InTouch Capital's Sean Callow forecasts ‘most likely' scenario for Aussie dollar as Donald Trump eyes higher tariffs
Australians were rattled after the US President revealed his baseline tariffs would be either 15 or 20 per cent – higher than the initial 10 per cent he announced on 'Liberation Day' in April.
Despite Trump's claim, Trade Minister Don Farrell said the Albanese government is still assuming 10 per cent tariffs until otherwise advised by the Trump Administration.
InTouch Capital foreign exchange analyst Sean Callow said it was 'very difficult to pin down' how the looming tariff decision would play out.
'How does China respond? Can they produce the stimulus that would offset some of the impact of these higher tariffs that are still in place with the U.S?' Mr Callow said on Business Now.
He remained upbeat about the future of the Australian dollar despite the uncertainty from Trump's tariffs.
'It's certainly a more positive mood," Mr Callow said.
'Those rallies in global equities are usually supportive for the Aussie dollar, it does tend to correlate positively with that.
'So the uptrend in the Aussie (dollar) is still probably the most likely path over the next few months.'
The Aussie dollar dipped from 63 US cents to about 60 US cents after Trump revealed his sweeping tariffs in April.
It quickly recovered its losses and has added another two cents in recent months.
Mr Callow forecasted the dollar to surge later in the year after it nudged up on Tuesday.
'It might continue to struggle a little bit around that 66 cent area,' he said.
'I do see the case for it to rally later in the year, but it poked its head above 66 cents and then the U.S dollar has just found a little bit of support in recent days.
'It's on a firmer footing in the past few weeks than it has been for a while.'
Trump on Monday (US time) told reporters he could hike the baseline tariff from 10 per cent to either 15 or 20 per cent.
'We're going to be setting a tariff for, essentially, the rest of the world,' the US President said.
'That's what they're going to pay if they want to do business in the United States, because you can't sit down and make 200 deals.'
Asked how steep the new tariff could be, Mr Trump replied: 'I would say it'll be somewhere in the 15 to 20 per cent range. I just want to be nice,' he added.
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