With the Australian economy so dependent on the export of raw materials, its currency can act as a barometer and sentiment of attitudes towards global trade.
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It should be no surprise Mr Trump is partly to blame with the Trade Wars and the general political malaise in Washington, weighing on global attitudes to risk and defining where investors put their money.
Stock markets globally have also been volatile and this is reflected in a more slippery Australian dollar which has lost ground against most currencies, including the pound, one of the worst performers as we end the year.
There is no major Australian economic data left as we end 2018 except Private Sector Credit which is released on Monday 31st. What might be more interesting is Chinese Manufacturing PMI, Purchasing Managers Index data, also released that day, which will provide some insight into how the Chinese economy is performing.
All eyes are on China and just how the Trade Wars might be impacting their economy, this news will also likely have an effect on the Australian dollar as the market looks for evidence of the anticipated global slowdown.
Next year is already looking like it could be a volatile period for the Australian dollar with further developments in the Trade Wars and also global tensions. Donald Trump’s pulling out of Syria and Iraq is just another example of the kind of instability that might rock financial markets, and would see the Australian currency weaker.
With the pound almost certain to face its own significant challenges from Brexit, its look like we might have quite a battle on between the currency pairing as to which is the weaker.
Sterling could feel the sharp force of Brexit displeasure and fall into the low 1.70’s, any sign of progress for Mrs May’s deal and uncertainty down under, would likely see us well over the 1.80 handle.
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