By guest contributor Stuart Talman, Director of Australian Sales, XE.com
After a dovish RBA sent the Aussie dollar into free fall the week prior, last week saw AUDUSD steady somewhat as progress on US-China trade talks boosted risk sentiment.
Ending the week 0.65% higher, the Aussie is currently under the influence of competing forces – on the positive side, upbeat US-China trade headlines and the Federal Reserve pausing its rate hike cycle; on the negative, the RBA suggesting that the next move may be a cut as they lower their growth forecasts and the local economic data flow continuing to disappoint.
Despite climbing back through 71 US cents, current sentiment and growing headwinds will likely see the Aussie dragged lower in the short term.
We have been here before with positive trade headlines as the market rallies in anticipation of concrete details confirming a reduction, delay or abolishment of tariffs only to see no such action. Trump commented through the back end of last week that trade talks had progressed well and that he was open to extending the March 1 deadline if needs be.