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Australian dollar mostly higher as trade war fears slide

Australian dollar daily update


Australian dollar daily update

The Australian dollar is higher against all major currencies except the British pound today. Following US Treasury Secretary Mnuchin's comments on trade (see our  US dollar daily update for more details), "risk-on" currencies are strengthening while safe havens including the US dollar and the Japanese yen are weakening. Given Australia's significant trading relationship with China, the currency sold off sharply last week on rising fear of a global trade war. Today, the currency is rebounding as the US and China continue to negotiate a deal. Riskier assets such as equities are also strengthening, while safe haven instruments such as government bonds sell off. Our medium-term outlook on the Australian dollar is neutral, while our short-term outlook is bearish. 

AUD/USD is up slightly today and trading just above 0.7730. EUR/AUD is flat and trading above 1.6040. GBP/AUD is up and trading above 1.8390.

Looking at economic data relating to the Australian dollar, this is a relatively light week. Tomorrow, we'll see HIA new home sales and hear a speech from RBA Assistant Governor Kent. On Thursday, we'll see private sector credit. Last week, employment changes were worse than expected. 


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