27th September 2018
27 September 2018
Overnight we saw the FOMC increase US interest rates by 0.25%. This decision was widely expected, so despite initial volatility after the decision that saw the AUD/USD go from 0.7260 to 0.7315, the market settled back to its original state within an hour.
This rate rise provided a pretty upbeat picture of the US economy.
The market anticipates another rate hike before the end of 2018, as well as three hikes in 2019. This is based off guidance provided by the Federal Reserve Bank of USA, which has remained largely unchanged from previous guidance they have given.
Now that the US interest rate rise is out of the way, the market will return focus to the US/China current ‘trade war’. China’s government will cut import tariffs on about 1500 goods from November 1 to lessen the impact of this trade war on its citizens.
This move suggests to the market that the Chinese government is expecting the trade war to last for some time (Business Insider).
Trump fanned the fire by having a crack at China when chairing the UN Security Council meeting saying, "China has been attempting to interfere in our upcoming 2018 election. They do not want me or us to win because I am the first president to challenge China on trade. And we are winning on trade. We are winning on every level.”
Buckle in, folks.
Chinese producers are turning to non-American sources when purchasing goods. Higher tariffs on goods from the US combined with lower prices for goods from other countries suggest this shift will speed up. This is good news for Australia and Aussie travellers, as it can put upward pressure on the AUD which means more bang for your travel buck.
If you are travelling soon, we recommend signing up to rate alerts so you can get the most out of your travel money by capitalising on great rates. We also offer Rate Guard, so should the rate improve within 14 days of purchase we will happily refund the difference.
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