Yahoo Finance AUD/USD and NZD/USD Fundamental Daily Forecast – Tariffs Against China Will Be Market Moving Event
The Australian and New Zealand Dollars are climbing back after early session weakness. Most of the price action is likely related to position-squaring ahead of the Federal Reserve meeting on March 21. However, there are also some key reports coming out early Monday and Tuesday.
At 1022 GMT, the AUD/USD is trading .7709, down 0.0001 or -0.02% and the NZD/USD is at .7818, up 0.0007 or +0.10%.
There are no major reports today but traders should be on their toes for any news about possible tariffs against China, retaliation in response to President Trump’s recent tariffs on steel and aluminum and more shake-ups in the White House.
The U.S. Dollar is trading a little better early Monday as traders shift their focus on new Federal Reserve Chair Jerome Powell’s first monetary policy meeting later in the week and as the increased threat of trade protectionism kept traders on edge.
The Fed is widely expected to raise rates 25 basis points, but the key focus will be on whether Fed policy makers forecast four rate hikes this year instead of three they had projected at its December meeting.
Additionally, investors are watching for an expected retaliation to President Trump’s tariff and other protectionist policies which could disrupt the U.S. and global economy.
On the political front, last week President Trump fired Secretary of State Rex Tillerson and former FBI deputy Andrew McCabe. The Washington Post also reported that Trump would replace his national security adviser, H.R. McMaster.
This prompted reports that Trump would also fire Special Counsel Robert Mueller. This could be a political disaster for Trump and trigger a volatile response in the financial markets with investors likely selling out of higher risk assets while moving money into safe haven assets. Lower demand for risk could trigger a break in the Aussie and Kiwi.
Finally, there are also worries that Trump is seeking to impose tariffs on up to $60 billion of Chinese imports. White House trade adviser Peter Navarro has said that Trump would get options in the coming weeks to address China’s “theft and forced transfer” of American intellectual property as part of an investigation.
China is Australia’s biggest trading partner.
This article was originally posted on FX Empire
