14 May
Australian dollar slid to five-year low amid expectations of RBA monetary easing
The Australian dollar slumped to five-year lows on Monday. Growing fears that escalating global trade tensions could trigger a worldwide recession spurred traders to price in significant monetary easing by the Reserve Bank of Australia (RBA), according to Reuters.
The agency noted a 20% probability that the central bank would implement a 50-basis-point rate cut at its May meeting.
According to IG analyst Tony Sycamore, the Australian dollar may decline as China-US tensions escalate. Given China's status as Australia's largest trading partner, retaliatory measures from Beijing may weaken the national currency.
Meanwhile, on Monday, Australia's three-year government bond yield dropped 11 basis points to 3.311%, its lowest level since May 2023. Reuters noted this marks the steepest three-day decline since 2011.
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