Australian Dollar weaker as Trump slaps tariffs on Chinese imports

Daily Currency Update

The Australian Dollar opens this morning again under the 70c mark buying 0.6990. Having moved between a low of 0.6978 and a high of 0.7018 the AUD/USD was unable to hold on as US-China trade negotiations continued which created some nervousness amongst investors. Unfortunately, the 11th round of trade talks between the two ended without a deal and the U.S confirmed a new round of tariffs on Chinese imports. The White House announced raising existing tariffs on $200 billion worth of Chinese imports from 10% to 25%. Beijing has already vowed to retaliate with unspecified “countermeasures,” which are likely to include higher tariffs on American goods.
In the RBA’s latest Monetary Policy Statement the RBA downgraded Australia’s growth and inflation outlook which surprisingly pushed the Aussie higher. The central bank has cut its June 2019 GDP forecast down to 1.75% and the trimmed mean inflation is expected to rise to 1.75% in December 2019. With everyone fully aware of the recent slowdown in the local economy markets have priced in a rate cut by the RBA in the coming months which might explain why the Aussie failed to weaken further.
Looking ahead, Australia will see the release of Home Loans data which measures the number of new loans granted for owner occupied homes, due to be released at 11:30AEST. Over the next few days we will also see NAB's Business Confidence, Westpac Consumer Confidence, and Q1 Wage Price Index, all of which are relevant in terms of measuring Australian economic health, and therefore to anticipate the RBA's moves.