- The Australian dollar fell heavily across the board on Tuesday as trade war fears flared again.
- The AUD/USD currently sits just above its year-to-date low.
- With little economic data or events scheduled on Wednesday, direction looks set to be dictated by sentiment and technicals.
The wild swings in the Australian dollar continued on Tuesday, this time to the downside.
As seen in the scoreboard as at 7.50am AEDT, the Aussie was creamed across the board, skidding lower late in the session as trade war fears flared again.
AUD/USD 0.7676 , -0.007 , -0.90%
AUD/JPY 80.91 , -0.73 , -0.89%
AUD/CNH 4.8122 , -0.0318 , -0.66%
AUD/EUR 0.6189 , -0.0036 , -0.58%
AUD/GBP 0.5421 , -0.0022 , -0.40%
AUD/NZD 1.0564 , -0.0047 , -0.44%
AUD/CAD 0.9891 , -0.0055 , -0.55%
After opening the session at .7746, the AUD/USD gradually lost ground in Asian trade as the US dollar index found support after falling to a fresh one-month low on Monday.
With no major data or events during the session, the US dollar strength was put down to quarter-end window dressing ahead of the Easter break.
However, as seen in the hourly chart below, the losses in the AUD/USD accelerated during North American trade as US stocks suffered another late and sharp selloff.
The move in both the Aussie and US stocks coincided with reports that the Trump administration is considering a crackdown on Chinese investments in the US, sparking a fresh wave of concern about the potential for the trade tariff between the two nations to turn into something more sinister.
“[The selloff was sparked by a] story that the US was looking to protect US tech sectors with curbs on China with the US said to be considering the use of an emergency law,” said David de Garis, Economist at the National Australia Bank.
“The Nasdaq has led the charge lower, sharply reversing its positive open and down by 2.93%.
“The negative sentiment gripped the wider market, the Dow and the S&P 500 off by 1.43% and 1.73% respectively. Bond yields are notably lower for longer tenors, the VIX back up and the AUD/USD taking the brunt as far as the FX majors are concerned, trading back down below cents, a few pips within sight of this year’s low.”
The AUD/USD currently sits just above the low of .7669 struck on March 21.
With little in the way of major economic data on Wednesday, whether the Aussie falls below this level will likely be determined by sentiment and technicals.
There’s no major releases scheduled in Asia with most of the activity arriving in the second half of the session.
The third reading of US Q4 GDP, goods trade data for February and pending homes sales are the headline acts with most of the remaining data points secondary in nature.