Aussie dollar outlook glum as trade tensions and rate cut loom large

Daily Currency Update

AUD - Australian DollarThe Australian Dollars depreciation continued through trade on Friday as US and China trade talks deteriorate. Unsteady labour market data Thursday and waning optimism a compromise on trade may have been reached before June both weighed on the AUD forcing the dollar below 0.69 to touch intraday and year to date lows at 0.6860. The uptick in unemployment rates Thursday compounded recent softness across wage prices and inflation data and have amplified calls for the RBA to act and loosen monetary policy in a bid to stimulate lacklustre domestic economic performance. Heightened US-China trade tension and growing concerns the global economy is failing to fire have weighed further on the domestic unit. As the US and China engage in a tit for tat tariff increase and the US look set on expanding it’s tariff agenda, albeit a decision on auto tariffs has been suspended for 6 months, the outlook for the AUD appears less than rosy. Despite an uplift on open following the weekend election results the sustained period of range bound trade with supports above 0.70 appear to have broken and risks to the downside remain in play. Attentions now turn to the RBA policy meeting minutes Tuesday and ongoing trade talks for direction through the week ahead.