Australian dollar (AUD) slumps amid tariff jitters
The Australian dollar (AUD) tumbled through Monday’s session as US President Donald Trump threatened a new 10% tariff on any country that aligns with ‘the Anti-American policies of BRICS’.
AUD investors were unnerved by the announcement amid uncertainty over how it could impact Australia’s trade relationship with China, the largest economy within the BRICS group.
The Reserve Bank of Australia (RBA) will deliver its latest interest rate decision later this afternoon, with the ‘Aussie’ poised to fall on a widely expected rate cut.
New Zealand dollar (NZD) slides in risk-off trade
The New Zealand dollar (NZD) also got off to a poor start this week as the risk-averse market mood saw investors largely shun NZD.
Turning to today, movement in the ‘kiwi’ may be limited, with NZD investors reluctant to alter their positions in the currency ahead of the Reserve Bank of New Zealand’s (RBNZ) interest rate decision on Wednesday.
Pound (GBP) firms as Reeves’s position reassured
The pound (GBP) trended broadly higher at the start of this week, with the currency continuing to recover from last week’s selloff after Prime Minister Kier Starmer gave his full backing to Chancellor Rachel Reeves.
However, this recovery remained modest in scope amid concerns that the UK faces fiscal deficit risks, following the government’s welfare reform climbdown.
UK data remains in limited supply today, likely leaving GBP movement to be driven by wider market trends.
Euro (EUR) slips amid EU-US trade deal uncertainty
The euro (EUR) faced headwinds on Monday amid signs of division within the EU on the terms of the EU-US trade deal currently being negotiated.
This drop in the euro was reinforced by data showing that retail sales in the Eurozone suffered their steepest decline in almost two years in May.
Unsurprisingly, the focus for EUR investors is likely to remain on EU-US trade negotiations, with the euro poised to rally if a deal can be found that would likely win the backing of a majority of EU members.
US dollar (USD) strengthens on trade deal hopes
The US dollar (USD) appreciated yesterday, with the currency benefitting from safe-haven flows and a recent trimming of Federal Reserve interest rate cut expectations.
Aiding the US dollar’s ascent were remarks from members of the Trump administration, suggesting that the US will announce several new trade deals ahead of the tariff deadline on 9 July.
Looking ahead, if investors are disappointed by the scope of these new deals, the US dollar could encounter some headwinds throughout today’s session.
Canadian dollar (CAD) sidelined by slow progress in US-Canada trade talks
The Canadian dollar (CAD) ticked lower on Monday, amid concerns that US-Canada trade negotiations aren’t progressing as quickly as hoped.
Coming up, Canada’s latest Ivey PMI is likely to weigh on the ‘loonie’ today, if June’s index reports another contraction of economic activity.
Data releases
14:30 AUD RBA Interest Rate Decision
16:00 EUR German Industrial Production (May)
00:00 CAD Ivey PMI (Jun)