Aussie Dollar Slips After Trump Tariff Threat

Fundamental Analysis

* Tariff Threat: The Australian dollar remains under pressure against the U.S. dollar due to concerns over Donald Trump’s recent proposal to raise tariffs on Chinese imports. Australia, a major exporter to China, could feel the economic impact of Trump’s suggested 60% tariff on all Chinese goods. Trump argues that this tariff increase would not only generate substantial revenue but also reduce the U.S.’s reliance on China, supporting domestic industries and addressing trade imbalances. Meanwhile, weaker-than-expected data from China has further weighed on the Australian dollar. In October, China’s CPI inflation grew just 0.3% year-over-year, down from September’s 0.4% and marking the slowest increase since June. Additionally, China’s Producer Price Index fell by 2.9%, exceeding expectations of a 2.5% decline and deepening from the 2.8% drop recorded the previous month.

Technical Analysis

* Technical Breakout: AUDUSD was traded lower following prior retracement from the resistance level 0.66550. MACD which illustrate bearish momentum signal with the formation of death cross suggest the pair to likely further extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 0.65250. Conversely, a potential reversal is also to be expected and the price could head back towards 0.66550.

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Potential Risks

Looking ahead, investors will closely watch key U.S. economic data releases, including CPI, PPI, and Retail Sales this week for further direction and insights into economic momentum.

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Monitoring

Stay updated on US and Australia data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.