 8 trillion dollars off global stock exchanges. Asian equities ended Friday lower with the ASX seeing a drop of 2.4% and the Shanghai Comp also dropping but by a less drastic 0.2%. Commodities also down across the board with Crude Oil falling 6.9%, Natural Gas down 7% and the biggest mover being CMX Copper seeing a 9.3% drop. We can expect continued volatility in the AUD and global markets, with further pressure on risk-sensitive assets if trade tensions persist and Trump’s tariffs lead to more uncertainty. No major local data set for release today. On Thursday, we'll see Chinese consumer and producer inflation figures.
 

USD

AUDUSD has taken a tumble, kicking off the week at 5-year lows of 0.5987 (if you ignore the brief Covid blip, AUDUSD touched 22-year lows), as investors sought the safety of the US Dollar amid rising trade tensions and concerns over the economic impact of Trump's global tariffs. Tariffs on Chinese imports into the US currently stand at 54%, with China responding by imposing a 34% tariff on imports from the US. Wall St. bled with the NASDAQ trading -5.8%, S&P 500 -6% and DOW JONES at -5.5%. Tariff developments drowned out the mixed US jobs report, which saw Average Hourly Earnings m/m at an expected +0.3%, Non-Farm Employment Change coming above forecasts at 228k, while the Unemployment Rate ticked up to 4.2%. On Saturday, Fed Chair Powell projected higher inflation and slower growth after Trump's tariff announcement. No major US data until CPI this Thursday evening.
 

EUR

AUDEUR opens at 5-year lows of 0.5453 (ignore brief covid lows, we are at 16-year lows) due to heightened risk aversion stemming from global economic uncertainties and weaker commodity prices, which weigh heavily on the Australian economy. European equities seeing a similar trench with DAX and CAC both seeing a drop over the weekend, DAX coming in at -5% and CAC at -4.3%. Data out of Europe has stayed fairly quiet with nothing significant set for release this week. Movements for the Euro will likely be driven by advancements out of the US and China.
 

GBP

AUDGBP seeing almost a 5% drop from Friday morning, opening up today at 10-year lows of 0.4629 given global trade war fears. The FTSE seeing similar results compared to other major equities seeing a drop of 5%. The only major data was released Friday night with construction PMI coming in slightly off expected at 46.4 making evident a continuous contacting market.
 

NZD

AUDNZD opens at 10-month lows of 1.0775. This Wednesday, the Reserve Bank of New Zealand is expected to cut the Official Cash Rate by 25bps to 3.5%.