- AUD/USD slumps to near 0.6500 as the US Dollar strengthens on US-EU trade agreement.
- The US reduces tariffs on imports from the EU to 15%.
- Investors await a slew of US data, Australian Q2 CPI and the Fed’s monetary policy.
The AUD/USD pair is down almost 0.6% to near the psychological level of 0.6500 during the European trading session on Monday. The Aussie pair faces a sharp selling pressure as the demand of the US Dollar (US) has increased after the announcement of trade agreement between the United States (US) and the European Union (EU) over the weekend.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.92% | 0.12% | 0.45% | 0.15% | 0.76% | 0.65% | 0.51% | |
| EUR | -0.92% | -0.81% | -0.45% | -0.77% | -0.16% | -0.27% | -0.41% | |
| GBP | -0.12% | 0.81% | 0.20% | 0.05% | 0.66% | 0.55% | 0.41% | |
| JPY | -0.45% | 0.45% | -0.20% | -0.28% | 0.27% | 0.19% | 0.21% | |
| CAD | -0.15% | 0.77% | -0.05% | 0.28% | 0.58% | 0.51% | 0.36% | |
| AUD | -0.76% | 0.16% | -0.66% | -0.27% | -0.58% | -0.11% | -0.25% | |
| NZD | -0.65% | 0.27% | -0.55% | -0.19% | -0.51% | 0.11% | -0.14% | |
| CHF | -0.51% | 0.41% | -0.41% | -0.21% | -0.36% | 0.25% | 0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The details of the US-EU deal shows that Washington has reduced the tariff rate on imports from Brussels to 15%, the half of what President Donald Trump had threatened in the mid of the month.
Market sentiment turns extremely favorable for riskier assets as the US-EU deal has diminished fears of a disruption in the global trade flow. S&P 500 futures trade higher during the European trading session. However, a firm US Dollar has weakened demand for risk-sensitive assets.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, surges to near 98.30, the highest level seen in a week.
Going forward, investors will focus on a slew of US economic data, notable Personal Consumption Expenditure Price Index (PCE) for June and the preliminary Q2 Gross Domestic Product (GDP) data. While the major highlight will be the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.
On the Aussie front, investors await the Q2 Consumer Price Index (CPI) data for July, which will be published on Wednesday. The CPI data is expected to show that price pressures grew at a moderate pace. Subdued growth in price pressures would boost market expectations that the Reserve Bank of Australia (RBA) could reduce interest rates in the monetary policy next month.
(This story was corrected at 11:40 GMT to say in the second paragraph that Washington has reduced the tariff rate on imports from Brussels to 15%, not 30%.)
Economic Indicator
Consumer Price Index (QoQ)
The Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a quarterly basis, measures the changes in the price of a fixed basket of goods and services acquired by household consumers. The CPI is a key indicator to measure inflation and changes in purchasing trends. The QoQ reading compares prices in the reference quarter to the previous quarter. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.
The quarterly Consumer Price Index (CPI) published by the Australian Bureau of Statistics (ABS) has a significant impact on the market and the AUD valuation. The gauge is closely watched by the Reserve Bank of Australia (RBA), in order to achieve its inflation mandate, which has major monetary policy implications. Rising consumer prices tend to be AUD bullish, as the RBA could hike interest rates to maintain its inflation target. The data is released nearly 25 days after the quarter ends.
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