The Australian Dollar surged against the US Dollar for the third straight day as US President Trump expressed optimism about trade negotiations with China. The People's Bank of China injected liquidity into the financial system, while Trump called for an immediate interest rate cut by the Federal Reserve.
The Australian Dollar (AUD) strengthened against the US Dollar (USD) for the third consecutive session on Friday, extending its gains following an optimistic outlook from US President Donald Trump on China trade negotiations. Trump's remarks, made after a conversation with Chinese President Xi Jinping, hinted at potential progress in US-China trade talks. He expressed a preference for avoiding tariffs on China and optimism about reaching a deal.
The People's Bank of China (PBOC) maintained its interest rate at 2.00% and injected 200 billion Yuan ($27.46 billion) through a one-year medium-term lending facility (MLF) to selected financial institutions. Meanwhile, Australia's Judo Bank reported a modest expansion in the private sector for the fourth consecutive month, driven by growth in the services sector while manufacturing output stabilized. Adding to the positive sentiment for the AUD, President Trump called for an immediate interest rate cut by the US Federal Reserve (Fed) at the World Economic Forum in Davos, Switzerland. This statement, made before the Fed's monetary policy meeting, could potentially weaken the US Dollar. Traders anticipate the Fed to hold rates steady at its January meeting. However, Trump's policies could lead to inflationary pressures, potentially limiting the Fed to just one more rate cut. Chinese authorities have implemented measures to stabilize their stock markets, including allowing pension funds to increase investments in domestic equities and launching a pilot scheme enabling insurers to purchase equities starting in the first half of 2025
AUSTRALIAN DOLLAR US DOLLAR CHINA TRADE PBOC FEDERAL RESERVE INTEREST RATE CUT STOCK MARKETS
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