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According to Sean Callow, Research Analyst at Westpac, the Aussie has absorbed the latest wave of US tariffs on Chinese imports and China’s angry retaliation, with the war of words continuing as President Trump said maybe he was not friends with President Xi any more.

Key Quotes

“Despite all this, AUD is middle of the G10 pack over the week, flat vs USD. It may be that the trade war risk premium on AUD is being trimmed.”

“Australia’s export price basket is holding near 6 month highs, underpinning AUD fair value – see chart. AUD/USD should have another go at closing above the 50dma, currently at 0.7294. A test of the 100dma at 0.7387 however would probably require a broad USD fall.”