The Australian Dollar had a day to forget with a precipitous decline to close out last week. The currency was undermined by a number of factors, but the telling result was a fresh yearly low to 0.7175. Opening this morning at 0.7185, the Aussie looks to navigate a politically charged week while the bears stay firmly in the drivers’ seat.
The Aussie spent much of the week oscillating within familiar ranges around the 0.73 mark before succumbing to off-shore pressures from the United States. Again, it was President Trump that was the catalyst for volatility with a clear escalation in his rhetoric with regards to China and tariffs. The risk-on sentiment quickly shifted to risk-off with emerging markets and commodity currencies all feeling the crunch. The global market for base metals also received its own fall which only exacerbated the Aussies declines.
The AUD also felt the pinch domestically with a poor reading in the CAPEX, falling building approvals and Westpac’s mortgage rate hike all adding fuel to the fire. This was then further exacerbated on Friday with reports of rising tensions with China, as Australia looks to ban Huawei mobile phones from its mobile network market. China has responded by denying visas for a number of Australian journalists, inferring a deterioration in our relationship with China.
The pair now turn to a new week firmly against the ropes with traders first turning to retail sales for direction. As always, investors are keeping a close eye on the changing politically landscape for clues as well.