Home Daily Commentaries Simmering trade tensions edge closer to boiling point, sapping market demand for risk

Simmering trade tensions edge closer to boiling point, sapping market demand for risk

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 March, 2025

Daily Currency Update

The Australian dollar fell on Thursday as risk appetite evaporated. The promise of more US tariffs, a possible US government shutdown and growing skepticism surrounding a Ukraine/Russia peace deal cast a pall over markets, forcing investors away from equities and risk assets and toward safe haven strongholds. The AUD slid back below US$0.63 marking intraday lows at US$0.6272 before finding support. Trade tensions escalated as President Trump threatened to impose a 200% tariff on wine, champagne, and other alcoholic beverages exported to the US from France and the EU if the EU did not immediately remove its proposed retaliatory tariffs on a range of goods primarily produced in Republican states. As the threat of a global trade war continues to escalate, risk sentiment faltered, falling further after Russian President Vladimir Putin rejected the US proposal for a ceasefire ahead of talks suggesting you can’t have a truce without first agreeing terms.

The AUD opens this morning near US$0.6280. Our attentions today remain with US trade policy, while Senate Democrats and Republicans work to push through a stop-gap funding bill to avoid a government shutdown as risk sentiment remains key in shaping direction into the weekly close.

Key Movers

The US dollar outperformed on Thursday, stronger than all major counterparts outside the yen, as risk sentiment faltered and investors chased haven assets. With peace talks between Russia and the Ukraine facing roadblocks, trade tensions escalating and the threat of a US government shutdown on the weekend increasing, markets moved away from equities and risk assets. President Trump escalated trade tensions with Europe, the target of his ire. After the EU announced plans to impose $28billion in tariffs on US goods, like whiskey, Harley Davidson motorcycles and a range of other products produced in southern Republican states, President Trump threatened to impose a 200% tariff on wine and champagne exported from France, commenting “we will not back down, we’re not going to be ripped off anymore”. The euro slid back below 1.0850, while the pound gave up 1.2950.

Our attentions turn now to UK Industrial Production and GDP data, while the EU release CPI numbers for February. Trade tensions and talks between senate Democrats and Republican to avoid a shutdown will prove key in shaping direction.

Expected Ranges

  • AUD/USD: 0.6200 - 0.6350 ▼
  • AUD/EUR: 0.5720 - 0.5820 ▼
  • GBP/AUD: 2.0480 - 2.0720 ▲
  • AUD/NZD: 1.1000 - 1.1100 ▼
  • AUD/CAD: 0.9020 - 0.9120 ▼

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.