Summary:
The dollar struggled on Tuesday due to a new 100% tariff on films made outside the US, while the Australian dollar rose to a five-month high.
The dollar struggled to make headway on Tuesday, weighed down by new 100% tariff on films made outside the US. The Australian dollar benefited from the fallout, hovering near five-month high.
Australian financial markets on Monday largely welcomed a historic win by the centre-left Labour Party as it strengthens the government's hand in dealing with any serious threat to the economy from global trade war.
Goldman Sachs left its forecasts for fiscal spending, GDP growth and RBA policy rates unchanged as the recent policy announcement from Labour is unlikely to have a material economic impact in the near term.
The worry for Canberra is that an escalation in tensions between Washington, Australia's main security ally, and Beijing, its largest trading partner, could dent demand for commodities.
China's manufacturing activity fell more than expected to a 16-month low, sliding into contractionary territory in April. Exporters front-loaded outbound shipments to avoid higher duties in the previous month.
Trump said he is willing to lower tariffs on China at some point because the levies now are so high that the two economies have essentially stopped doing business with each other.
The Aussie dollar has breached its 200 SMA, extending the uptrend from last month. The initial resistance lies around 0.6500, which is followed by 0.6550.
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