Shoppers and travellers are being warned to expect more hip-pocket pain as the Australian dollar tumbles. Global currency traders are waiting for more details on Donald Trump's signature tariff policy, which has investors buying up US dollars.
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00:00Travelling can be stressful, and for Aussies going overseas, they're finding their money
00:08isn't going as far.
00:10Philip and Martina Cross have been watching the Aussie dollar for four to five weeks.
00:15I think you just have to step around it in some ways.
00:18The couple are heading to Europe and won't be splashing out at fancy restaurants.
00:23The tour is all inclusive, so I think that makes it a lot easier.
00:28The Australian dollar has been falling against a basket of currencies in recent months, including
00:33the Euro and US dollar.
00:36It's become really clear that the Aussie dollar is sensitive to Trump's tariff policy, so
00:42that if he goes aggressively on tariffs, then the Aussie will weaken.
00:47Also hitting the Aussie, a weak Chinese economy sending commodities prices lower.
00:52They're our largest export partner, so the weak outlook there is depressing the outlook
00:59for Australian exports and therefore demand for the Aussie.
01:03I think the risks are that we see it struggling near term.
01:08How low could we go?
01:10I think we can get into the high 50s area.
01:13What the US Federal Reserve does with interest rates, analysts say, is the big wild card
01:18for the Australian dollar.
01:20Our US interest rates relative to Australia puts downwards pressure on the local currency
01:26as traders buy up US dollars to invest in American assets.
01:30If for example there are fewer interest rate cuts in the United States, the local currency,
01:36the Aussie dollar, could fall further.
01:38A weaker dollar pushes up the price of US imports, making the inflation fight more difficult.
01:45With Aussies still grappling with the cost of living crisis.
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