News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Australian Dollar Looks Mired In Growing Trade-War Worries

Australian Dollar Looks Mired In Growing Trade-War Worries

David Cottle, Analyst
Australian Dollar Looks Mired In Growing Trade-War Worries

Australian Dollar Fundamental Forecast: Bearish

  • Fears of tit-for-tat tariff imposition have weighed on the Australian Dollar
  • There’s not key domestic information on tap this week to divert attention
  • Trade news flow will be key and doesn’t look promising

Find out just what makes the best traders stand out from the rest with DailyFX in-depth study of the Traits of Successful Traders

The Australian Dollar was in thrall to overseas events last week and, with very little of note on the domestic data schedule, this week looks set to offer more of the same.

Trade remains gloomily front and center. As a ‘risk asset’ geared to the global cycle, the Australian currency probably has as much to lose as any from any ratcheting-up of trade tensions. And they are ratcheting up. News last week that US President Donald Trump had signed off on US$50 billion of tariffs against China, and threatened more wide ranging trade barriers, was not good news for Aussie bulls.

Indeed, coupled with lower world prices for the raw materials which make up so much of Australia’s exports, tariff worries saw AUD/USD slide last Thursday.

All countries and regions threatened by higher US trade barriers are now considering their options and it seems as though diplomacy and compromise of an order apparently in short supply will be needed to avoid outright trade war. Against this international backdrop it’s hard to see the Australian Dollar making headway. At the very least it will remain hostage to trade headlines.

Domestically the currency still wrestles with a central bank in no clear rush to lift its key Official Cash Rate from its record, 1.50% low, even as US interest-rate rises savage Australia’s long-held yield advantage. Job creation also missed expectations last month and, although it remains reasonably robust, fears about it sustainability have been stoked.

To pile on the worries, at least for bulls the technical picture is darkening too. DailyFX Senior Currency Strategist Ilya Spivak notes that AUD/USD is now being pressured down towards a key support trend which has led the pair higher quite consistently for two years past. Fundamentally the Australian economy is not performing at all badly, but still it’s hard to get too excited about its currency given all of the above.

So It’s a bearish call this week, with at least one eye on the international news flow.

Australian Dollar Looks Mired In Growing Trade-War Worries

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you.

Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES