The Australian dollar hits low below the 71 cent, despite trade problems



Posted

September 10, 2018 08:49:07

The Australian dollar is in a two-and-a-half year low and has briefly dropped below $ 71 for a rising greenback and trade problems between the US and China.

The dollar hit low at US $ 70.99 on Friday's Wall Street session and again this morning. It has since recovered somewhat to be 71.09 US cents at 8:07 am (AEST).

It is the first time that the Australian dollar has traded below 71 US cents since February 2016.

NAB's foreign currency strategy, Ray Attrill, said the Aussie dollar was the worst-performing currency on Friday.

"AUD was the biggest loser on Friday, followed by the NZD," he wrote.

"Contributing to the late weakness of the day was the jump in USD-CNH (US dollar-Chinese yuan – to 6.87 from sub-6.85) … on the Trump quotation marks that he was willing to add rates … to import tariffs on the whole meaning of Chines. "

The latest remarks by US President Donald Trump were delivered to journalists during a media evening of mid-flight on Air Force One.

"The $ US200 billion [in tariffs] what we are talking about could happen very quickly, depending on what happens to them. To a certain extent it is up to China, "Mr Trump said.

"And, I hate to say this, but after that another US $ 267 billion is ready to go in the short term if I want to, which changes the comparison altogether."

The $ US200 billion in fees to which Mr Trump was referring was already announced in July, but was subject to a consultation period ending last week, which means that they can now be imposed at any time.

This ongoing threat of an escalating trade war between Australia's main export client and one of its other major trading partners is likely to lead to further volatility for the local currency.

"AUD broke Friday under the main technical levels and a test under 0.70 [US dollars] (2016 low) can not be excluded in the short term, "remarked ANZ & S Cherelle Murphy.

"There will be eyes on the headlines, with all the negative consequences for China that probably will damage AUD."

Subjects:

currencies,

markets,

Australia


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