Rising trade tensions will have a negative impact on the Australian dollar
The Nomura Securities logo can be seen at the company's head office in Tokyo, Japan, November 28, 2016. REUTERS/Toru Hanai
According to Nomura Holdings, there is a risk of further decline of the Australian dollar amid growing trade tension with China.
"Although the markets were in the "buy risk" mode after the promising news from Moderna about the successful testing of an experimental vaccine against COVID at an early stage, we see the global and local risks of Australian dollar (AUD) decline" - wrote Andrew Ticehurst, a bank strategist, in an e-mail.
Restrictions on beef exports and a new barley tariff will be painful for directly affected Australian industries and firms, but on a macro level it will not yet "affect the parties," in terms of significant impact on national GDP growth, he wrote.
If trade restrictions apply to Australia's larger exports, such as Australian coal, LNG or iron ore, the problem would become much more serious, with those goods exporting to China at around US$100 billion a year. Today, the affected exports account for less than 1% of Australia's total exports and all exports account for only moderate 23% of GDP, which is less than the UK, Europe or many Asian countries.