AUD finds support amid broad based USD sell off

Key Movers

Direction through trade on Thursday was dominated by European headlines. Reports revealed Germany has set plans in motion to reform its debt structure to allow for more spending on infrastructure and defence. The move sparked a surge in European yields and an uptick across European equity indices, with Germany’s DAX closing 3% higher on the day and the euro extending its recent upturn. The euro climbed through 1.06 and 1.07, stopping just short of a break above 1.08, marking its highest level since November. Scandinavian currencies also outperformed, while the British Pound tracked with the euro, jumping through 1.28 and is now poised to surge through 1.29. In contrast, the USD has fallen sharply, lower against all G10 currencies. ADP employment data was softer than expected, prompting yields to fall before stronger than anticipated ISM service data helped retrace losses.

Our attentions remain affixed to US tariff policy, with reports there may be some relief from the Canada and Mexico tariffs after confirmation a month-long exemption would be applied to cars. US officials continue to highlight April 2nd as a critical juncture for the US to complete its reciprocal tariff review. President Trump’s tariff program was expected to add underlying and structural US dollar support, but the execution has sparked growing fears that tariffs could act as a handbrake on US growth, dampening yields and putting downward pressure on the dollar.

In other news, the ECB is expected to cut rates by 25 basis points to 2.5% at its meeting today. The cut has been fully priced in and will be the 6th cut in this easing cycle. We are attuned to any signals on future policy and updated ECB forecasts for direction. In the US, the focus is on jobless claims and trade data ahead of tomorrow's non-farm payroll numbers.