- The Australian dollar tumbled into close on Tuesday, giving up modest gains seen earlier in the session.
- The turnaround was sparked by reports the US will soon announce a list of additional $US200 billion in tariffs on Chinese imports.
- Despite a busy data and events calendar today, trade headlines look set to dominate.
The Australian dollar was on track to close flat to higher on Tuesday, mirroring continued continued gains in other risk assets during the session.
However, that all changed just minutes ago following reports the United States is poised to publish a list of $US200 billion in new tariffs that will be applied on Chinese imports entering the country.
The trade war has escalated, as Trump promised prior to the introduction of the first round of tariffs late last week.
Here’s the scoreboard as at 7am AEST.
AUD/USD 0.7459 , -0.0007 , -0.09%
AUD/JPY 82.83 , 0.08 , 0.10%
AUD/CNH 4.9583 , 0.0143 , 0.29%
AUD/EUR 0.6350 , -0.0002 , -0.03%
AUD/GBP 0.5620 , -0.001 , -0.18%
AUD/NZD 1.0911 , -0.0007 , -0.06%
AUD/CAD 0.9777 , -0.0002 , -0.02%
After dipping in Asia, the Aussie clawed higher in European and US trade, bolstered by continued gains in stocks.
However, that all changed late in the session as news hit that the US is about to announce new tariffs on Chinese imports.
According to Bloomberg, citing two unnamed sources familiar with the matter, the list could be released within the next few hours.
Before the US introduced $US34 billion worth of tariffs on Chinese imports on Friday, US President Donald Trump had pledged to announce additional tariffs should China respond with reciprocal tariffs of their own on US imports.
They did, and now Trump appears set to follow through with his threat.
Risk assets, including the Aussie, reacted negatively to to news, losing ground as soon as the news broke.
In recent trade, the AUD/USD has fallen as much as 0.4% to .7428.
Given the late-breaking news, trade headlines look set to dominate Wednesday’s trading session, making data releases near-irrelevant for market direction.
Australia will release housing finance data for May at 11.30am AEST. Like most other housing indicators at present, loans to owner-occupiers are expected to fall 2%.
Westpac will also release its Australian consumer sentiment report for July at 10.30am.
Wayne Byres, APRA Chair, will also deliver a highly-anticipated speech on Australia’s housing market from 1pm AEST.
Outside of Australia, other headline releases today include US producer price inflation and wholesale inventories.
The Bank of Canada (BoC) will also meet with the bank expected to lift its official interest rate by 25 basis points to 1.5%. The announcement will hit at midnight AEST.
There’s also a plethora of central banker scheduled to speak with Draghi from the ECB, Carney from the BoE and Bostic and Williams from the US fed all in action.
Despite the busy calendar, trade tensions still look set to dominate outside the BoC decision.
In particular, the performance of Chinese markets, especially the Chinese yuan, could prove to be influential in Asian trade.