Promise of tariffs takes the shine off AUD rebound
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Daily Currency Update
The Australian dollar underperformed through trade on Wednesday amid new tariff headlines. With little of note on the macro ticket, the AUD tracked within a narrow trading handle, bouncing between US$0.6330 and US$0.6350 through the domestic session before slipping back toward US$0.63 overnight. While the AUD enjoyed a short-term boost following reports the US will again postpone the implementation of tariffs against Canada and Mexico, the upswing was short-lived as President Trump promised a 25% tariff would be applied on EU autos and “other things”. Markets are still holding out hope the US will not proceed in applying tariffs and are simply threatening their implementation in order to gain leverage in trade and geopolitical negotiations. This has helped the AUD bounce off 2025 lows below US$0.61 but leaves the AUD vulnerable to another sharp downturn should the US push ahead in applying tariffs. Our focus is keenly attuned to headlines through March and leading into April as key markers of US intentions.Key Movers
There has been little movement across major currencies through the last 24 hours as markets continue to sideline major bets pending guidance on US tariffs and headline macro data. News flow was light, but President Trump did confirm the proposed 25% tariff to be imposed on Canada and Mexico would be postponed until the 2nd of April, pushed back from the 4th of March. He also noted that a 25% tariff will be applied to EU autos and “other things”. Markets continue to hold out hope that the US is simply using the threat of tariff’s as a bargaining chip for pushing its trade and geopolitical agenda’s. This remains a dangerous strategy, as the proposed tariffs are much broader than pre-election expectations had forecasted. The tariff impact is nowhere near fully priced in, as we move through March and into April there is ample scope for volatility. The euro slipped below 1.05 after Trump's comments, while the yen continues to gather support on lower US treasury yields forcing the USD below 149 and the GBP remains largely unchanged.Our attentions today turn to US jobless claims, Q2 GDP data and durable goods orders with another eye affixed to tariff headlines.
Expected Ranges
- AUD/USD: 0.6220 - 0.6350 ▼
- AUD/EUR: 0.5980 - 0.6080 ▼
- GBP/AUD: 1.9900 - 2.0200 ▲
- AUD/NZD: 1.1020 - 1.1120 ▼
- AUD/CAD: 0.9000 - 0.9100 ▼