The Australian dollar looks set for another volatile period after the announcement this afternoon for US tariffs to be imposed against the EU, Canada and Mexico. US President Donald Trump is moving forward with tariffs on steel and aluminium imports which could result in a trade war across the globe. The Australian dollar could see a period of weakness if this outcome materialises as the Aussie is a higher risk currency and generally performs worse in times of global uncertainty. Things could escalate quickly as the EU have made clear it will look to apply tariffs on American brands such as bourbon whiskey and Levi’s jeans. The US tariffs will take effect at midnight this evening so there could be some considerable volatility when the Australian markets open and a particularly volatile end to the week.
The Aussie did come under added pressure at the start of the week following developments in Italy which could have seen fresh elections. The outlook in Italy has improved throughout the week although it wouldn’t take much to see tension rise and an anti-establishment push from the two new parties seeking to form a government. Expect more uncertainty for EUR AUD on the back of developments in Italy.
Clients with a GBP AUD requirement should pay very close attention to what is happening in the UK with the ongoing Brexit. Whilst we may have been talking about it for over two years the process is about to become very interesting in these coming weeks as a vote on the Brexit withdrawal bill in the House of Commons approaches. There are whispers of a potential vote of no confidence in the government if UK Prime Minister Theresa May is defeated and this scenario could see major volatility for GBP AUD exchange rates. Clients looking to buy Australian dollars should plan around this event to avoid disappointment.
For assistance in making transfers either buying or selling Australian dollars then please get in touch with me James at [email protected]