Australian dollar (AUD) plummets in response to Trump tariffs
The Australian dollar (AUD) saw increased volatility at market open this morning, dropping over 1% against major currencies in the past three hours following U.S. President Donald Trump’s tariff announcement early this morning.
U.S. President Donald Trump announced a 10% tariff on Australian imports, along with similar measures targeting other major global economies.
Markets remain concerned by the potential impact of Trump’s reciprocal tariffs and the Australian Dollar is expected to remain volatile throughout today’s trading session.
In addition to the fallout from Trump’s tariff announcement, AUD exchange rates may also be influenced by Australia’s latest trade figures today. Will a narrowing of Australia’s trade surplus in February apply further pressure on the ‘Aussie’?
New Zealand dollar (NZD) hit by tariff turmoil
The New Zealand dollar (NZD) also tumbled overnight in response to the announcement of tariffs imposed on major world economies, including a 10% tariff on New Zealand imports into the US.
In the absence of any notable domestic data, it’s likely NZD exchange rates will remain highly sensitive to risk dynamics today. Fears of market turmoil will likely see investors will shy away from the ‘Kiwi’.
Pound (GBP) stumbles by trade deal disappointment
The pound strengthened against the AUD with the GBPAUD pair gaining as much as 1.26% following the announcement of Trump’s trade tariffs as markets reacted to escalating trade tensions.
However, the pound struggled to gain meaningful support against all other currencies on Wednesday, as it became clear that the UK had failed to secure an exemption from Trump’s tariff measures.
While UK officials remained optimistic about reaching an agreement, analysts cautioned that the UK’s open economy would still be vulnerable to broader global trade disruptions.
Looking ahead to today’s session, Sterling may find some support if the UK’s latest services PMI confirms a sharp improvement in activity for March.
Euro (EUR) mixed amid trade war fears
Trade in the euro (EUR) was a little erratic on Wednesday, amid concerns that the EU’s retaliation to Trump’s tariffs could spark an EU-US trade war.
While transatlantic trade tensions weighed on the single currency, a pullback in the US dollar ahead of Trump’s tariff announcement helped buoy EUR exchange rates.
The European Central Bank (ECB) will publish the minutes from its latest policy meeting later today. If they signal that a growing number of policymakers believe Eurozone interest rates are at or close to their neutral level, the euro may strengthen.
US dollar (USD) undermined by recession jitters
The US dollar is facing headwinds following Trump’s ‘Liberation Day’ tariff announcement, as analysts warned the move will upend global trade and risks tipping the US economy into a recession.
US President Donald Trump has announced fresh import taxes on goods being imported to America in the latest escalation of the global trade war.
The latest ADP employment release helped to limit the US dollar’s losses, as a surprisingly strong increase in employment growth bolstered expectations for Friday’s more influential payroll figures.
Coming up, the ‘greenback’ may face further headwinds later today if the latest ISM services PMI reports a slowing of US service sector activity last month.
Data releases
10:30 AUD Balance of Trade (Feb)
18:30 GBP Services PMI (Mar)
19:00 EUR PPI (Feb)
22:00 EUR ECB Minutes
22:30 CAD Trade Balance (Feb)
00:00 USD ISM Services PMI (Mar)