Australian dollar (AUD) Market Update
The Australian dollar (AUD) has been experiencing fluctuations in response to recent developments in U.S. trade policy, particularly following former President Donald Trump's announcement of potential tariffs on steel and aluminum imports. Early in the week, the AUD faced downward pressure but managed to recover as market participants speculated on the likelihood of Australia securing exemptions from these tariffs, similar to its situation during Trump’s previous term. The currency's trajectory remains closely linked to the evolving expectations around U.S.-China trade relations, alongside upcoming data releases that may influence sentiment.
As FX analysts note, the AUD has been on a declining trend amid concerns about a Trump victory and its implications for tariffs that could further strain trade with key Australian partners like China and Europe. Currently, the AUD is trading at 0.6268 against the USD, slightly below its 3-month average, while exhibiting notable stability within a 6.9% range over this period. Meanwhile, the AUD has managed to hold above its 3-month averages against the EUR and GBP, trading at 0.6085 and 0.5071 respectively. However, the outlook is clouded by uncertainties surrounding Chinese demand; stronger trade data and fiscal stimulus anticipated from China could help support the AUD, propelling it toward the 0.68-0.69 range against the USD. In contrast, the potential for restrictive tariffs could hinder any recovery. As the market awaits further economic indicators, particularly from China, the Australian dollar's performance will hinge on the interplay between domestic and international economic sentiments.