AUD outperforms as trade conditions improve and USD faces mounting pressure
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Daily Currency Update
The Australian dollar outperformed most majors through trade on Monday, extending toward a new 2025 high just north of US$0.6580. Equities and risk assets rallied as sentiment improved on reports of progress across a raft of US trade negotiations and the promise of looser US monetary policy, while an uptick in China manufacturing activity helped underpin gains. Having broken outside Friday’s narrow range, the AUD moved through last Thursday's high at US$0.6583, before meeting resistance.With the US dollar on the back foot, an extended risk recovery could see the AUD test US$0.66. Our attention remains affixed to evolving trade negotiations, while China Manufacturing data, the ECB’s Sintra conference on Monetary policy and US Jobs data and manufacturing numbers round out the macro ticket.
Key Movers
The US dollar continues to underperform, sliding again through trade on Monday amid improved trade headlines, the prospect of looser Fed policy and rising concern as to the impacts of President Trump’s Big Beautiful Bill. It is expected that the President's trademark legislation will pass through the Senate today, although there is a raft of amendments still to be processed as key GOP Republicans push back on the current iteration of the Bill.At the weekend, the Congressional Budget Office suggested the Senate Bill will add 3.3 trillion dollars to the national debt through 2034, while thrusting some 10-20 million Medicaid and social welfare recipients into the wild to fend for themselves.
In trade, the EU announced it is willing to accept a trade agreement with the US, while Canada confirmed it will rescind its digital services tax in a bid to save negotiations. The euro and CAD both rallied, with the CAD recovering losses suffered in last week's close and the euro extending toward 1.1790, its highest level since September 2021.
Our attention today remains with trade headlines as we move rapidly toward the implementation of the liberation day tariff agenda. Any easing in tensions should help support risk assets, while uncertainty could drive another risk-off run.
Expected Ranges
- AUD/USD: 0.6520 - 0.6620 ▲
- AUD/EUR: 0.5550 - 0.5620 ▲
- GBP/AUD: 2.0700 - 2.1000 ▼
- AUD/NZD: 1.0720 - 1.0820 ▲
- AUD/CAD: 0.8900 - 0.9000 ▲