The Australian dollar remains under pressure

Sergei Supinsky/AFP/Getty Images
  • The Australian dollar remains pressured by ongoing concerns surrounding trade tensions between the US and China.
  • The AUD/USD remains anchored below 77 cents despite weak US jobs growth in March.
  • The Commonwealth Bank says the Aussie will “continue to trade on the defensive this week”.

The Australian dollar remains under pressure, hindered by persistent concerns that trade tensions between the United States and China could erupt into a full-blown trade war.

It fell against most of the major crosses on Friday, including the greenback, despite the release of a disappointing US non-farm payrolls report for March.

Here’s the scoreboard as at 7.20am AEST.

AUD/USD 0.7674 , -0.0001 , -0.01%
AUD/JPY 82.04 , 0.07 , 0.09%
AUD/CNH 4.8436 , 0.0045 , 0.09%
AUD/EUR 0.6249 , 0.0006 , 0.10%
AUD/GBP 0.5447 , 0.0012 , 0.22%
AUD/NZD 1.0538 , -0.0005 , -0.05%
AUD/CAD 0.9795 , -0.0013 , -0.13%

Giulia Specchia, FX Strategist at ANZ Bank, said weakness in the Aussie dollar reflected broader sentiment across financial markets on Friday.

“There was a broad risk-off move on Friday night as trade war rhetoric flared up once more,” she said in her morning note.

“Friday saw Trump threaten an additional $US100 billion of tariffs against Chinese exports, with China pledging to retaliate.

“Volatility is not going away soon.”

The escalation in perceived geopolitical tensions — resulting in widespread losses in stocks and safe-haven buying in US treasuries — largely overrode the release of a soft US non-farm payrolls report for March, ensuring the AUD/USD remained anchored below the 77 cent level.

AUD/USD Hourly Chart

Turning to the day ahead, sentiment and technicals looks set to dominate again given an absence of major economic events during the Asian session.

In Australia, markets will receive the latest Performance of Construction Index (PCI) for March at 8.30am AEST. Regionally, Japan will also release trade and consumer confidence figures during the session.

None will likely be of much interest to traders.

Later in the session, data highlights include German trade, Eurozone investor sentiment along with housing starts and the release of the Bank of Canada’s business outlook survey.

“AUD/USD will continue to trade on the defensive this week because of US/China trade related uncertainties,” said Elias Haddad, Senior Currency Strategist at the Commonwealth Bank.

“The threat that more inward looking US trade policies leads to retaliatory protectionism trade measures from the rest of the world, especially China, is a risk to our constructive global growth outlook.

“If trade tension worsens it will undermine economic confidence and be a drag on global growth.”

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