- The dollar bleeds due to tariff uncertainty and concerns about US debt.
- The solid Austral Manufacturing data have provided support to the AU.
- Today’s approach is in the US manufacturing PMI and President Powell’s speech.
The Australian dollar is one of the ones that best works on Monday. The feeling of negative risk is not weighing on the AUD today, which is receiving support from a weak US dollar to reach levels just below 0.6500.
The dollar has started the week defensive, beaten by a mixture of events. Trump’s promise to increase 50% steel and aluminum imports threatens to further restrict economic growth and enliven inflation, which has revived investors’ fears on stagflation.
Beyond that, the US president has opened a new front in an already fragile commercial relationship with China, while market concerns about the impact of a bill of fiscal cuts on the fiscal health of the country remain imminent. All this is giving a new boost to the tendency to “sell America.”
Australian manufacturing activity continues to grow
In Australia, the Global S&P manufacturing PMI revealed that the activity of the sector continued to grow in May, although at a slower pace than expected. These figures support the Hawkish tone message of the RBA last week and provide some support to the AU.
In the US, today’s approach is in the ISM manufacturing PMI, which is expected to continue improving in May, although even at levels that reflect contraction. The US dollar needs a positive surprise here to relieve the bearish pressure.
Apart from that, Logan and Goldsbee of the Fed will meet with the press before President Powell. His comments on economic growth, employment and inflation will be analyzed carefully in search of clues about the bank’s plans for June and July meetings.
Commercial War between the US and China Faqs
In general terms, “Trade War” is a commercial war, an economic conflict between two or more countries due to the extreme protectionism of one of the parties. It implies the creation of commercial barriers, such as tariffs, which are in counterbarreras, increasing import costs and, therefore, the cost of life.
An economic conflict between the United States (USA) and China began in early 2018, when President Donald Trump established commercial barriers against China, claiming unfair commercial practices and theft of intellectual property by the Asian giant. China took retaliation measures, imposing tariffs on multiple American products, such as cars and soybeans. The tensions climbed until the two countries signed the Phase one trade agreement between the US and China in January 2020. The agreement required structural reforms and other changes in China’s economic and commercial regime and intended to restore stability and confidence between the two nations. Coronavirus pandemia diverted the attention of the conflict. However, it is worth mentioning that President Joe Biden, who took office after Trump, kept the tariffs and even added some additional encumbrances.
Donald Trump’s return to the White House as the 47th US president has unleashed a new wave of tensions between the two countries. During the 2024 election campaign, Trump promised to impose 60% tariff particularly in investment, and directly feeding the inflation of the consumer price index.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
