Trade tensions, particularly the tariff hikes of up to 25% on imports from Mexico and Canada, and 20% on Chinese imports, have raised investor concerns about an escalating global trade war.

However, the Australian dollar remains at risk due to the slowdown in China's economy, as China is Australia's largest trading partner. This could directly impact the demand for Australian exports.

Although the Reserve Bank of Australia (RBA) has cut interest rates by 25 basis points, it has emphasized that future decisions will largely depend on inflation data. Meanwhile, investors anticipate that the RBA may further cut interest rates by an additional 75 basis points next year.

Source: Fxstreet