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Sean Callow, Research Analyst at Westpac, notes that AUD/USD hit 13 month lows last week on US-China trade tensions but finished the week little changed.

Key Quotes

“AUD/USD traded poorly for much of last week, finally breaking below 0.7400 for the first time this year. It reached a low of 0.7346, its weakest point since May 2017. The catalyst for the initial break of 0.7400 was a statement by President Trump threatening tariffs on $200bn of goods imported from China. This was a reminder that AUD can be sensitive to the US-China trade battle, even if it is not the daily focus.”

“It seems likely that the US will continue to pursue protectionist trade policy despite criticism from many US business organizations and from within Trump’s Republican Party.”

“Australia’s calendar is even more low key this week than last, ahead of a busy start to July – next week we see the RBA meeting and May data on retail sales, the trade balance and building approvals. Short term then, AUD traders will have limited inspiration from domestic data and events. Commodity prices will be noted, with Australia’s key export prices losing momentum last week.”