- The Australian dollar has opened the new trading week close to where it ended the last, showing little reaction to trade headlines released over the weekend.
- Australian housing finance data for March will be released on Monday. RBA Deputy Governor Guy Debelle will also speak late in the Asian session.
- Outside of a few US Federal Reserve delivering speeches, the economic calendar is quiet, paving the way for trade headlines and Chinese markets to dictate market movements during the session.
The Australian dollar has opened the new trading week largely unchanged from where it closed on Friday, showing little reaction to trade-related headlines and tweets released over the weekend.
Here’s where the Aussie dollar is trading at 8am in Sydney on Monday.
AUD/USD 0.6995 , -0.0005 , -0.07%
AUD/JPY 76.79 , 0.04 , 0.05%
AUD/CNH 4.7943 , 0.0107 , 0.22%
AUD/EUR 0.6223 , 0.0005 , 0.08%
AUD/GBP 0.5378 , 0.0002 , 0.04%
AUD/NZD 1.0590 , -0.0002 , -0.02%
AUD/CAD 0.9385 , 0 , 0.00%
Following the United States’ decision to lift existing tariffs on $US200 billion worth of Chinese imports from 10% to 25% on Friday, White House economic adviser Larry Kudlow told Reuters on Sunday that China needs to agree to “very strong” enforcement provisions in order for an eventual trade deal between the two sides to be reached.
Kudlow said the decision to lift tariffs on Friday reflected Beijing’s reluctance to put previously agreed changes into law.
However, helping to alleviate concern that the US move could see trade talks break down, Kudlow said there was a “strong possibility” that US President Donald Trump will meet with Chinese President Xi Jinping at the upcoming G20 summit in Japan held in late June.
Before that potential meeting, the adviser acknowledged that US Treasury Secretary Mnuchin and Trade Representative Robert Lighthizer have also been invited back to Beijing to continue trade discussions.
“If the initial reaction from the AUD is any guide, markets have reacted in a relatively calm manner to the ending the US-China trade talks on Friday in the US without any deal and with more tariffs ‘on the way’,” said NAB economist David de Garis in a statement.
The seemingly relaxed market reaction has also come despite a series of trade-related tweets from US President Donald Trump over the weekend.
….The only problem is that they know I am going to win (best economy & employment numbers in U.S. history, & much more), and the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!
— Donald J. Trump (@realDonaldTrump) May 11, 2019
Reflecting elevated uncertainty over the outlook for trade talks between the two, traders have been reluctant to buy or sell the AUD/USD in early trade on Monday.
The AUD/USD currently sits at .6995.
Turning to the day ahead, trade headlines and tweets look set to maintain a vice-like grip on markets given a relatively light data calendar.
Domestically, Australian housing finance data for March will be released by the ABS at 11.30am AEST. RBA Deputy Governor Guy Debelle will also participate in a panel discussion from 5pm AEST.
Elsewhere, FOMC members Robert Kaplan, Rich Clarida and Eric Rosengren will also deliver speeches.
“It’s going to be pretty much a focus on the trade issue,” said de Garis at the NAB, referring to the day ahead.
Along with trade headlines, he says there’s likely to be plenty of focus on movements in the USD/CNY during Monday’s trading session.
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