- The AUD/USD shoots almost 1.4% to about 0.6050 while the US dollar faces an intense mass sale.
- The commercial war between the US and China could send shock waves through the Australian economy.
- The president of the Federal Reserve, Kashkari, hopes that Trump’s tariffs will increase inflation and weigh on GDP growth.
He AUD/USD It is recovering about 0.6050 during negotiation hours in North America on Wednesday. The Australian torque is strengthened as the US dollar (USD) falls abruptly in the midst of fears that the deterioration of commercial relations between USA (USA) And China could push the economy towards a recession.
He US dollar index (DXY), which tracks the value of the dollar against six main currencies, falls to about 102.00. The S&P 500 opens with a slight positive tone, exhibiting an increase in the appetite of investor risk.
The tariff war between the US and China has intensified, since the latter has increased counter-84%, equalizing the reciprocal taxes imposed on Beijing by President Donald Trump on Tuesday. Such scenario will force US importers to look for other nations to buy substitutes for Chinese products. Market participants expect the event to be inflationary, since the purchase of similar goods from other nations will not be profitable, given China’s competitive advantage in manufacturing due to lower labor costs.
Market experts also believe that the inflationary impact of the commercial war between the US and China could lead to a recession in the US during the hours of North America, the president of the Bank of the Federal Reserve of Minneapolis, Neel Kashkari, said: “Short -term inflation will increase, the purchasing power will decrease, the investment will probably be lower and the GDP will be smaller due to the tariffs.”
Looking ahead, investors will focus on the minutes of the March meeting of the Federal Open Market Committee (FOMC), which will be published at 18:00 GMT.
Although investors have backed the Australian dollar (aud) against the US dollar, its perspective It is still weak due to possible economic clashes for the commercial war between the US and China. The Australian economy is expected to be one of the main victims of the commercial war, given its significant dependence on exports to China.
Commercial War between the US and China Faqs
In general terms, “Trade War” is a commercial war, an economic conflict between two or more countries due to the extreme protectionism of one of the parties. It implies the creation of commercial barriers, such as tariffs, which are in counterbarreras, increasing import costs and, therefore, the cost of life.
An economic conflict between the United States (USA) and China began in early 2018, when President Donald Trump established commercial barriers against China, claiming unfair commercial practices and theft of intellectual property by the Asian giant. China took retaliation measures, imposing tariffs on multiple American products, such as cars and soybeans. The tensions climbed until the two countries signed the Phase one trade agreement between the US and China in January 2020. The agreement required structural reforms and other changes in China’s economic and commercial regime and intended to restore stability and confidence between the two nations. Coronavirus pandemia diverted the attention of the conflict. However, it is worth mentioning that President Joe Biden, who took office after Trump, kept the tariffs and even added some additional encumbrances.
Donald Trump’s return to the White House as the 47th US president has unleashed a new wave of tensions between the two countries. During the 2024 election campaign, Trump promised to impose 60% tariff particularly in investment, and directly feeding the inflation of the consumer price index.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
