Author: Dennis Li

As the new round of tariffs between the US and China kicked in on Monday, the Aussie, viewed as a proxy to global economy, edged lower across the board against its major peers. The AUDUSD dipped by 0.34% continuing to be stuck in the range between 0.7100 and 0.7300 since September. The AUDEUR fell by 0.55% at one point, testing its support of 0.6150  before recovering some of it losses overnight. Fresh concerns, more around the unpredictability of the trade wars impact on global growth than the tariffs themselves drove the markets last night. The Dow in particular after a stellar week last week gave up a lot of ground but not enough to suggest a contagion effect.

A holiday in Japan and China yesterday may have disguised the real impact on the markets with today’s opening watched with anticipation.

• After ECB’s Draghi said he sees a vigorous pickup in euro zone inflation in a regular hearing, the EUR rose to a more than three-month high against the USD on Monday.
• Turkey’s lira regained more than 3% of its value against the USD after US Secretary of State Pompeo said he expected discussions with Turkish officials this week over the fate of a jailed US pastor who has been the source of much angst between the two countries.
• US President Trump and his South Korean counterpart Moon Jae-in signed a renegotiated free-trade agreement on the sideline of the United Nations General Assembly, making the first time the US president has finalised a major trade deal since sworn in to office.

With trade tensions back to dominate the market sentiment, investors will also be paying attention to different central bankers’ outlook on global economic growth in speeches from ECB, BOJ, US Fed and BoE later this week.