AUD rallies on softer USD and promise of China stimulus
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Daily Currency Update
The Australian dollar outperformed on Monday, buoyed by a weaker USD and improved China activity data. Chinese retail sales jumped 4% year-on-year while officials announced a 30-point plan to stimulate domestic consumption. Minimal details were supplied at the policy briefing yesterday, yet the plan has been described as the most comprehensive stimulus program in 50 years and a key pivot toward domestic demand, away from supply-led measures.The AUD leapt through US$0.6350, marking intraday highs at US$0.6385, holding gains through overnight trade amid an absence of headline tariff news. The AUD is also stronger against the GBP and euro while giving up ground against the NZD.
Our attention turns now to Canadian CPI and US 2nd tier data as risk sentiment and tariff headlines continue to dominate direction. We are wary of significantly extending AUD upside expectations ahead of the US reciprocal tariff review due in early April.
Key Movers
The US dollar fell through trade on Monday following a decline in treasury yields and a softer-than-expected retail sales report. Sales figures for February showed just a 0.2% uptick in activity, well short of expectations, while January data was revised lower. The softer print highlighted concerns of a slowdown in economic activity and does little to alleviate fears the US is pitching toward recession.With the USD on the back foot, the euro and GBP enjoyed modest gains, up between 0.3% and 0.4%, while the yen failed to capitalise and underperformed allowing the USD to move back above 149.
Our attention turns now to Canadian inflation data and mid-level US macro data. Tariff headlines remain in focus while geopolitical forces will be front and centre as President Trump meets with Russian President Vladimir Putin with the hope of furthering a US-brokered peace plan. So far Russia has pushed back against US efforts to negotiate a ceasefire.
Expected Ranges
- AUD/USD: 0.6280 - 0.6420 ▲
- AUD/EUR: 0.5780 - 0.5880 ▲
- GBP/AUD: 2.0200 - 2.0500 ▼
- AUD/NZD: 1.0920 - 1.1020 ▼
- AUD/CAD: 0.9050 - 0.9150 ▲