The Australian dollar hits a five year low and the US Dollar jumps higher in response to Donald Trump's plan to put tariffs on imports from Mexico, China and Canada.
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00:00The Aussie dollar fell to a new five-year low, below US$0.61, as the US dollar jagged
00:07higher in response to the plan to put 25% tariffs on imports from Mexico and Canada
00:12and 10% on imports from China.
00:16Currencies always tend to adjust to remove the effects of tariffs, and markets always
00:20tend to anticipate something they know is going to happen.
00:24The share market dropped 1.8% and there were some quite big falls, especially among mining
00:28stocks like Fortescue Metals.
00:30Falls above 2% were common.
00:33The selling today was basically in anticipation of a fall in the US tonight, and it'll be
00:38interesting which market falls the most – Mexico, Canada or the US.
00:42I don't really know which it'll be.
00:46Chinese market was still closed for the new year today, but Japanese stocks fell a quite
00:49chunky 2.9%.
00:52It was a big day for economic news here as well.
00:55Real trade fell 0.1%, which was taken as evidence that consumer spending is holding
01:00up pretty well.
01:02Building approvals rose 1% overall, but house approvals fell while apartment approvals jumped
01:074.4%.
01:09But there's still some way to go.
01:11Total approvals in December were 15,000, 5,000 short of the pace required to meet the National
01:17Housing Accord target.
01:19And we got house prices for January today as well.
01:22The national median price fell again, so the annual rate of price rises continued to fall.
01:28For perspective, the gap between house prices and the capacity to pay for a house has never
01:33been greater at about $400,000.
01:37So either interest rates have to be cut a lot, incomes have to rise a lot, or house
01:41prices have to halve for the gap to close, or a bit of all of the above.