Home Daily Commentaries AUD underperforms amid rising concerns for impact of a Trump 2.0 Presidency

AUD underperforms amid rising concerns for impact of a Trump 2.0 Presidency

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Wednesday 17 July, 2024

Daily Currency Update

The Australian dollar underperformed through trade on Tuesday amid stronger-than-expected US data and rising concern for a second Trump Presidency. With little of note on the domestic ticket the AUD tracked sideways before giving up 0.4% through overnight trade, sliding below US$0.6750 to mark intraday lows at US$0.6717. US June retail sales printed significantly ahead of market estimates bolstering bets for a strong Q2 GDP print and offering little to change Fed pricing expectations. Momentum had been gathering around a possible 3rd rate cut before year-end but a resilient consumer base suggests the Fed can afford to be patient and measured in adjusting policy. The AUD gapped lower on the back of the data print and failed to recover losses despite a USD correction late in the day. With Trump already talking harder and firmer tariffs for China there are fears the AUD will become a scapegoat in the lead-up to the November 5 election. With the US election acting as a headwind, resistance approaching US$0.68 will likely remain in play while support for moves toward US$0.6680 may be tested.
Our attention today turns to NZ, UK and Eurozone CPI inflation data and US housing starts ahead of domestic employment data tomorrow.

Key Movers

The US dollar enjoyed mixed fortunes through trade on Tuesday and ended flat for the day as conflicting forces pulled the world’s base currency in different directions. The USD rallied following a hotter-than-anticipated domestic Retail sales print. US June retail sales data showed personal consumption jumped 0.9% well ahead of the 0.2% increase priced in by analysts. Even when stripped to exclude car sales purchasing activity was still well above consensus estimates and suggests that Q2 GDP could print higher than expected on the back of consumption growth. While there was little movement in Fed pricing the stronger print gives the Fed license to adopt a slow and measured path when easing interest rates. The USD jumped in the moment following the print but a retracement in yields forced the dollar to give up gains and finish largely unchanged on the day. The DXY dollar index is up 0.05%.
In other news, Canadian CPI data fell in line with expectations elevating expectations the Bank of Canada will cut rates again next week.
Our attention now turns to UK, NZ, and Eurozone CPI prints as key marked guiding directions throughout the day.

Expected Ranges

  • AUD/USD: 0.6680 - 0.6800 ▼
  • AUD/EUR: 0.6150 - 0.6230 ▼
  • GBP/AUD: 1.9100 - 1.9400 ▲
  • AUD/NZD: 1.0980 - 1.1080 ▼
  • AUD/CAD: 0.9150 - 0.9250 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.