By guest contributor Stuart Talman, Director of Australian Sales, XE.com.
Now sitting around 13% off January’s calendar year highs and at its lowest level since MAR. 2016 – the past week’s Aussie dollar price action and further deterioration in the macro backdrop dictate that 70 US cents will likely give way in the coming weeks…….or perhaps in the next few days.
The Aussie dollar will continue to remain under intense pressure as the trade war intensifies and emerging market economies continue to falter.
Further ratcheting up the trade fight – Trump reportedly has his sights set on another trade war target in Japan. A Wall Street Journal article reporting late Thursday that Trump is ready and willing to make Japan “pay” going forward. In his comments to the WSJ journalist, Trump commented on his good relationship with the Japanese leadership but added – “Of course that will end as soon as I tell them how much they have to pay.”
It didn’t stop there as Friday brought more aggression – this time from on board Air Force One, Trump warning that he would slap an additional US$267 billion on top of the $200 billion due to be enacted in the coming days.
“The $200 billion we are talking about could take place very soon depending on what happens with them. To a certain extent it’s going to be up to China,” Trump said. “And I hate to say this, but behind that is another $267 billion ready to go on short notice if I want. That totally changes the equation.”
If the proposed volume in tariffs is implemented, this would take the total figure to US$517 billion, exceeding the US$505 billion in imported goods from China last year. Seems we’re now well and truly on track for each and every Chinese product exported to the US to be slapped with tariffs with a Chinese retaliation of similar magnitude.