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AUD stays resilient against US stock market falls

October 15, 2018 Financial No Comments Email Email

The AUD had remained resilient amidst this week’s US stock market falls in surprisingly welcome news for Aussie travellers about to visit the USA, foreign currency experts Travel Money Oz said today.

“On Wednesday and Thursday night, there was some major moves in the US Stock Market, with the Dow Jones falling by more than 800 points,” general Manager for Travel Money Group, Kelly Spencer, said.

“This was The Dow’s third biggest points fall ever, however, only the 16th biggest percentage fall.

“This fall led to a pretty big risk-off sentiment, that is, people seeking investments with a lower perceived risk. Surprisingly though, the AUD/USD remained resilient and did not witness any massive movements.”

Ms Spencer said this was partly due to underwhelming expectations for US inflation, which put downward pressure on the USD against most major currencies.

“President Trump consistently tweets about the stock market making new highs, so seeing its biggest fall since February has seen him quick to point blame at the Fed and their ‘out of control’ behaviour.

“Usually the AUD comes under pressure when risk sentiments rise. However, as people rotate out of stocks and into US Treasuries, it has reduced the return on these assets and the gap between similar Australian assets, making the Aussie assets more appealing,’’ she said.

“Next week the US will release its twice yearly currency report. It sounds like the US Treasury Department will state that China isn’t manipulating their currency. If this is the case, it would help stop an escalation of the ongoing US/China trade war.

“Trump has publicly stated that he believes China is a currency manipulator, so he appears to be at odds with the US Treasury Department here.

“If that’s the case he will be fighting with both the Fed and the US Treasury. It could be a big week ahead,’’ she said.

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