FX.co ★ Australian Dollar Drops on Recession Fears

The Australian dollar has declined to approximately $0.60 as of Monday, marking its lowest point since the COVID-19 pandemic surged in March 2020. This drop is attributed to the intensifying trade war, which has stoked fears of a global recession. Prime Minister Anthony Albanese has dismissed the idea of implementing retaliatory actions against Washington’s 10% tariff on Australian goods, emphasizing that the United States accounts for less than 5% of Australian exports. Nonetheless, the imposition of higher US tariffs on significant trading partners such as China, Japan, and South Korea is negatively affecting the broader global trade and growth outlook. Financial markets are currently anticipating a total of 100 basis points in rate cuts from the Reserve Bank of Australia for this year, with potential reductions expected within the months of May, July, and August. Furthermore, the Australian dollar is under pressure due to a sell-off in commodities and a shift towards safer investment assets.