Australian Dollar Slips Following Tariff Threat from Trump

Fundamental Analysis

* Tariff Treat: The Australian dollar continues to face downward pressure against the U.S. dollar, driven by worries over Donald Trump’s recent proposal to hike tariffs on Chinese imports. With Australia being a key exporter to China, Trump’s suggested 60% tariff on all Chinese goods could have economic repercussions for Australia. Trump claims this increase would not only generate significant revenue but also reduce U.S. dependence on China, supporting domestic industries and addressing trade imbalances. Adding to the strain on the Australian dollar, weaker-than-expected data from China has surfaced. In October, China’s CPI inflation rose only 0.3% year-over-year, down from 0.4% in September, marking the slowest increase since June. Furthermore, China’s Producer Price Index declined by 2.9%, surpassing expectations of a 2.5% drop and worsening from the previous month’s 2.8% fall.

Technical Analysis

* Technical Breakout: AUDUSD was traded lower following prior retracement from the resistance level 0.66550. MACD which illustrate bearish momentum signal with the formation of death cross suggest the pair to likely further extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 0.65250. Conversely, a potential reversal is also to be expected and the price could head back towards 0.66550.

Potential Risks

Looking ahead, investors will closely watch key U.S. economic data releases, including CPI, PPI, and Retail Sales this week for further direction and insights into economic momentum.

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Monitoring

Stay updated on US and Australia data, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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