AUD/USD Exchange Rate Steadies as US-China Trade Tensions Abate with China Agreeing to Cut Tariffs
The Australian Dollar US Dollar (AUD/USD) exchange rate is steady today, and is currently trading at US$0.7217, after US-China trade tensions were abated by news that China could cut US car tariffs by up to 50%.
AUD, however, is still recovering from yesterday’s release of the Westpac Consumer Confidence figures for December, which showed a decrease to 1.0% against last month’s 2.8%.
These followed on from Australia’s poor Q3 house price figures, which revealed an expected decrease of -1.5% against last quarter’s -0.7%.
The US Dollar (USD) meanwhile has been in a state of volatility after US-China trade tensions were exacerbated last week by the arrest of a Huawei executive on charges of violating sanctions on Iran.
However US President Donald Trump has eased tensions somewhat by commenting that he would intervene in the case, saying:
‘If I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security, I would certainly intervene if I thought it was necessary.’
AUD/USD Exchange Rate Rangebound as Trump Shows Willingness to Improve US-China Relations
The Australian Dollar (AUD) has been relieved by a sign of US-China easing their trade tensions, with a combination of China’s willingness to reduce its tariffs on US imports and Donald Trump’s apparent willingness to improve relations over the Huawei controversy.
These were also eased by comments from the Chinese Ministry of Commerce which stated that the US Treasury Secretary Mnuchin and Chinese Vice Premier He would continue to ‘push forward with next steps in the timetable and roadmap’ regarding trade negotiations.
The ‘Aussie’ is still struggling, however, after houses prices are predicted to fall to a bearish 20%, with Capital Economics claiming that ‘this would make the downturn in each city [Melbourne and Sydney] the largest in modern history’.
US Dollar to Australian Dollar (USD/AUD) Exchange Rate Steady
The US Dollar (USD) meanwhile reacted to a slew of US data releases today, most notably the US Consumer Price Index for November, which increased to 2.2%.
Prior to this was the release of the US MBA mortgage applications figures which showed a decrease.
However these data releases left USD mostly unmoved against the Australian Dollar (AUD), with political concerns remaining.
Later today we will see the release of November’s US monthly budget statement, which is also expected to decrease.
USD found some support when Donald Trump tweeted yesterday that US-China relations were improving:
Very productive conversations going on with China! Watch for some important announcements!
— Donald J. Trump (@realDonaldTrump) December 11, 2018
AUD/USD Outlook: Australian Inflation and US Retail Sales in the Spotlight
The Australian US Dollar (AUD/USD) exchange rate is likely to be driven by political developments this week, with global trade news remaining in the spotlight for ‘Aussie’ traders.
Tomorrow will see the release of Australia’s consumer inflation expectation figures for December, with AUD investors paying close attention to any signs of an increase which could raise the chances of there being a rate hike from the Reserve Bank of Australia (RBA).
Following this release will be an RBA bulletin with AUD traders taking note of any comments regarding the strength of the Australian economy.
USD will likely be affected by tomorrow’s raft of data release, with the first being the publication of November’s continuing jobless claims, which are expected to increase.
These will be followed by the release of the initial jobless claims figures, which are also expected to increase on last month’s figure.
Friday will also see a slew of US data stats, with the most important being the retail sales figures for November, which are expected to decrease.