Home Daily Commentaries AUD unable to capitalise on USD reversal as promise of trade war looms large

AUD unable to capitalise on USD reversal as promise of trade war looms large

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Thursday 28 November, 2024

Daily Currency Update

The Australian dollar traded higher on Wednesday, but was among the worst performers when valued back against other major counterparts. Having opened just above US$0.6450, the AUD climbed steadily through the day, benefiting from a broad US sell off and end of month re-balancing ahead of the Thanksgiving long weekend. Edging toward US$0.65, the AUD was unable to extend back above the key psychological handle as markets continue to absorb President-elect Trump's promise of an additional 10% tariff on all Chinese imports. Since the US election, the impending US-China trade war has cast a pall over the AUD and after Trump's comments earlier this week, AUD upside will likely be very hard won through the near term.

Today, our attention turns to RBA Governor, Michelle Bullock, as markets seek clearer guidance on the criteria needed to commence an easing cycle. The November RBA meeting minutes noted the board would require more than one good quarter of inflation data before it would consider lowering rates. Any insight from Governor Bullock could be key in shaping near term rate expectations.

Key Movers

The US dollar fell sharply through trade on Wednesday, with the DXY dollar index giving up close to 2% amid month-end rebalancing and profit taking. Having lurched higher Tuesday after Trump’s promise for steeper tariffs, the USD retraced gains Wednesday. With minimal headline data or news flow on hand, it seems investors sought to square positions, while rebalancing positions after a strong performance across equities through November. The decline was greatest against the euro, GBP and JPY. The euro advanced 0.8% and is now trading above 1.0550, while Sterling climbed nearly 1% to trade just short of 1.27 and the JPY forced the USD near 1.3% lower and back below 151.50. The CAD was one of the day's underperformers as analysts are still digesting President-elect Trump's promise to impose a 25% tariff on Canadian imports.

With US markets closed for Thanksgiving, there is little macro data on hand to drive direction through the next 24 hours.

Expected Ranges

  • AUD/USD: 0.6400 - 0.6550 ▼
  • AUD/EUR: 0.6100 - 0.6200 ▼
  • GBP/AUD: 1.9300 - 1.9700 ▲
  • AUD/NZD: 1.0900 - 1.1100 ▼
  • AUD/CAD: 0.9050 - 0.9150 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.