AUD edges higher as attentions turn to US tariff announcements
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Daily Currency Update
The Australian dollar edged higher Tuesday amid a generally softer USD. Markets largely ignored the RBA policy announcement policy makers left rates on hold, a decision that was widely expected. Our attentions were affixed to the accompanying press conference to see if Governor Bullock would offer any insight into possible future policy moves. Still, she offered little noting, “The board is well placed to respond to domestic and international developments.” She acknowledged there were risks to both sides on inflation and the board is closely monitoring activity indicators. We believe the RBA is moving too slowly, particularly given the recent softening in the labour market and ongoing downturn in activity across the economy. We expect they will cut rates again in May. The AUD tracked sideways through the local session before climbing back above US$0.6250 settling near US$0.6280.Our attention now turns to tomorrow’s US reciprocal tariff announcements. The highly anticipated announcement will prove crucial in shaping risk sentiment and near team AUD direction.
Key Movers
The US dollar softened against most major counterparts through trade on Tuesday amid weaker jobs data and a downturn in manufacturing activities. US job openings fell to 7.57 million in February, well below market estimates amid elevated economic uncertainty. Interestingly the private sector quit rate fell to just 2.2% indicating employees have little confidence in their ability to find new work or higher wages should they quit their current position. The US ISM manufacturing index fell below 50, down to 49 from 50.3 in February. The fall sends the sector below the line delineating growth and suggests manufacturers are now scaling back activities. In response, markets increased calls for the Fed to lower interest rates with 80 points of rate cuts now priced in through December. While most majors advanced against the USD the euro lost ground as headline CPI fell to just 2.2% increasing the likelihood of another 25-point rate cut. Markets are now pricing a further 60 points of cuts into year-end.Risk sentiment remains key in shaping the direction and our attentions remain affixed to tonight’s all-important liberation day announcements. President Trump is expected to address the media and outline his administrations reciprocal tariff plans mid-morning AEDT.
Expected Ranges
- AUD/USD: 0.6220 - 0.6350 ▲
- AUD/EUR: 0.5750 - 0.5850 ▲
- GBP/AUD: 2.0450 - 2.0750 ▼
- AUD/NZD: 1.0950 - 1.1050 ▲
- AUD/CAD: 0.8950 - 0.9050 ▼