Aussie Sinks as US-China Trade Tensions Sour Market Sentiment

The Australian dollar sank today, leading the decline among riskier commodity currencies, as the market sentiment deteriorated amid escalating trade tensions between China and the United States. Domestic macroeconomic data was not helpful to the Aussie either.
The Australian Bureau of Statistics reported that the total seasonally adjusted number of home loans dropped by 2.5% in March from the previous month. That is instead of rising 2.2% as analysts had predicted.
But macroeconomic data had a limited impact on the Aussie as traders were more concerned by the news that China decided to retaliate to the US tariffs. Trade wars can hurt the Chinese economy. And that does not bode well for the economy of Australia itself as it heavily depends on trading with China.
The bad news, both domestic and overseas, also hurt the monetary policy outlook. Speculators increased their bets on a 25 basis point interest rate cut by the Reserve Bank of Australia next month to a 34% chance from 21% last week.
AUD/USD tumbled from 0.6990 to 0.6941 as of 17:14 GMT today. EUR/AUD jumped from 1.6051 to 1.6184. AUD/JPY sank from 76.74 to 75.76.

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