SYDNEY: The Australian and New Zealand dollars steadied on Monday after a bruising week as the spectre of imminent US tariffs and a potential global trade war pounded export-exposed currencies.
The Antipodeans were undermined by a bout of risk aversion in markets amid heightened geopolitical tensions on diplomatic efforts to end the Ukraine war, while worries about the US economy mounted after a string of soft data.
President Donald Trump’s tariffs on Canada and Mexico are set to take effect on Tuesday, said Commerce Secretary Howard Lutnick, although it might not be the full 25%.
An extra 10% levy on Chinese imports is, however, due to come into effect this week.
The Aussie rose 0.3% to $0.6227 on Monday, having tumbled 2.4% last week in the biggest weekly decline since June 2023.
That left it flat for February, with resistance heavy at the 2025 high of $0.6409 and support at the February low of $0.6085.
The kiwi inched 0.2% higher to $0.5608, after falling 2.5% the previous week.
It ended February 0.7% lower, with support at Friday’s low of $0.5587 and $0.5517. Imre Speizer, a market strategist at Westpac, said there is potential for the pullback in the Australian dollar to extend to $0.6130 in the week ahead.
“The strong US dollar trend is expected to persist for much of H2 2025. Expectations of RBA rate cuts add to the medium-term bearish case,” he said.
For the week, much attention will be on the headlines from the National People’s Congress in Beijing, which opens its annual session on Wednesday where stimulus measures and possible reprisals against US tariffs could be announced.
The Asian giant is the biggest market for the Antipodeans’ resource exports, leaving them vulnerable to any policies that might hurt demand there.
Data due on Wednesday are expected to show Australia’s economy grew a moderate 0.4% in the December quarter, but annual growth would still be a meagre 1.2%.
Australia, NZ dollars mugged as proxies for tariff, China risks
Inventories are expected to have added 0.3 percentage points to gross domestic product.
Also out are minutes of the Reserve Bank of Australia’s February meeting which should offer more detail on why it decided to lower rates for the first time in four years, while also warning that further easing was dependant on progress in inflation.
Markets currently imply a scant chance it will cut again at the next meeting on April 1, but a 67% probability of a move in May.
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