Trump’s BRICS Threat Rattles Aussie and Kiwi

Action Insight Daily 7-4-25

Trump’s BRICS Threat Rattles Aussie and Kiwi

Australian and New Zealand Dollars fell sharply to start the week, leading losses alongside Yen. The moves come just ahead of central bank meetings in both countries, with RBA widely expected to cut rates by 25bps to 3.60% and RBNZ likely to hold at 3.25%. But given how well those outcomes are priced in, the sharp declines are more tied to a sharp escalation in US-led trade threats, which now openly target nations aligned with the BRICS economic bloc.

US President Donald Trump and Treasury Secretary Scott Bessent confirmed over the weekend that unilateral tariffs first announced in April will take effect August 1 for countries that have not finalized deals with the US The warning comes alongside new “take-it-or-leave-it” letters being sent to trading partners, with a clear message: accept the revised deal or revert to harsher April 2 tariff rates.

Adding fuel to the risk-off tone, Trump explicitly warned that any country aligning itself with BRICS “anti-American policies” will face an additional 10% tariff. That’s a direct signal to countries like Australia and New Zealand, which maintain strong trade ties with China, India, and Indonesia—all key BRICS or BRICS-aligned nations. Markets are increasingly viewing the region as vulnerable to secondary economic fallout if bilateral relations deteriorate further......

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EUR/AUD Daily Outlook

Daily Pivots: (S1) 1.7905; (P) 1.7950; (R1) 1.8019; More...

EUR/AUD's rally from 1.7245 resumed by breaking through 1.7989 resistance decisively. Intraday bias is back on the upside. Next target is 161.8% projection of 1.7245 to 1.7705 from 1.7459 at 1.8203. Firm break there will target 1.8554 resistance. For now, further rise will remain in favor as long as 1.7872 support holds, in case of retreat.

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Economic Calendar
GMT Ccy Events Actual Forecast Previous Revised
23:30 JPY Household Spending Y/Y May 4.70% 1.20% -0.10%
05:45 CHF Unemployment Rate Jun 2.90% 2.90%
06:00 EUR Germany Factory Orders M/M May -0.20% 0.60%
06:45 EUR France Industrial Output M/M May 0.40% -1.40%
08:30 GBP Construction PMI Jun 48.6 47.9
09:00 EUR Eurozone PPI M/M May -0.60% -2.20%
09:00 EUR Eurozone PPI Y/Y May 0.30% 0.70%