- The Australian dollar is currently facing challenges as the US dollar gains traction, bolstered by optimism surrounding a trade agreement between the US and the European Union.
- US-China trade discussions are set to recommence on Tuesday.
- The Reserve Bank of Australia (RBA) is expected to closely observe employment data for June and inflation figures for the second quarter.
The Australian dollar (AUD) appears to be in a bit of a decline, trading at around 0.6520 during Asian hours on Tuesday after experiencing losses over the last three sessions. This shift is largely influenced by the rise of the US dollar (USD) due to the recent trade agreements between the US and the EU.
This past Sunday, the US and the EU finalized a framework deal that imposes a 15% tariff on a majority of European imports, effective from August 1. This agreement comes after a prolonged standoff, as noted by Bloomberg.
Market participants are watching closely for updates on the US-China trade situation. Talks are set to pick up again on Tuesday, following a lengthy negotiation session that lasted over five hours in Stockholm on Monday. The aim is to navigate existing tensions and extend the current trade truce by another three months.
US Treasury Secretary Scott Bescent met with China’s Deputy Prime Minister Lifeng at the Swedish government office. This meeting is crucial as they approach the August 12 deadline for a long-term tariff agreement with the Trump administration, building on preliminary agreements made in earlier months that helped reduce tensions.
Expectations are that the Federal Reserve will keep benchmark interest rates in the range of 4.25% to 4.50% at their July gathering. Attention will be on the FOMC press conference for any hints that rate cuts might be in the pipeline for September.
The RBA is likely to keep a vigilant eye on June’s employment statistics and inflation data from the second quarter before making any decisions regarding potential interest rate cuts. Both monthly and quarterly reports on inflation are anticipated to be released later this week.
