Trump trade tariffs start to drive currency prices

The Australian Dollar and New Zealand Dollar weakened hugely yesterday following the trend set in Tuesday’s afternoon session. Over the last 48 hours GBP/NZD rates have spiked by nearly 2.5% giving you an extra $9,000 on a £200,000 transfer and 1.3% on GBP/AUD giving you an extra $4,500. A huge proportion of this climb can be attributed to the latest tariff that President Trump has introduced to Canada. This was mentioned in yesterday’s report however it is continuing to have an impact on global currency markets.

This tariff was specifically introduced on Canada and their imports of softwood lumber. There has been no further mention of this being emulated on other countries but with the Australian and New Zealand Dollar being so dependent on exports, the market is pricing in the possibility of what it could mean on the economy.

Markets are now very cautious of all trade - oriented countries with the fear that such protectionist tariffs may become commonplace.

Consumer Price Index results in AUD losses

Yesterday we had the latest economic update from Australia which was their Consumer Price Index figures. The release was strong at 2.0% which mitigated concerns that inflation may start to cause a slowdown or period of contraction. This figure was however below what most had expected of 2.1% which resulted in the Australian Dollar losing value in early trading which further exacerbated the losses seen since the Trump trade tariff news.

AUD expected to be more expensive as week ends

The next data release to drive market value for the Australian Dollar is the Production Price Index released on Friday morning. This is expected to show an improvement and as a result I would expect to see the AUD strengthen in value and become more expensive to buy before the weekend. If you have AUD to buy it may be wise to take advantage of these near 7-month highs whereas AUD sellers may want to wait until Friday with a hope of getting more for their money.

Making a timed transfer is difficult during periods of market volatility, so why not speak to a member of our team about the different contract options available to you to help mitigate risk? Call today on 01494 725 353 or email me here if you are yet to trade with us and would like to speak with someone regarding an AUD transfer.

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