AUD starts new week on front foot amid more US dollar weakness
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Daily Currency Update
The Australian dollar started the week on the front foot, advancing 1%, amid broader USD softness. Having opened Monday south of US$0.6435, the AUD climbed steadily through the domestic session, pushing through US$0.6450, extending gains through overnight trade and marking intraday highs at US$0.6499. US dollar weakness was the main theme driving direction, as markets largely ignored the upswing in Treasury yields and instead focused on softer-than-anticipated ISM manufacturing data and rising concerns about the debt burden and fiscal position.Having held onto gains into this morning's open, the week's busy macroeconomic ticket presents an opportunity for the AUD to break outside its recent US$0.64/65 trading handle.
Our attention today turns to US jobs data and Eurozone CPI numbers, while tariff headlines dominate the underlying risk narrative. The AUD’s vulnerability remains, with the uncertainty stemming from the Trump administration's tariff agenda. After a de-escalation in trade tensions through May, hostilities between the US and China are again on the rise. The introduction of a 50% tariff on steel and aluminium is the latest Trump push to exert influence over key trading partners.
Key Movers
US dollar weakness drove direction through trade on Monday as investors largely ignored an upswing in Treasury yields and instead, focused on growing concerns surrounding the state of the US fiscal position and burgeoning debt burden. Erratic foreign trade policies and Trump's “big beautiful bill” have created an environment of mistrust, prompting investors to seek alternatives to US assets, driving down demand for the USD.With the US dollar on the back foot, the latest ISM manufacturing report helped consolidate the daily downturn, marking a consecutive 3-month period where activity has contracted. The index dipped below the April read and was well short of market estimates, with subindices measuring employment and new orders suggesting the weight of Trump's tariff agenda is beginning to eke into the wider economy. The euro pushed back above 1.14, eyeing 1.1450, while the pound set about consolidating a break above 1.35, and the yen forced the dollar back below 143.
Our attention turns now to Chinese Manufacturing numbers, Eurozone CPI data and the latest Jolts Jobs openings report ahead of Friday’s non-farm payroll numbers. While trade and tariff headlines remain key in shaping the underlying risk narrative.
Expected Ranges
- AUD/USD: 0.6400 - 0.6530 ▲
- AUD/EUR: 0.5650 - 0.5720 ▲
- GBP/AUD: 2.0700 - 2.1000 ▼
- AUD/NZD: 1.0720 - 1.0820 ▼
- AUD/CAD: 0.8830 - 0.8980 ▲