Australian dollar falls to five-month low as Trump rally continues

Written on the 21 November 2016

The Aussie sank to US73.22c as traders pushed up the US dollar in the wake of the Republican's presidential victory.

The Australian dollar has slid to its lowest level against its US counterpart since early June, as a rally in the greenback continued.
On Monday evening the local unit stood at US73.22c, down from US73.89c on Friday.

Donald Trump's presidential election victory has put a fire under the US currency as investors bet that the incoming administration would boost government spending, causing higher inflation and interest rates.

The trend continued when Federal Reserve chair Janet Yellen signalled last week that a December rate rise in the United States was increasingly likely.

A huge selloff on the global bond market has also seen money flow into the greenback, putting further pressure on other currencies such as the Aussie.

National Australia Bank foreign exchange strategists have forecast the Aussie dollar to drop towards US70c during 2017, and even lower in 2018.

Many economists expect the recent rise in commodity prices to go into reverse as the impact of China's last round of monetary stimulus wears off and the country's big importers of coal and iron ore run down inventories again.

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Source:  The Guardian