AUD resilient in face of new tariffs
Written by
Daily Currency Update
Tariffs continue to dominate headlines and the AUD with President Trump announcing a new 25% tariff on Steel and Aluminium on Monday. After the announcement, the AUD came under pressure, sliding toward intraday lows just above US$0.6230 before finding support. A rebound in metal prices and a positive start to the week for risk assets helped lift the AUD back above US$0.6250 and back toward US$0.6280 overnight, a starkly different response to last week's tariff collapse.While last week's markets drove the AUD toward 5-year lows below US$0.61, this week, the reaction was far more sanguine as analysts and investors await more detail as to the extent, timing and reach of new tariffs. Our attention today remains on US trade policy while domestic consumer sentiment and business surveys provide some colour regarding the health of the local economy.
Key Movers
Tariff headlines again dominated direction with President Trump announcing a new 25% tariff on Steel and Aluminium. The comments made by Air Force One again target the States' three biggest trading partners in Mexico, Canada and China. Just when Mexico and Canada thought they had earned a reprieve from the firing line, the promise of new tariffs cast a new pall of uncertainty over the new administration's trade agenda.Unlike last Monday, the market reaction was somewhat muted as there has been little colour added to the headline comments and analysts are sidelining major bets until more details are made available. Most majors are little changed and our attention turns to Fed Chair Jerome Powell as he testifies in front of a Senate committee on monetary policy. While we acknowledge Powell is unlikely to stray too far from the comments made following the last Fed policy meeting, we are keenly attuned to any commentary on tariffs, their possible impact on inflation and the Fed’s plan to normalise rates through 2025.
Expected Ranges
- AUD/USD: 0.6100 - 0.6300 ▲
- AUD/EUR: 0.6020 - 0.6120 ▲
- GBP/AUD: 1.9500 - 2.0000 ▼
- AUD/NZD: 1.1050 - 1.1150 ▲
- AUD/CAD: 0.8920 - 0.9050 ▲