AUD/USD Exchange Rate Falls as US-China Trade Tensions Intensify
The Australian Dollar US Dollar (AUD/USD) exchange rate is down today and is currently trading around $0.7115 on the inter-bank market.
AUD/USD failed hold onto its gains following the strengthening in iron ore prices yesterday.
This is also due to a general lack of economic data over the Easter holidays, which has left the ‘Aussie’ feeling the strain of geopolitical uncertainty.
US-China trade discussions are still ongoing, and with China being Australia’s largest trading partner, the diminishing prospects of a trade deal are weighing on market confidence in the risk-averse Australian Dollar.
Michael Hirson, Asia Director at the consultants Eurasia Group, sounded a note of caution, saying:
‘We have entered into a new normal in which US-China geopolitical competition has intensified and become more explicit. The trade deal will moderate one phase of the US-China power struggle, but only temporarily and with limited effect.’
US Dollar traders, meanwhile, are awaiting the publication of the US new home sales figures for March today, which are expected to slip.
These will be followed by the Housing Price Index figures for February.
USD/AUD Exchange Rate Rises as Trump Calls to End Waivers on Iranian Oil Imports
In US news meanwhile, President Donald Trump has called for an end to waivers on Iranian oil imports, which will affect countries like China, India and South Korea.
Donald Trump tweeted:
Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil. Iran is being given VERY BAD advice by @JohnKerry and people who helped him lead the U.S. into the very bad Iran Nuclear Deal. Big violation of Logan Act?
— Donald J. Trump (@realDonaldTrump) April 22, 2019
This has further exacerbated tensions between the US and China, with Beijing seeing that trade with Iran is legal and the US interference is unjustified.
Geng Shuang, a spokesman for China’s Foreign Ministry, said:
‘China-Iran co-operation is open, transparent and in accordance with law. It should be respected.’
Meanwhile, this has also provided the US with some leverage in trade discussions, likely strengthening market confidence in the ‘Greenback’.
AUD/USD Forecast: ‘Aussie’ Could Fall on Renewed US-China Trade Fears
Many ‘Aussie’ (AUD) traders will be looking ahead to tomorrow’s release of the Reserve Bank of Australia’s Trimmed Mean CPI figures for the first quarter, and with any signs of an improvement this could benefit the AUD/USD exchange rate.
These will be followed by the Australian CPI figures for the first quarter which, however, are expected to ease.
The US Dollar, meanwhile, will remain sensitive to US-China trade developments this week, and with Trump putting more pressure on Iran, this could prove an obstacle in further trade discussions between the two superpowers.
The Australian Dollar US Dollar (AUD/USD) exchange rate will likely remain sensitive to geopolitical tensions this week on a general lack of Australian data, with Thursday being a Australian bank holiday for Anzac Day.