The Australian and New Zealand (NZ) dollars plummeted on Tuesday, hitting their lowest levels in months. This dramatic drop followed U.S. President-elect Donald Trump’s renewed threats to impose steep tariffs on Canada, Mexico, and China. As a result, the U.S. dollar strengthened significantly.
The Australian dollar fell 1%, reaching $0.6438, its lowest level since early August. It broke the critical support level of $0.6441. On the other hand, the New Zealand dollar dropped 0.6% to $0.5812, marking its weakest point in over a year.
Concerns over Trump's trade policies have created uncertainty for the Australian dollar. His proposed tariffs of 25% on Mexican and Canadian goods and an additional 10% on Chinese imports have sparked fears of further economic strain. Analysts predict that the Australian dollar could slide even further, potentially hitting levels around $0.6350.
The New Zealand dollar, meanwhile, faces added pressure ahead of the Reserve Bank of New Zealand’s policy meeting. Market speculations suggest a 40% chance of a 75-basis-point rate cut. Such a move could further weigh on the kiwi.
Wednesday is shaping up as a critical day for both currencies. Australia is set to release October inflation data, with forecasts expecting a modest rise to 2.3%. Meanwhile, the Reserve Bank of New Zealand’s rate decision could shift market sentiment dramatically.
The Australian dollar’s relationship with China also plays a role in its performance. China, Australia’s largest trading partner, has seen its offshore yuan drop 0.3% to a four-month low due to Trump’s tariff threats.
Market volatility surrounding the Australian and New Zealand (NZ) dollars continues to increase. Traders are closely monitoring key economic events and policy decisions for further insights.
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