- Pair being sentiment driven with no economic data due to be released
- US – Sino relations strained after US blacklists 33 firms, Chinese threats
- US public holiday expect subdued trading
- At midday AUD/USD is trading +0.05% at US$0.6538 >> Real time exchange rates
The Australian Dollar is trading relatively flat versus its US counterpart in subdued trading on Monday. The US is closed for Memorial Day public holiday, limiting volumes being traded.
At midday, AUD/USD is trading +0.05% at US$0.6538. This is mid-way between the daily traded range of US$0.6520 – US$0.6550. The pair is extending gains from the previous week, which saw the Aussie Dollar rally 1.9% versus the greenback.
With very little on the Australian economic calendar this week, the risk sensitive Aussie dollar is expected to be driven by sentiment.
On the one hand, the easing of lockdown measures across the globe is lifting risk appetite, boosting demand for the perceived riskier Australian Dollar. On the other hand, rising US – Sino tensions could weigh on the Chinese proxy, the Australian Dollar.
On Friday, the US Commerce Department blacklisted 33 Chinese companies, in a move that China says it strongly opposes, raising the prospect of retaliation from Beijing. Chinese foreign minister Wang Yi warned the US was taking relations towards a new cold war.
Chinese state media has threatened Australia with new economic sanctions if it supports the US in the escalating war of words and now actions. The threat comes after China banned taxed barley imports and stopped buying meat from some Australian abattoirs. Relations between Australia and China have been on a downward spiral since Canberra called for an independent inquiry into the origin and spread of coronavirus in China.
China is Australia’s largest trading partner so rising tensions between Australia and China or between the US and China could have a negative impact on the Australian Dollar whilst boosting the safe haven US Dollar.
There is no high impacting US data today. Investors will look ahead to the release of US consumer confidence data tomorrow. This sentiment data could provide some clues as to how quickly the consumer driven US economy is expected to rebound.