Home Daily Commentaries AUD steady in face of US tariff announcements

AUD steady in face of US tariff announcements

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.

| Friday 14 February, 2025

Daily Currency Update

The Australian dollar advanced on Thursday amid a slew of market moving announcements. Markets continue to revel in the afterglow created by reports the Ukraine and Russia will commence negotiations to end the war. Stocks have surged, particularly across the Eurostoxx 600, while a correction in Energy and Gas prices have helped fuel deflationary hopes and drive gains across European currencies. With risk sentiment buoyed, the AUD tested US$0.63 extending through the handle after softer than expected US PPI data and sweeping US tariff announcements. President Trump announced the US will be implementing a reciprocal tariff program, that is, whatever taxes are charged on US exports will be charged on goods imported into the US. The wide-reaching nature of the announcement helped proffer a short term USD bounce, pushing the AUD back below US$0.63, before regaining its upward momentum. Since tumbling to a 5-year low last week, we have seen a divergence in tariff announcements and AUD performance. While the AUD remains vulnerable to a US led trade war that stifles global growth, markets are now beginning to short the USD as the impacts of a tariff program are likely to weigh on US domestic economic performance. Of course, this could well change when we obtain more detail as to what the new administrations tariff programs actually involve, but markets are taking comfort in the fact the latest set will not take effect until April.

Our attentions today turn to US retail sales and European Q4 GDP data along with any fallout from Trump's tariff announcements.

Key Movers

There is plenty to digest today with the USD index giving up 0.6% despite wide reaching tariff announcements. European currencies led gains against the USD, as markets bask in the afterglow of reports the Ukraine and Russia will begin negotiations to end the war. The CHF, SEK and euro all led gains with the latter shrugging of a promise from president Trump to issue a reciprocal tariff on European VAT. While markets had expected the US announcing wide-reaching tariffs in retaliation to European levies, no one expected Trump to suggest the new administration would look to issue a Tariff to combat Value added Tax. While in effect VAT is a border tax, it is applied to all goods much like Australia’s GST and hardly singles out US exports. While the euro baulked at the announcement, it recovered its upward momentum to trade above 1.0450.

With the USD on the back foot, the JPY enjoyed a 1% rally, while the GBP jumped back through 1.25 and 1.2550.

Our attentions turn now to European Q4 GDP data and US retail sales along with any fall out from Trump's proposed tariff agenda.

Expected Ranges

  • AUD/USD: 0.6150 - 0.6350 ▲
  • AUD/EUR: 0.5980 - 0.6080 ▼
  • GBP/AUD: 1.9700 - 2.0100 ▲
  • AUD/NZD: 1.1080 - 1.1150 ▲
  • AUD/CAD: 0.8900 - 0.9000 ▼

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.