Trump tariffs: Australian dollar falling
The Australian dollar dropped to the lowest point in five years as a commercial war among the largest economic partners in the country – China and the United States – reaches a passage from fever.
Trading at the US59.33 ¢ Monday morning, the dollar resumed to just over 60 ¢ when the expectations increased with further instability in a Commercial war unleashed by Donald Trump’s “Liberation Day” rates.
On Friday, China slapped a uniform rate of 34 % on US importsSpread the Australian market and lower the dollar to levels not seen by the global financial crisis and Covid-19 pandemics.
Why is the Australian dollar falling?
Rodrigo Catril, Senior Stratega of NAB foreign currency, said that the Australian dollar is “in the land of no man” since commercial tensions between the United States and China become more volatile. Catril said that the risks of a “systemic shock” caused by commercial tensions were increasing and that the dollar “never behaves well” in such circumstances.
Catril said there was some space for optimism, but a “faithful to the” Trump administration could cause a commercial war expanded with China in which the markets could “worsen a little before they improve. We have to read and prepare ourselves for a little volatility”.
While the main international actors such as the European Union plan to respond to Trump rates, there is an expansion of tactics.
“The scope of the rates is probably a little restricted – We should probably really talk about commercial tensions … this is where we can talk about rates on services or restrictions on the sectors or financial access and so on,” said Catril.
“The general sense is that Europe is, at the moment, more inclined to negotiate first and then try to take revenge later if the negotiations fail,” said Catril, “Europe is talking about the idea of imposing rates on services, which is obviously where great technology in the United States has a little exposure to Europe”.
