- The Australian dollar came under renewed selling pressure on Monday.
- Steep losses in US stocks, partially in response to ongoing concerns about a potential trade war erupting between the US and China, likely contributed to the downside pressure on the Aussie.
- There’s a slew of Australian data releases scheduled today, including the RBA’s April interest rate decision.
The Australian dollar came under pressure on Monday, falling against all of the major crosses except for the New Zealand dollar.
Here’s the scoreboard as at 6.55am AEST.
AUD/USD 0.7660 , -0.0018 , -0.23%
AUD/JPY 81.12 , -0.48 , -0.59%
AUD/CNH 4.8017 , -0.0051 , -0.11%
AUD/EUR 0.6227 , -0.0002 , -0.03%
AUD/GBP 0.5454 , -0.0021 , -0.38%
AUD/NZD 1.0614 , 0.0015 , 0.14%
AUD/CAD 0.9891 , -0.002 , -0.20%
Continuing the theme seen in late March, the Aussie was weighed down by substantial losses in US stocks, said David de Garis, Economist at the National Australia Bank.
“The catalyst seems to have been the announcement on Sunday from the Chinese Ministry of Finance that it is increasing tariffs on up to 128 US products, higher tariffs on frozen pork, wine, aluminium scrap, and certain fruits and nuts, in response to the US tariffs on steel and aluminium,” he said in his morning note.
Along with steep losses in US tech stocks, this contributed to a lift in risk aversion during the session, an outcome that ultimately weighed on the risk-sensitive Australian dollar.
De Garis said the US dollar also found support from the release of strong US economic data during the session, continuing the run of solid data prints seen in the lead up to the Easter break.
“The release of the US ISM Manufacturing report for March was another blockbuster-type number at 59.3,” he said.
“It revealed that the prices paid component jumped to 78.1 from 74.2 as US manufacturers reported increasing costs pressures, including from steel and aluminium, prices for which were already higher even before the US tariff increases.”
Turning to the day ahead, de Garis says trade and tariff-related headlines will likely dictate the Aussie’s direction despite the release of a slew of economic data releases and the Reserve Bank of Australia’s (RBA) April monetary policy decision at 2.30pm AEST.
“Markets will take a lead from tariff and trade news,” he says.
Alongside the RBA interest rate decision, an outcome that will almost certainly see the bank leave the cash rate at 1.5% and maintain a neutral bias on the outlook for interest rates, markets will also receive house price data from CoreaLogic, the Ai Group’s manufacturing purchasing managers index (PMI) and job ads data from ANZ Bank during the session.
None are likely to cause much of a reaction in the Australian dollar.
Later in the session, data highlights include German retail sales, Spanish unemployment, PMI figures from the Eurozone along with the Empire State manufacturing index in the United States.