Australian dollar falls as Trump’s tariff announcement rocks markets

Australian dollar (AUD) slides as Trump tariff fears return

The Australian dollar (AUD) weakened yesterday as renewed concerns about US trade tariffs during Donald Trump’s second term as President sparked widespread risk aversion.

On his social media platform Truth Social, Trump reiterated his intention to levy hefty tariffs on imports into the US from Mexico, Canada and China. With AUD’s status as a proxy for the Chinese economy, this weighed heavily on the currency.

Turning to today, Australia’s latest inflation reading is the focus for AUD investors. With inflation expected to have accelerated last month, the ‘Aussie’ could regain ground.

New Zealand dollar (NZD) dented by global trade worries

Global trade tariff fears also rocked the New Zealand dollar (NZD) yesterday, with NZD wavering lower against its stronger rivals, although it fared better than the ‘Aussie’.

The Reserve Bank of New Zealand (RBNZ) interest rate decision is in the spotlight today. Another 50bps interest rate cut could see the ‘kiwi’ slump.

Pound (GBP) uncertain amid market volatility

The pound (GBP) traded without a clear direction yesterday, with general market volatility causing GBP to waver.

Meanwhile, investors largely brushed off a larger-than-expected drop in retail sales volumes revealed in the Confederation of British Industry’s (CBI) latest distributive trades survey.

Today, Sterling could once again trade without a clear trajectory amid a lack of UK economic data.

Euro (EUR) mixed amid USD volatility

The euro (EUR) was also uncertain yesterday, with EUR wobbling due to its negative correlation with a volatile US dollar (USD).

The common currency was able to shrug off concerns about the Russia-Ukraine war, however, despite the Kremlin warning that it would retaliate for Ukrainian strikes on Russian territory using US-made missiles.

Germany’s latest consumer confidence report could influence EUR this evening. If consumer morale in the Eurozone’s largest economy declined heading into December, the euro could stumble.

US dollar (USD) fluctuates amid Trump tariff warnings

The US dollar saw choppy trade yesterday after Trump’s tariff announcement on social media rocked markets.

USD wavered as investors reacted to and digested the unexpected announcement, although markets eventually stabilised.

Following the Federal Reserve’s meeting minutes this morning, USD investors will be awaiting the October core PCE price index due out tonight. An uptick in the Fed’s preferred measure of inflation could boost USD.

Canadian dollar (CAD) hit by 25% tariff on Canadian products

The Canadian dollar (CAD) slumped yesterday, as Trump’s announcement of a 25% tariff on all Canadian products entering the US spooked CAD investors.

With economic data from Canada thin on the ground today, US tariff fears could continue impacting the ‘loonie’. In addition, oil prices may affect the crude-linked currency.

Data releases

10:30 AUD Monthly CPI Indicator (Oct)

11:00 NZD RBNZ Interest Rate Decision

19:30 EUR German GfK Consumer Confidence (Dec)

23:30 USD Core PCE Price Index (Oct)


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