Australian dollar up on trade talk hopes
Published on 13.09.2018 09:31

The Australian dollar has made significant recovery over the last 2 trading sessions on the back of positive local data and a potential compromise between the US and China over the ongoing trade wars.

What started as a tit for tat trade spat  between the world’s 2 biggest economies has now somewhat got out of hand with the US threatening to up the ante by imposing a further $200 billion dollars on Chinese goods which would be expected to hit the Chinese economy hard.

This would be devastating news for the Australian economy and the Aussie dollar as China is the country’s biggest trading partner so any negotiations to calm the situation down would be a welcome relief.

White House economic adviser Larry Kudlow noted that negotiations with China on trade matters had picked up in recent days such moves were a  "a positive thing."

"The Treasury Department is in communication with China. I can't go beyond that," Mr Kudlow said.

"I think most of us think it's better to talk than not to talk, and I think the Chinese government is willing to talk. If they come to the table in a serious way to generate some positive results, yes of course. That's what we've been asking for months and months." He added.

The Aussie dollar also received a boost today on the back of solid employment data which has raised speculation that a rate hike from the RBA could be a distinct possibility in the nearest future.

The Australian economy created 44,000 new jobs in August which was well above analysts’ expectations for a number of 18,000 and the best part was most of the new positions created were actually full time.

The unemployment rate remained steady at 5.3 percent and the RBS would like to see this slightly lower before firmly committing to any rate hike.

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Andrew Masters

Analyst

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