AUSTRALIAN DOLLAR EDGES HIGHER, UPSIDE SEEMS LIMITED DUE TO TRUMP’S TARIFF THREAT

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  • The Australian Dollar faced downward pressure from concerns over Trump’s tariffs on Chinese goods.
  • The AUD faced challenges as China's latest stimulus measures fell short of investors’ expectations.
  • Trump’s fiscal policies could heighten inflation risks, prompting the Fed to adopt a more restrictive policy stance.

The Australian Dollar (AUD) gains ground on Monday despite a generally negative outlook driven by concerns over Donald Trump’s proposed tariff increases on Chinese goods, which could impact Australian markets, one of China's largest trading partners. US markets will be closed for the Veteran’s Day Bank Holiday.

The AUD also faced potential downward pressure from lower-than-expected Chinese Consumer Price Index (CPI) data released on Saturday. Additionally, China's latest stimulus measures fell short of investor expectations, further dampening demand prospects for Australia’s largest trading partner and weighing on the Australian Dollar.

On Friday, China announced a 10 trillion Yuan debt package designed to alleviate local government financing pressures and support struggling economic growth. However, the package stopped short of implementing direct economic stimulus measures.

Australia's 10-year government bond yield dropped to around 4.6%, reflecting a decline in US bond yields following the Federal Reserve's widely anticipated 25 basis point interest rate cut. Last week, the Reserve Bank of Australia (RBA) kept its interest rate unchanged at 4.35%. The central bank emphasized that underlying inflation remains too high and is not expected to return to its target until 2026.


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