AUD/USD continues to lose ground this week. Currently, the pair is trading at 0.6878, down 0.21% on the day. On the release front, it’s a light day. There are no Australian releases and only one major event in the U.S. The UoM Consumer Sentiment is expected to rise to 97.8.
It’s been a rough week for the Aussie, which has fallen 1.75% this week. This is the sharpest weekly drop since early February. The currency has been hit hard, as risk appetite has soured over the escalating trade war between the U.S. and China. The U.S. raised tariffs on $200 billion in Chinese goods late last week, and the Chinese responded this week with tariffs on $60 billion in U.S. products. On Thursday, China accused the U.S. of manipulating the talks, after the U.S. blacklisted Huawei, a Chinese telecom company. As well, an escalation in tensions between the U.S and Iran, which could lead to an interruption in oil shipments, has raised crude prices and sent equity markets sharply lower on Friday.
Australians head to the polls on Friday in a very tight race between the center-right Liberals and the left-leaning Labor. After years of a booming economy, Australia has been gripped by a slowdown, as the global trade war and a weaker Chinese economy has damaged the export-reliant Australian economy. The markets are hopeful that the winner will be able to form a majority government that will be able to serve a full term. A close finish between the parties could result in a minority government, and the resulting uncertainty could dampen sentiment towards the struggling Australian dollar.
