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The Australian dollar (AUD) remained subdued against the U.S. dollar (USD) on Tuesday. AUD/USD is likely to fall due to U.S. President Donald Trump’s decision to expand steel and aluminum tariffs by 25% to cover all imports, a decision that invalidates trade deals with key U.S. allies, including Australia. The White House confirmed that all import tax exemptions had been eliminated and said further action on microchips and cars would be considered in the coming weeks.
Trump later said he would “take very seriously” Australia’s request to be exempted from the steel tariffs, citing the country’s trade deficit with the United States. In response, Australian Trade Minister Don Farrell stressed on Monday that Australia is seeking tariff exemptions similar to those it obtained during Trump’s presidency in 2018.
Australia’s Westpac consumer confidence index rose 0.1% in February to 92.2 from 92.1 in January. Despite the slight increase, consumer confidence remains subdued amid ongoing concerns about household finances and rising living costs.
Market sentiment suggests expectations are rising that the Reserve Bank of Australia (RBA) will cut the 4.35 per cent cash rate at its next meeting in February. Traders are now pricing in a 95 percent chance of a rate cut to 4.10 percent as recent data suggests underlying inflation is slowing faster than the RBA expected. That prompted several major Australian banks to bring forward their forecasts for the first rate cut from May to February.
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