Australian Dollar Extends Losses Due to Likelihood of Potential Tariffs from Trump
The Australian Dollar (AUD) losses ground against the US Dollar (USD) for the third consecutive session on Tuesday. Proposed tariff increases on Chinese goods by US President-Elect Donald Trump could negatively impact the AUD, as Australia is one of China’s largest exporters.
Australia's Westpac Consumer Confidence index rose by 5.3% to reach 94.6 points in November, marking its second consecutive month of improvement and the highest level in two and a half years. However, the index has remained below 100 for nearly three years, reflecting that pessimists still outnumber optimists.
Matthew Hassan, Senior Economist at Westpac, noted, "Consumers are feeling less pressure on their family finances, are no longer worried about further interest rate rises, and are increasingly confident in the economic outlook."
The US Dollar continues to strengthen following the US election results that confirmed Trump’s victory. Analysts suggest that if Trump’s fiscal policies are implemented, they could boost investment, spending, and labor demand, raising inflation risks. This scenario might prompt the Federal Reserve (Fed) to adopt a more restrictive monetary policy, potentially strengthening the Greenback and putting added pressure on the AUD/USD pair.
Traders await the US inflation data release on Wednesday for insights into future US policy. The headline Consumer Price Index (CPI) is expected to show a 2.6% year-over-year increase for October, while the core CPI is projected to rise by 3.3%.
Source: FX Street
