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25th October 2018
Overnight the market’s risk averse mood persisted which continued to aid a lift in the USD, pushing the AUD from 0.71 to 0.7061.
This corresponds with the USD strengthening against the Euro, on the back of European data that signalled slowing economic growth across the Euro zone.
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The AUD also weakened against the Canadian dollar following Canada’s central bank raising interest rates. The bank has confirmed that more hikes are to be expected in order to keep inflation in check. As Canadian interest rates increase, the CAD may become more enticing for investors to get a greater return.
Closer to home, the AUD itself rose mid-week alongside China’s stock market recovery from multi-year lows.
Despite China suffering severe losses in 2018 (mainly due to the US trade war), there has been a slight rebound in the market after the Chinese Ministry of Finance pledged to cut taxes this year and the next. The Chinese economy welcomes tax cuts amidst the pressure of President Trump’s $250billion worth of tariffs on Chinese exports to the US.
How does this affect Aussie travellers? Chinese stimulus measures (aka cutting taxes for Chinese businesses) are important for Australia, as the AUD is underwritten by our huge commodity trades with China. In other words, a boost in the Chinese economy can lead to a boost in the AUD.
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