Trump Doubles Down on Trade War

AUD

The AUD opens a tad higher, having strengthened into the evening before falling sharply on developments in global trade war tensions. Overnight, President Trump doubled down on his trade war, threatened to impose additional tariffs on China, starting April 9, if Beijing does not withdraw its 34% retaliatory tariffs on the US. The threat stands at an additional 50% tariff on China, taking the total levy to 104%. Because tariffs are thought to be hurting world growth, risk-sensitive currencies like the AUD have been largely underperforming. Asian equities tumbled to start the week: the Hang Seng down -13.2%, Nikkei -7.8% and the Shenzhen -7.1%. The ASX fared slightly better, falling -4.2% with the energy sector again taking the hardest hit. Later this morning we'll see Westpac Consumer Sentiment and NAB Business Confidence data for Australia. Thursday will bring Chinese consumer and producer inflation figures.
 

USD

AUDUSD opens flat at 0.5992, moving higher throughout the course of yesterday, touching 0.6126 highs in the late evening before falling sharply after President Trump threatened an addition 50% tariff on China, if Beijing doesn't withdraw their retaliatory 34% tariff on the US by April 9. Another volatile night for financial markets ultimately saw Wall St. close mixed on the day. The Dow Jones closed -0.9%, the S&P 500 -0.2%, although the Nasdaq managed 0.1% gains. Overnight, FOMC Daly will be speaking on the economic outlook. No major data events until US CPI and the FOMC Meeting Minutes, on Thursday.
 

EUR

Another volatile evening for the AUDEUR pair saw 0.5580 highs before a sudden 2.5% decline to 0.5440 on global trade war developments. The pair has since recovered over 1% to kick off the day at 0.5492. The DAX and CAC fell -4.1% and -4.8% yesterday. Disappointing Eurozone data saw Retail Sales increase by 0.3% m/m (expectations were +0.5%) as well as a sharp deterioration in Sentix Investor Confidence (-19.5, prev. -2.9). The economic index plummeted to its lowest level since October 2023, driven by Trump's tariff hammer. Little major Eurozone data for the remainder of the week. We'll see Industrial Production m/m on Thursday evening.
 

GBP

AUDGBP pokes its head back above the 0.47 handle, kicking off the day at 0.4708. The FTSE lost -4.4% yesterday. The only key economic data from the UK this week will be monthly GDP, set for release Friday afternoon.
 

NZD

AUDNZD touched 1.0777 lows in the early hours before gaining about 0.5% to open at 1.0839. Tomorrow, the Reserve Bank of New Zealand is expected to cut their key interest rate by 0.25% to 3.5%. The central bank has delivered three consecutive 0.5% cuts, with the economy being hit hard in the middle two quarters last year, contracting 1.1% quarter-on-quarter in 2 and Q3.