Downward pressure on the Australian dollar continues as US China trade war escalates

Aussie gains 3.44% in one week

The Australian dollar is hitting economic headlines for the wrong reasons at the moment, as the currency is currently trading around its lowest levels since 2016 against some major currency pairs.

Australian dollar hits 3 year low against the US dollar

On Wednesday the Aussie dollar finished the day at its lowest level against the US dollar since January of 2016, and the AUD/GBP rate is also trading close to 3-year lows despite the pound’s woes owing to the Brexit uncertainty surrounding the UK and it’s future trading arrangements.

The heating up of the trade war talks between US President Donald Trump and Chinese leaders has resulted in a dip in risk appetite and this has pushed the Aussie dollar lower. Commodity currencies tend to be negatively impacted when the global economy shows signs of a slowdown and this is being reflected within the AUD’s value at the moment along with other similar currencies. Recent data out of China implied that retail sales are growing at their slowest pace since 2003. With sales dropping along with industrial output the policymakers within China have suggested that they will continue to implement stimulus measures to try and counter the slowdown.

There is also the chance of an interest rate cut from the Reserve Bank of Australia in the forthcoming months, and talk of this talking place is likely to also impact the Aussie dollar negatively.

Brexit vote to affect pound to Australain dollar rates

Domestically, the pound is likely to continue to be heavily influenced by cross-party Brexit talks as the leaders of the Conservative and Labour parties try to reach an agreement which has so far failed to materialise in a successful outcome. UK Prime Minister Theresa May has also called for another vote on her Withdrawal Agreement early into next month, and this will be her fourth attempt at pushing the deal through parliament.

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