Author: Hayden Carswell
The AUD opens lower this morning as China retaliates and raises tariffs on a range of US goods. China will target $60Bln in goods which will take effect on the 1st June. Any threat to trade is considered a potential negative for Australia.
The risk off environment dominating has seen the AUD testing support from Q1 2016. Wage data tomorrow will be key to avoid any further downside surprises.
Global equities tumbled on the back of this, US markets were down 2-4% with European and Asian equity indices down 1-2%. Trump intends to spend 15bln in aid on struggling farmers whose products have been targeted in by tariffs.
We have seen the US Fed reach a peak in interest rates, Treasury yields fell overnight, and 75% of the market is now expecting a 25bp Fed cut by the end of the year. Reiterating trade wars are not good for business.
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