The Australian dollar weakened significantly against major currencies during the Asian trading session on Tuesday, reaching a nearly four-month low of 0.6434 against the U.S. dollar. This decline follows U.S. President-elect Donald Trump's announcement of a 10 percent tariff on all Chinese imports and a 25 percent tariff on goods from Canada and Mexico, raising concerns over escalating global trade tensions.
The Australian dollar's drop came from Monday's closing value of 0.6502, with further declines expected if the downtrend continues, potentially finding support around 0.63 against the greenback. The currency also fell to nearly a two-month low of 99.08 against the yen, down from 100.27.
Other commodity currencies, including the New Zealand dollar, also faced pressure, with the kiwi reaching a one-year low of 0.5797 against the U.S. dollar. The Canadian dollar fell to a more than four-and-a-half-year low of 1.4178 against the U.S. dollar.
The announcement has led to a cautious trading atmosphere, with investors awaiting key U.S. economic data later in the week, including consumer price inflation readings preferred by the Federal Reserve.
In the Australian stock market, the benchmark ASX 200 index retreated by 58.20 points, or 0.69 percent, amid the negative sentiment stemming from Trump's trade policy announcements. Major banks such as Commonwealth Bank and ANZ saw declines, reacting to the Australian Prudential Regulation Authority's decision to maintain the mortgage serviceability buffer.
Market analysts are closely monitoring these developments, as the potential for further tariffs could significantly impact global trade dynamics and currency valuations.