AUD/USD dropped below 0.64 handle on tradewar escalatory headlines
- AUD/USD taking a hit on escalating trade tensions.
- Trump seeking to squeeze China in retaliation to COVID-19.
AUD/USD is trading at 0.6399, oscillating around 0.64 the figure following a drop to a low of 0.6393 from a high of 0.6452 and weighed by renewed sentiment pertaining to trade wars between the US and China.
AUD/USD has dropped below the 0.64 handle on the recent trade war headlines. More on those here: Trump: Will be able to report on whether China is fulfilling its obligations under trade deal in about a week or two.
The headlines follow the news earlier in the week whereby Reuters reported how the Trump administration is “turbocharging” an initiative to remove global industrial supply chains from China.
Lead paragraphs
The Trump administration is “turbocharging” an initiative to remove global industrial supply chains from China as it weighs new tariffs to punish Beijing for its handling of the coronavirus outbreak, according to officials familiar with US planning.
President Donald Trump, who has stepped up recent attacks on China ahead of the Nov. 3 US presidential election, has long pledged to bring manufacturing back from overseas.
Now, economic destruction and the US coronavirus death toll are driving a government-wide push to move US production and supply chain dependency away from China, even if it goes to other more friendly nations instead, current and former senior US administration officials said.
Meanwhile, analysts at Westpac explained that AUD is "highly positively correlated with global risk sentiment and a high beta anti-USD play, underperforming other currencies against the US dollar from February into late March, then outperforming markedly in April as equity markets rebounded sharply."
Official Chinese data indicates that the economic damage from Covid-19 was heavily concentrated in January and February, followed by a sharp rebound in March, at least in industrial activity. Further growth would of course benefit both China and Australia, whose iron ore exports to China surged in March.
AUD/USD levels
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
