Australian Dollar Strengthens, Gains Seemingly Limited by Potential Trump Tariffs
The Australian dollar (AUD) strengthened on Monday (11/11) despite its generally negative outlook driven by concerns over Donald Trump’s proposed tariff hikes on Chinese goods, which could impact the Australian market, one of China’s largest trading partners. US markets will be closed for the Veterans Bank Holiday.
The AUD also faces potential downside pressure from weaker-than-expected Chinese Consumer Price Index (CPI) data released on Saturday. In addition, China’s latest stimulus measures have fallen short of investor expectations, further dampening the demand outlook for Australia’s largest trading partner and weighing on the Australian dollar.
On Friday, China announced a 10 trillion yuan debt package designed to ease local government financing pressures and support struggling economic growth. However, the package did not implement any direct economic stimulus measures
The yield on Australia’s 10-year government bond fell to around 4.6%, mirroring the decline in US bond yields following the Federal Reserve’s long-anticipated 25 basis point interest rate cut. Last week, the Reserve Bank of Australia (RBA) kept its cash rate unchanged at 4.35%. The central bank stressed that underlying inflation remains too high and is not expected to return to its target until 2026.
Source: FXStreet
