Australian dollar slips another week

The Australian dollar has slipped a little further against its US counterpart as the spat between the US and China over trade hurts commodities and commodity currencies, including the Aussie.

At 0635 AEST on Monday, the Australian dollar was worth 74.46 US cents, down from 74.57 US cents on Friday.

Westpac analysts say the tension over trade looks to have hit commodity currencies.

“The trade spat between US and China appeared to hurt commodities and commodity currencies, with China threatening retaliatory tariffs on Friday,” they said in a morning note.

“The US dollar index closed down 0.1 per cent on the day. …. (The) AUD extended a week-old decline to 0.7440 – the lowest since 9 May.”

There are no obviously local event risks for the Australian dollar, leaving the currency vulnerable to trade-based tensions, along with continuing reactions to the US and European central banks’ recent decision on interest rates.

“The combination of hawkish Federal Reserve and dovish European Central Bank surprises last week, plus US-China trade spat, could take AUD/USD lower towards 0.7410 (the May low) during the week ahead,” the Westpac analysts said.