SYDNEY, – The Australian dollar slipped from eight-month highs on Monday after U.S. President Donald Trump issued tariff letters to the EU and Mexico, while the kiwi struggled to hold above 60 cents.
The Aussie was 0.1% lower at $0.6566, down from an eight-month high of $0.6595 hit on Friday. It eked out a small gain of 0.3% last week, an impressive result given the U.S. dollar’s broad bounce.
The kiwi dollar fell 0.4% to $0.5985, after losing 0.7% last week to as low as $0.5978. It now faces resistance at the 60 cents level and is some distance away from its nine-month peak of $0.6120 hit two weeks ago.
Against the kiwi, the Aussie hit a new three-month top of NZ$1.0961, having jumped 1.3% last week due to the pullback in expectations for local rate cuts after the Reserve Bank of Australia wrongfooted investors and kept rates steady.
Higher iron ore prices also helped, with the steelmaking ingredient up about 4% last week. Australian Prime Minister Anthony Albanese, in China for an official visit, pledged on Monday to work with Beijing to address global excess steel capacity.
Tony Sycamore, analyst at IG, said the Aussie needs to see a sustained break of its range extremes to provide a clearer picture of what comes next. “Specifically, a sustained break above resistance at around 0.6600 would indicate the next leg higher has commenced.”
Analysts at the Commonwealth Bank of Australia noted that an escalation of the U.S.-led tariff war remains the biggest downside risk to the Australian dollar.
Looking ahead, Australia will publish jobs data on Thursday, where expectations are centred on a rise of 20,000 jobs and a steady unemployment rate at 4.1%. The labour market has stayed surprisingly resilient and is one reason why the RBA is not rushing to stimulative policy settings.
However, any unexpected weakness will add to the case for a rate cut in August, which is now priced at 85%. Swaps now imply a total further easing of 75 basis points to a terminal rate of 3.1% early next year.
This article was generated from an automated news agency feed without modifications to text.
