Home Daily Commentaries AUD finds fresh low as new tariffs loom large

AUD finds fresh low as new tariffs loom 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.

| Tuesday 4 February, 2025

Daily Currency Update

Fallout from President Trump's tariff announcement on Friday eked into the start of this week with markets driving US dollar gains while forcing risk assets and equities lower. President Trump confirmed he will now implement new tariffs on the US’s three largest trading partners (Canada, Mexico and China) under the portents of a “national emergency” surrounding illegal immigration and elevated drug arrivals. On market open, the USD soared and the AUD cratered, falling below US$0.61 to touch new post-election lows of US$0.6088.

The AUD then found support on reports Mexico and the US had reached an agreement that would ensure the implementation of new tariffs would be delayed one month. Mexico President Sheinbaum confirmed they will send 10,000 National Guard officers to the border in a bid to stem the flow of illegal immigration and drugs across the US southern border. The promise of a delay helped bolster hopes Canada and China will be able to broker their own agreements and allow the AUD to climb back through US$0.6150.

With little of note on the domestic ticket our attentions remain with the ever-evolving tariff environment.

Key Movers

There has been significant movement to start the new week as markets absorb the implications of new US tariffs and react to deals brokered to delay their implementation. The CAD, MXN and CNH all fell in response to President Trump's promise to implement new tariffs against the US's largest trading partners. The MXN and CAD found some reprieve after it was confirmed the implementation of tariffs against Mexico would be delayed following an agreement to fortify the border with increased National Guard troops. While Canada has not yet brokered its own agreement, the promise of a delay helped foster a rebound. With China in the midst of Chinese New Year celebrations we will need to wait for the PBOC’s decision as to the daily fix and larger CNY reaction.

The euro was also hammered as Trump promised to whack tariffs on EU goods as well. With the GBP flat and yen stronger on lower US yields, our attention turns to US jobs data and commentary from Fed member Musalem while the ever evolving tariff narrative will guide broader flows.

Expected Ranges

  • AUD/USD: 0.6050 - 0.6200 ▼
  • AUD/EUR: 0.5920 - 0.6030 ▼
  • GBP/AUD: 1.9800 - 2.0200 ▲
  • AUD/NZD: 1.1000 - 1.1100 ▲
  • AUD/CAD: 0.8950 - 0.9100 ▼

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.