Home Daily Commentaries AUD tumbles on promise of steep new tariffs

AUD tumbles on promise of steep new tariffs

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Wednesday 27 November, 2024

Daily Currency Update

The Australian dollar underperformed Tuesday slumping toward a new post-election low. Risk sentiment faltered and the goodwill garnered after the appointment of Scott Bessent to treasury Secretary evaporated after President-elect Donald Trump announced he would impose steep new tariffs on Mexico, Canada and China as soon as he begins his new term in the White House. The promise of an additional 10% tariff on Chinese goods propelled the USD up through 7.25 against the Chinese yuan, driving the AUD toward intraday lows below US$0.6440. While details surrounding the proposed tariffs remain scant, the ongoing risk of such headlines ensures the AUD will face ongoing headwinds through the near term as investors remain on edge and market volatility is elevated. The prospect of lower global growth and trade does not bode well for the AUD. If Trump follows through with his promise of imposing a 60% tariff on China we could see a significant CNY devaluation and an extended AUD depreciation toward and possibly through US$0.60.

Our attention now turns to October CPI numbers, while the RBNZ policy meeting may provide opportunities for upside in the AUD/NZD pair.

Key Movers

The US dollar was broadly stronger Tuesday as the market direction was dominated by a truth social post from President-Elect Donald Trump promising that steep new tariffs would be imposed early in his 2nd term. The DXY dollar index lurched higher up 0.3% as commodity-linked currencies tumbled. With Trump promising to issue a 255 Tariff on Canada and Mexico both the CAD and MXN tumbled following the announcement and offered little sign of a recovery in the hours that followed. With risk sentiment evaporating the JPY is the only G10 currency to have outperformed the US dollar.

Our attention now turns to the RBNZ’s policy meeting, Australian inflation data, European consumer confidence data, and US GDP estimates, while political headlines continue to drive the underlying narrative.

Expected Ranges

  • AUD/USD: 0.6400 - 0.6550 ▼
  • AUD/EUR: 0.6100 - 0.6200 ▼
  • GBP/AUD: 1.9200 - 1.9600 ▲
  • AUD/NZD: 1.1050 - 1.1150 ▼
  • AUD/CAD: 0.9050 - 0.9180 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.

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