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April's Monthly Wrap: AUD, NZD, CAD: Trump trade concerns leave commodity currencies weaker

currency-newsApril's Monthly Wrap: AUD, NZD, CAD: Trump trade concerns leave commodity currencies weaker
Key rates:
 
  • AUD Monthly lows: £0.57, €0.68, $0.74, NZ$1.06, C$0.99
  • AUD Monthly highs: £0.60, €0.71, $0.76, NZ$1.09, C$1.03  
  • NZD Monthly lows: £0.52, €0.62, $0.68, AU$1.64, C$0.91
  • NZD Monthly highs:£0.56, €0.66, $0.70, AU$1.73, C$0.95
  • CAD Monthly lows: £0.56, €0.66, $0.72, AU$0.96, NZ$1.05
  • CAD Monthly highs: £0.60, €0.71, $0.75, AU$1.00, NZ$1.08
 
April turned out to be a pretty bad month for the commodity currencies, with the Australian, New Zealand and Canadian dollars all recording losses against a number of the other majors.

In fact, the weakness exhibited by all three currencies helped the pound surge to a seven-month high against the ‘Aussie’, a ten-month high against the ‘Kiwi’ and its best levels against the Canadian dollar since the UK voted to Brexit last June.

A severe decline in risk appetite was largely to blame for the way AUD, NZD and CAD exchange rates spiralled over the course of the month, with US geopolitical tensions, Trump trade concerns and fluctuating commodity prices all taking a toll.

The Australian dollar was also negatively affected by the expectation that the Reserve Bank of Australia (RBA) plans to leave interest rates on hold for the foreseeable future in light of ongoing issues with the domestic housing and labour markets.
 

"It has been a bad week for US-Canada trade relations. Last Monday, it became apparent that Canada intends to effectively cut off the last dairy products being exported from the United States. Today, the Department of Commerce determined a need to impose countervailing duties of roughly $1bn on Canadian softwood lumber exports to us. This is not our idea of a properly functioning free trade agreement."

- US Commerce Secretary, Wilbur Ross


Meanwhile, Trump’s attack on the Canadian dairy industry was one of the driving forces behind the Canadian dollar’s slide. Shortly after Trump’s Presidency began, he met with Canadian PM Justin Trudeau and made every appearance of being willing to work with Canada in order to develop a mutually beneficial trade relationship. 

However, claims from the US that Canada is illegally subsidising its timber industry and accusations that Canadian dairy farmers are engaging in ‘predatory pricing’ have soured relations between the two nations and upped concerns that Trump’s protectionist policies could have negative repercussions for those nations who rely heavily on trade.

Given that New Zealand exports a significantly higher proportion of dairy produce to the US than Canada, fears that the South Pacific nation could be next in the firing line left the New Zealand dollar weaker.

Will the Australian, New Zealand and Canadian dollars keep falling this month?

A little rebound in oil prices bolstered the Canadian dollar after the bank holiday, but whether or not we see AUD, NZD and CAD exchange rates extend losses in part depends on the attitude President Trump adopts in the weeks ahead. If his protectionist attitude persists, concerns over the future economic performance of Canada, New Zealand and Australia may keep all three currencies under pressure.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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