The Australian dollar tumbled on Monday against a basket of major rivals, widening losses for the second session against the US dollar and trading below 60 cents, thus plumbing five-year lows.
It comes amid mounting concerns about an aggressive global trade war that could put the world economy into recession, boosting the odds of multiple Australian rate cuts this year.
The Price
The dollar index fell 1.8% today to $0.5933, the lowest since March 2020, with a session-high at $0.6029.
Aussie lost 4.6% on Friday against the greenback, the first loss in four days, and the heftiest since October 2008.
Aussie also lost 3.95% last week, the second weekly loss in three weeks, and the heftiest since March 2020.
The massive losses come as the global markets are shaken by US President Donald Trump’s aggressive tariffs on all imports.
Global Recession
Concerns about a global economic recession are surging, after Trump imposed a 10% base tariffs on all imports, with a higher 20% tariff on the EU, 34% on China, leading to severe disruption in global markets.
Such tariffs directly target vital sectors such as automobiles and industrial products, and will hit global trade considerably, with JPMorgan estimating a 60% chance of a global recession this year.
Oil prices also tumbled to four-year lows, while US stocks lost $5 trillion of their value in just two days, with Chinese demand slowing down and US inflation expected to rise by 0.7%, thus triggering concerns about long-term consequences.
Australian Rates
The odds of a Reserve Bank of Australia 0.25% interest rate cut in May surged to 90%.
The odds of a bigger 0.5% cut in May stood at 20%.
