Aussie dollar rallies ahead of US and China trade discussions
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Daily Currency Update
The Australian dollar is stronger this morning when valued against the Greenback currently trading at 0.6404 at time of writing. The AUD/USD pair recovering initial losses during European trading hours on Friday. The Aussie pair bounces back as the US dollar retreats from almost a month high posted earlier in the day, with investors turning cautious ahead of the United States (US)-China trade discussions over the weekend. Positive outcome from trade talks between worlds’ two largest powerhouses will also be favourable for the Australian dollar (AUD), given the strong reliance of Australia on its exports to China. Looking ahead this week on the data front and on Tuesday we will see the release of both the Westpac Consumer Sentiment and NAB Business Confidence. On Wednesday, the Australian Bureau of Statistics will release the quarterly Wage Cost Index. It's a leading indicator of consumer inflation, when businesses pay more for labor the higher costs are usually passed on to the consumer. Finally on Thursday all eyes will be on the unemployment rate figures for the month. Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions.Key Movers
The US dollar Index (DXY), which measures the value of the US dollar against a basket of currencies, reverses sharply on Friday after hitting a near one-month high of 100.86 earlier in the day. Disappointment surrounding the so-called US-UK trade deal weighed heavily on the Greenback, with investors focusing on this weekend’s critical trade negotiations between the United States and China in Switzerland. Sir Keir Starmer and Donald Trump announced the "first-of-a-kind" agreement with a live, televised phone call earlier this week, and the British prime minister hailed the deal as one that will save thousands of jobs in the UK. The scramble to secure a UK-US trade deal was sparked by Mr Trump's 'Liberation Day' announcement last month, which saw the president hike import tariffs for multiple countries and subsequently send global markets crashing. President Donald Trump's blanket 10% tariffs on imports from countries around the world still applies to most UK goods entering the US. The agreement, which has yet to be fully worked out, will reduce tariffs on British steel, aluminium and aircraft engine exports to the US down to zero. Meanwhile, taxes on up to 100,000 British cars exported annually to the US will be reduced from 27.5 per cent to 10 per cent.Expected Ranges
- AUD/USD: 0.6300 - 0.6500 ▲
- AUD/EUR: 0.5600 - 0.5800 ▲
- GBP/AUD: 2.0550 - 2.0750 ▼
- AUD/NZD: 1.0750 - 1.0950 ▲
- AUD/CAD: 0.8850 - 0.9050 ▼