The Australian dollar is another currency coming under pressure at the moment, for both political and economic reasons.

Currency Pair% Change (Month)Difference on £200,000

With China being the country’s main trading partner and the Aussie dollar being sensitive to the global economic outlook, we’re witnessing the Aussie dollar lose value with both the pound and the US dollar trading around 3-year highs against the Aussie dollar.

The trade war between the US and China is proving to be a major headache for the Australian economy and therefore AUD. Iron ore, coal and gas, education, tourism, milk and meat are all heavily exported from Australia to China. With many of China’s exports being exported to the US any slowdown in business between the two is likely to have a knock-on effect on Australia, so if you have a currency requirement involving the pair it’s worth monitoring how this matter unfolds.

Aside from the trade war the Chinese economy has been showing signs of a slowdown, with Retail sales hitting their slowest pace since 2003, with pressure mounting on economic policy makers to announce stimulus packages to counter the slowdown.

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This week the AUD/USD rate dropped below a key benchmark level. The pair fell below 0.70 following the most recent comments from Trump on Chinese trade, and this level is crucial for the Aussie dollar. Despite being good news for exporters, of which there are many down under, it’s bad news for consumers and importers of goods into Australia.

There has only been one prolonged period of time during the Aussie dollar's history whereby the AUD/USD interbank rate sat below 0.70 which was in the early 2000’s, which is why this move has hit the headlines.

With the Reserve Bank of Australia expected to cut interest rates this year from the already record lows of 1.5%, there could be challenges for the Aussie dollar through 2019.


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