On Tuesday, the AUD/USD currency pair dropped to below $0.648, continuing its downward trend from the previous day. This decline was influenced by the Chinese yuan’s vulnerability to potential US tariffs and ongoing economic challenges in China.
The Australian dollar is closely tied to the yuan because China is Australia’s main trading partner.
Australia Reports Deficit; Inflation Too High for Rate Cuts
In domestic news, Australia reported its sixth straight quarterly current account deficit at the end of September, attributed to slow exports. Regarding monetary policy, Michele Bullock, Governor of the Reserve Bank of Australia, stated last week that core inflation in Australia is still too high to consider reducing interest rates soon.
She mentioned that the current restrictive policy would persist until more certainty about inflation returns within the central bank’s target range.
