The Australian Dollar weakened against the US Dollar on Monday as US President Donald Trump threatened tariffs on Canada, Mexico, and China. Market anticipation of an RBA interest rate cut also weighed on the AUD.
The AUD/USD pair weakened to around 0.6155 during Monday's early Asian session, marking a decline of 0.95% for the day. This depreciation of the Australian Dollar (AUD) is being fueled by several factors, primarily US President Donald Trump's threat to impose tariffs on goods from Canada, Mexico, and China.
The White House announced on Saturday that tariffs of 25% would be levied on imports from Canada and Mexico, while China would face a 10% tariff, all effective from Tuesday, according to Bloomberg. Canada, Mexico, and China have pledged to retaliate against these sweeping new tariffs on their exports to the US. China's foreign ministry expressed concern that these tariffs would inevitably affect future cooperation on drug control.Trump's tariff threats are exerting selling pressure on the China-proxy Aussie as China is a major trading partner for Australia. Adding to the AUD's downward pressure are rising expectations that the Reserve Bank of Australia (RBA) will cut interest rates. According to a Bloomberg survey conducted on Friday, 20 out of 23 respondents anticipate the RBA will lower its cash rate to 4.10% on February 18th. Financial markets currently assign a nearly 90% probability to this rate reduction. Traders are closely watching for the release of China's January Caixin Manufacturing PMI, scheduled for later on Monday. A stronger-than-expected outcome in this report could help mitigate the AUD's losses.
AUD/USD Australian Dollar US Dollar Trump Tariffs RBA Rate Cut Caixin PMI
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