AUD/USD has been capped by US dollar strength backed by US data and Fed optimism, but supported on dips by pauses in the US-China trade battle, according to Sean Callow, Research Analyst at Westpac.
Key Quotes
“The US stock market rose on 4 of 5 days last week, with the interruption coming Wednesday on the latest battle in the US trade war with China. The headline was that the US would announce a list of $200bn of imported Chinese goods that could be subjected to tariffs. AUD/USD tumbled on the news. But the tariff list should not have been a surprise.”
“Chinese officials have pledged retaliation, but seem unlikely to act before US tariffs come into effect. So there is scope for a more upbeat mood to return in the week ahead.”
“Early last week, AUD/USD rose to 3 week highs just short of 0.7500 before sliding more than a cent on the Trump tariffs. It has since recaptured some lost ground to just above 0.7400 but is not being helped by commodity prices. In particular, metals such as copper have tumbled in recent weeks, with Australia’s export basket at a 1 month low.”
“In the week ahead, Australia’s calendar highlights are the minutes from the RBA’s July meeting, with a focus on banks’ rising funding costs and the June labour force data. Westpac looks for a 17,000 rise in total employment and a steady unemployment rate, at 5.4%. This would not challenge the Reserve Bank’s optimism on the Australian economy, after last week’s strong readings on consumer and business sentiment.”
“Overall, AUD/USD has been capped by US dollar strength backed by US data and Fed optimism, but supported on dips by pauses in the US-China trade battle.”
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