SYDNEY: The Australian and New Zealand dollars slipped on Wednesday after the US and China agreed on the framework of a deal aimed at easing trade tension, an outcome markets had largely priced in after days of positive messaging.
The Aussie eased 0.2% to $0.6509, having gained 0.4% overnight to as high as $0.6533. Should it hold above the 65 cent level, resistance awaits at $0.6538 and then $0.6550.
The kiwi fell 0.3% to $0.6033 after eking out a 0.1% gain overnight.
There is support around $0.6030 while resistance is at a multi-month peak of $0.6080.
In London, negotiators from the US and China said they had “agreed a framework on trade” to be presented to leaders for approval.
Commerce Secretary Howard Lutnick said the framework should result in China’s restrictions on rare earth and magnet exports being addressed.
Initial market reaction was somewhat muted as the meeting’s outcome has been invariably priced in.
Asian stocks were mostly higher and the US dollar gained slightly.
Wall Street futures were last down 0.3%.
“For now it sounds positive but I suspect there’s going to be various twists and turns in this. It is hard to know preciously what that means and whether it’s enough to head off a further increase in tariffs,” said AMP chief economist Shane Oliver.
“The other problem is that’s priced in… US share markets are just below their all time high,” Oliver said.
Australian, New Zealand dollars eye multi-month tops as US-China talks continue
Down Under, this week is light on economic data or events, with movement in the Aussie an kiwi largely a function of the US dollar.
The main global event is the US consumer price index for May, due later in the global day, which will give insight into the inflationary impact of tariffs.
Median market forecasts are for the headline CPI to rise 0.2% and the core 0.3%, which would push annual inflation rates to 2.5% and 2.9% respectively.
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