The Australian dollar has come under further pressure in today’s trading session after yesterday’s selloff on the back of move by China to retaliate for the new tariffs slapped on them by the US government.
Chinese has fought back by introducing new tariffs of their own which has now brought the possibility of a full-blown trade war to the forefront again which is going to be terrible news for the Aussie dollar as any trade war is expected to hit the Chinese economy hard.
China is Australia’s biggest trading partner and with the Australian economy on the slide, it can ill afford this situation.
The National Australia Bank business conditions index released earlier today came in under expectations which also added fuel to the fire for the Australian dollar and now all eyes will be the release of Key job figures on Thursday
The strength of the jobs market has been the sole reason the Reserve Bank of Australia has kept interest rates on hold which to some is counterproductive as they believe the Australian economy needs lower interest rates in order to revive it.
If the job numbers come in under expectations the Australian dollar is expected to tumble as rate cut in the coming months will be a near certainty.
"Given the RBA’s recent communications, downside surprises to the Australian labour market data this week will raise pricing for a rate cut as soon as June and push AUD lower” says Kim Mundy, a strategist fromCommonwealth Bank of Australia.
“The AUD can drop more than 1 US cent if the Australian labour data disappoints," she added.