AUD: AUDUSD Off Today’s Highs On Lacklustre Equity Performance

RBA-dated OIS pricing is slightly softer across meetings today. 

• Moreover, OIS pricing remains 3-6bps softer across meetings than 24 January’s pre-Q4 CPI levels, with August leading.
• A 25bp rate cut is more than fully priced for April (130%), with the probability of a February cut at 89% (based on an effective cash rate of 4.34%).
• Based on historical patterns, it would be highly unusual for the RBA not to follow through on market expectations, especially since it has made no attempt—officially or unofficially—to steer expectations away from a cut, as it has done in the past.

Figure 1: RBA-Dated OIS – Today Vs. Pre-Q4 CPI

Source: MNI – Market News / Bloomberg

Outflows from South Korea and Taiwan dominated flows in the region over recent days with latest data showing only Thailand and Malaysia with modest inflows. 

• South Korea: Recorded outflows of -$266m yesterday, bringing the 5-day total to +-$187m. 2025 to date flows are -$1,478m. The 5-day average is +$37m, the 20-day average is -$88m and the 100-day average of -$140m.
• Taiwan: Had outflows of -$639m yesterday, with total inflows of +$630m over the past 5 days. YTD flows are negative at -$2674m. The 5-day average is +$126m, the 20-day average of -$85m and the 100-day average of -$81m.
• India: Saw outflows of -$54m as of the 7th, with a total outflow of -$894m over the previous 5 days. YTD outflows stand at -$9312m. The 5-day average is  -$179m, the 20-day average of -$359m and the 100-day average of -$173m.
• Indonesia: Posted outflows of -$56m , bringing the 5-day total to -$273m. YTD flows are negative at -$519m. The 5-day average is -$55m, the 20-day average is -$17m the 100-day average of -$15m.
• Thailand: Recorded inflows of +$30m as of Friday, totaling +$74m over the past 5 days. YTD flows are negative at -$256m. The 5-day average is +$15m, the 20-day average of -$10m the 100-day average of -$16m.
• Malaysia: Experienced inflows of +$21m Friday, contributing to a 5-day outflow of -$38m. YTD flows stand at -$740m. The 5-day average is -$8m, the 20-day average of -$33m the 100-day average of -$26m.
• Philippines: Saw outflows of -$8m yesterday, with net inflows of +$9m over the past 5 days. YTD flows are negative at -$93m. The 5-day average is +$2m, the 20-day average of -$3m the 100-day average of -$2m.

Today Australian PM Albanese and US President Trump discussed the possible exemption of Australia from the just signed 25% tariffs on US imports of steel and aluminium to take place on March 4. Trump mentioned this exclusion as an option when he signed the order, which currently doesn’t include any “exemptions”. The US is not an important trading partner for Australia as a whole and vice versa.

• Australia may get an exemption from the current tariffs and avoid being targeted as it is one of the few countries that the US has a surplus with, it accounts for only 0.5% of US imports and 2% of aluminium imports and less than that for steel.
• Australia’s 0.5% of total US imports is dwarfed by 12.6% coming from Canada, 15.6% from Mexico, 18.6% from the EU and 13.4% from China – the ones being targeted by universal tariffs.
• The US trade surplus with Australia rose slightly last year to US$17.9bn from US$17.6bn. It has increased in each of the last four years and is up almost $9bn since 2020. 

US trade deficit US$bn 12mth sum

• Australia is way more vulnerable to a reduction in demand from China whether due to its own structural problems or the impact of the US’ universal 10% tariff. While exports to the US rose to 4.6% of the total in 2024 from 3.7%, to China they were 34.5%.
• Australia is a large LNG exporter and may benefit from increased shipments to China following its 15% tariff on LNG imports from the US. Oil & gas accounted for 15.5% of Australia’s 2024 merchandise exports.

Australia merchandise exports by destination % total 2024

Source: MNI - Market News/ABS