US tax reform causing problems for the Australian Dollar as Trump prepares to announce new plans that could rock markets. If Trump implements business and profit friendly economic policies the amount of investments into the USD could rocket. There has already been indication of positioning and if this continues the attractiveness of the Aussie may dwindle.
AUD has been a very popular investment over the last few months with so much uncertainty and globally low interest rates. Investors have been prepared to move their funds into higher interest rate areas and try to generate profits there. With the US economy on the brink of further growth there could be further interest rate hikes expected soon.
More interest rate hikes in the US will mean the potential profit and risk level may make the AUD less attractive if there’s more security in the US. What’s left to be seen is if Janet Yellen the head of the US Federal Reserve will suggest rate hikes are on the cards. Yellen speaks today and tomorrow providing an insight into the next market movements.
Chinese Inflation data
China’s Consumer Price Index figures released in the early hours of this morning provided positive reading. China is Australia’s biggest trading partner and good news can filter through to the Aussie. The data from China has been brought into disrepute as there have always been questions over bogus data. However, China’s statistic chief has called for officials who publish false data to be brought to justice. This could pose good news for the future, alternatively there could be concern that if the figures are honest they may not share the news the likes of Australia need.