Sean Callow, analyst at Westpac, points out that after a turbulent week, AUD/USD is still -1% from its level when President Trump tweeted that the US would impose new tariffs on Chinese imports.
Key Quotes
“China’s response to stand by as USD/CNY broke 7.00 and the US’s subsequent formal declaration of China as a currency manipulator obviously deepen concern over US-China trade relations, an ongoing weight on AUD.”
“But the sharpest AUD/USD fall of the week – which extended to 0.6677, a low since March 2009 – came when the RBNZ chose to cut -50bp rather than -25bp. The kneejerk assumption that the RBA would also become more dovish sent pricing for the terminal RBA cash rate below 0.40% by Q3 2020.”
“AUD has since recouped the RBNZ-led losses and as the chart shows, Australia’s export sector is starting from a very strong position as China worries grow. Yet RBA easing talk will remain lively next week as Westpac looks for wages growth to soften to 2.2%yr and the unemployment rate to tick up to 5.3%. Rallies to 0.6800 should fade and 0.6675 may be retested over the week.”
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