Following the People’s Bank of China’s (PBoC) interest rate decision on Wednesday, the Australian dollar (AUD) lost value in relation to the US dollar (USD). In November, the Monetary Policy Committee (MPC) of the PBoC decided to maintain the benchmark interest rate at 3.1%.
After making his Ministerial Statement on the economy on Wednesday, Australian Treasurer Jim Chalmers said that “tumbling iron ore prices and a softening labor market have impacted government revenue.” Chalmers described Australia’s challenging economic future, pointing to the slowdown in the labor market and the deterioration of China, a significant trading partner, as major causes.
As tensions in the Russia-Ukraine crisis escalate, the US dollar (USD) gains momentum on safe-haven flows, which might put downward pressure on the AUD/USD pair. Ukraine launched US-provided ATACMS missiles against Russian territory for the first time late Tuesday, according to a Reuters report, marking a major escalation on the 1,000th day of the war. However, after Russian Foreign Minister Sergei Lavrov declared that the government would “do everything possible” to avoid a nuclear war, market worries somewhat subsided.
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