- The Australian Dollar struggles as President Trump reveals plans to implement a 25% tariff on all steel and aluminum imports.
- The AUD encountered difficulties as China’s retaliatory tariffs on specific US exports were implemented.
- The US Dollar gained support as the January job report strengthened the cautious sentiment regarding the Fed’s policy outlook.
The Australian Dollar (AUD) remains under pressure against the US Dollar (USD) for the third straight day on Monday, as concerns over escalating trade tensions continue to weigh on the currency. The AUD/USD pair has been experiencing downward momentum following US President Donald Trump’s announcement aboard Air Force One that the US would impose a 25% tariff on all steel and aluminum imports, without specifying which countries would be affected.
Trump also indicated that additional reciprocal tariffs would be introduced by midweek, to be enforced almost immediately, matching the tariff rates of other nations, according to Reuters.
In response, Australian Trade Minister Don Farrell commented that “Australian steel and aluminum support thousands of well-paying American jobs and are critical to our mutual defense interests.” Farrell is advocating for a tariff exemption, similar to the one granted to Australia during Trump’s presidency in 2018.
The Australian Dollar has also faced further weakness due to concerns over the ongoing US-China trade war, given Australia’s strong economic ties with China. Last week, a new US levy on Chinese imports was implemented, and China began imposing retaliatory tariffs on US exports this Monday.
There had been expectations that President Trump and Chinese President Xi Jinping would engage in talks to resolve the dispute. However, a planned phone call between the two leaders was reportedly canceled, although there is still hope for future negotiations.
Market participants are increasingly betting that the Reserve Bank of Australia (RBA) will cut its cash rate from 4.35% to 4.10% in its upcoming meeting later in February. This follows recent data showing that underlying inflation has moderated faster than expected, prompting several major Australian banks to revise their rate cut forecasts, moving the anticipated cut from May to February.
Australian Dollar Weakens as US Dollar Rises on Cautious Fed Outlook
- The US Dollar Index (DXY), which measures the US Dollar’s value against six major currencies, rises above 108.00 at the time of writing. The Greenback receives support as the US Federal Reserve (Fed) is now expected to keep interest rates steady this year, following January’s jobs report released on Friday, which indicated slowing job growth but a lower Unemployment Rate.
- US Nonfarm Payrolls (NFP) increased by 143,000 in January, significantly below December’s revised figure of 307,000 and the market expectation of 170,000. However, the Unemployment Rate declined slightly to 4% in January from 4.1% in December.
- US Initial Jobless Claims rose to 219K for the week ending January 31, as reported by the US Department of Labor (DOL) on Thursday. This print surpasses initial estimates of 213K and was higher than the previous week’s revised tally of 208K (from 207K).
- Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee mentioned on Friday that inconsistent policy approaches from the US government cause a high level of economic uncertainty that makes it difficult for the Fed to draw a bead on where the economy, and inflation specifically, are likely heading.
- Meanwhile, Fed Board of Governors member Adriana Kugler noted that US growth and economic activity remain healthy overall, but noted that progress toward the Fed’s inflation goals has been somewhat lopsided, per Reuters.
- In an interview with CNBC, Minneapolis Fed President Neel Kashkari said that he would move towards supporting further rate cuts if they see good inflation data and the labor market stays strong
- China’s Consumer Price Index (CPI) grew at an annual rate of 0.5% in January, up from 0.1% in December and exceeding the market forecast of 0.4%. On a monthly basis, CPI inflation rose 0.7% in January, compared to December’s flat reading of 0%, though it fell short of the expected 0.8% increase.
- China’s Producer Price Index (PPI) declined 2.3% year-over-year in January, matching December’s drop but coming in weaker than the market consensus of a 2.1% decrease.
Technical Analysis: Australian Dollar tests 14-day EMA near 0.6250
The AUD/USD pair is trading near 0.6250 on Monday, approaching the 14-day Exponential Moving Average (EMA) on the daily chart. A break below this level could indicate a weakening of short-term price momentum. The 14-day Relative Strength Index (RSI) is hovering around the 50 level, with further movement expected to establish a clearer trend direction.
Currently, the AUD/USD pair is testing immediate support at the 14-day EMA, which stands at 0.6253. A significant drop below this level could shift the bias toward the downside, potentially driving the pair toward 0.6087, which is the lowest point since April 2020, reached on February 3.
To the upside, the AUD/USD pair may target the region around the eight-week high of 0.6330, last seen on January 24.
AUD/USD: Daily Chart
Australian Dollar PRICE
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | -0.04% | 0.44% | 0.36% | 0.00% | 0.09% | 0.18% | |
| EUR | -0.09% | -0.06% | 0.47% | 0.38% | -0.09% | 0.06% | 0.17% | |
| GBP | 0.04% | 0.06% | 0.38% | 0.42% | -0.02% | 0.12% | 0.23% | |
| JPY | -0.44% | -0.47% | -0.38% | -0.12% | -0.36% | -0.38% | -0.25% | |
| CAD | -0.36% | -0.38% | -0.42% | 0.12% | -0.32% | -0.32% | -0.21% | |
| AUD | -0.01% | 0.09% | 0.02% | 0.36% | 0.32% | 0.15% | 0.26% | |
| NZD | -0.09% | -0.06% | -0.12% | 0.38% | 0.32% | -0.15% | 0.11% | |
| CHF | -0.18% | -0.17% | -0.23% | 0.25% | 0.21% | -0.26% | -0.11% |
