Australian dollar collapses to Covid levels
Luca Ittimani
The Australian dollar has fallen to its lowest level since Covid against the US dollar as global markets sell off against the prospects of a global recession.
One dollar was buying just 60 US cents on Monday morning after falling to a low of 59.64, its lowest point since April 2020. It was worth 64 US cents on Wednesday, hours before US president Donald Trump set markets reeling with his tariff announcement.
The Australian dollar also reached pandemic-era lows in Europe, with one dollar buying just 54.4 Euro cents or 46.2 British pence at its lowest point on Monday morning.
Markets were even selling off the Australian dollar in Asia. It was worth less than 15,500 Vietnamese dong on Monday, when it had been buying almost 16,500 dong on Wednesday. The dollar slumped in India, Indonesia and New Zealand as well.
The Australian economy and therefore the dollar is heavily engaged in global trade, with investors buying big when they expect a global boom and selling off when they fear a crash, according to AMP economist My Bui:
When there is concern about a global slowdown, and particularly from the tariff and global trade war, then there is less demand for our commodity.
Key events
Chalmers: Coalition policy a ‘bin fire of cuts and chaos’
Katy Gallagher, who is also the minister for the public service and a senator for the ACT, is also weighing in on the Coalition’s work from home and public service backflip which she calls a “shambles”.
Gallagher warns that there’s a much higher turnover amongst frontline staff (ie that natural attrition won’t work because all those frontline staff will need to be rehired).
He [Dutton] tells us that 41,000 jobs will be cut by natural attrition, but frontline services will be protected. The reality is where those high turnover departments, where we see turnover in public service, they’re in frontline public service agencies. It’s simply not believable.
Jim Chalmers then takes back the mic and describes the Coalition’s platform more broadly as “an absolute bin fire of cuts and chaos”:
There could not be a worse time to risk wages and tax cuts and secret cuts in a world which is this uncertain. Peter Dutton represents an unacceptable risk to our economy and to household budgets at the same time.
Chalmers says he has spoken with RBA Governor Bullock on best response to Trump tariffs
Chalmers says the modelling by Treasury has already been updated three times, and while forecasting is “difficult enough in more stable times, [it’s] especially so in uncertain times”.
As we brought you earlier, Chalmers confirms the modelling shows there will be big hits to growth in the US and China. But Australian GDP will also be impacted and inflation will be higher than otherwise in the short term.
Chalmers says he spoke with Reserve Bank governor Michele Bullock this morning on how to respond to the situation.
Both of us… are working out how to ensure that we can best calibrated for this economic uncertainty. As I said before, Australia is really well placed and we’re well prepared to deal with this global economic uncertainty
What we’re seeing around the world vindicates the strategy we have taken to fight inflation without ignoring the risks to growth.
Chalmers says Australia ‘uniquely placed’ to weather Trump tariff storm
The treasurer, Jim Chalmers, and the finance minister, Katy Gallagher, are speaking in Sydney on all things economic: the stock markets going, the pre-election fiscal outlook and that modelling below of the impact of Trump’s tariffs.
The escalating trade tensions are “casting a dark shadow” over the global economy, Chalmers says, but claims Australia is “uniquely placed” and well prepared to deal with any fallout.
Chalmers says the situation could lead to the Reserve Bank cutting interest rates in May by up to 50 basis points, but he won’t “preempt those decisions”
We are seeing very substantial volatility now in global stock markets and in our own markets as well. Today in Australia the market lost about 4% of value on Friday, the US about 6%.
What we’re seeing here is the impact of a series of bad decisions taken about tariffs. And the whole world is trying to get their head around the impacts on their own economies and the global economy as well.
Fuel me once, shame on you … fuel me four times, shame on me?
It took Peter Dutton almost a week to get himself to a petrol bowser for a picture opportunity (after announcing the policy during his budget reply), but he’s now gone four times in the last four days.
No doubt the opposition leader is trying to pump up some interest in his policy.
Dutton has struggled to get much traction so far in the campaign and polls are showing voters are driving their support back towards Labor. The opposition leader will need plenty more fuel in his own tank to try to turn that around in the next four weeks.
Treasury releases modelling of impact of Trump tariffs
Jim Chalmers has released modelling by the Treasury department on the impact of Donald Trump’s “liberation day” tariffs.
Treasury estimates US GDP will decline “significantly” due to the cost of imports being much higher and expects the impact on China and other countries facing higher US tariffs to also be “significant”.
Australia, it says, will be impacted in a more “modest way” and will face higher inflation and lower GDP growth in the short term.
Australia’s real GDP is estimated to decline by 0.1% and inflation to increase by 0.2 percentage points in 2025 relative to a baseline scenario with no tariffs.
Over the medium term, Australia’s GDP will be permanently lower, while the effect on inflation will be temporary.
Treasury says 80% of the total impact on Australia will come indirectly from the effects of US tariffs on Chinese demand. Australia will also be impacted by a reduction in demand for Australian goods from other major trading partners like Japan and South Korea.
Labor announces additional $1.1bn in spending
Patrick Commins
Labor has announced an extra $1.1bn spending in the barely two weeks since the budget, according to Treasury’s pre-election update.
The Pre-election Economic and Fiscal Outlook, or PEFO, showed a slightly worse underlying deficit of $300m in this financial year and $100m over the next, before slight improvements in following years left total deficits over the forward estimates periods only very slightly larger.
Almost all of the recently announced extra spending had been provisioned for, and mostly reflected infrastructure announcements, such as the $881m “Building a Better Future Through Considered Infrastructure Investment” policy.
There is also the $80m committed towards the establishment of the Queensland Academy for Health Sciences in Rockhampton, Queensland and $120m towards the construction of facilities for maternity services at the Rouse Hill hospital in New South Wales.
PEFO also showed a growing uneasiness among Treasury officials that Donald Trump’s recently unveiled “reciprocal tariffs” will shock global trade and growth. The documents state:
The increase in tariffs announced over the past few days have been more significant than expected. The potential magnitude and persistence of the economic effects of these announcements has resulted in greater-than-usual uncertainty around the outlook.
Despite this, the direct impact on Australia would remain limited, Treasury said, and the top line economic forecasts were unchanged from the March 25 budget.
Jim Chalmers last week said he would release updated Treasury announcements that factor in the recent tariff escalation when it becomes available.
Jonathan Barrett
ASX enjoys lunch time reprieve after steep falls
After a tumultuous opening on the ASX, the market has recorded a modest reprieve with some of the losses pared.
The benchmark S&P/ASX 200 sank well over 6% to trade below the 7,180 point mark within minutes of the market opening this morning, equating to about $160bn in value eroded from stocks.
At lunchtime, it was trading at the 7,380 point mark, down about 4%, reducing the losses recorded today to about $100bn.
While Donald Trump’s new tariff regime sparked an initial selldown across global sharemarkets last week, plans to hit the US with retaliatory imposts from major economies, including China and the EU, have heightened risks of a global recession.
The ASX is following the lead from Wall Street where the futures market has also bounced back in the last few hours.
PM sidesteps issue of Victorian premier’s popularity
Anthony Albanese stood alongside Victorian premier Jacinta Allan today, but dodged questions on Allan’s popularity in the state, and whether that was a “drag” on his electoral chances.
Albanese has done three press conferences so far in Melbourne, but this is the first time Allan has been with him. The last time, he said she wasn’t there because the Victorian parliament was sitting.
He sidestepped questions today saying, “we’ll partner with state and territory governments right around the country. That’s what we do”.
Albanese was also asked to comment on the state of Victoria’s budget under Allan, which unsurprisingly, he wouldn’t do.
I’m responsible for my budget, I’m happy to answer questions about my budget. The premier’s right here. If you want to ask her a question about Victoria, I’m happy for her to do that.
But the question of whether Allan could have an impact on federal Labor’s chances is a very real one.
You can read more about that in Benita Kolovos’ piece here:
Caitlin Cassidy
Coalition accused of ‘scapegoating’ over plans to cut international student numbers
The National Tertiary Education Union has warned the Coalition’s international student cap of 240,000 international student enrolments a year would threaten thousands of jobs in the public education sector and undermine research capabilities.
NTEU national president, Dr Alison Barnes, said the “reckless policy” would “potentially lead to thousands of job losses across the sector”, based on previous impacts during the pandemic.
Peter Dutton’s Coalition has adopted rhetoric that demonises international students, using extreme Trumpist language that evokes harmful stereotypes rather than addressing real policy issues. Last year, he referred to international students as ‘modern-day boat arrivals’ – rhetoric that damages Australia’s reputation as a welcoming destination for global talent.
The Greens deputy leader and spokesperson for higher education, Senator Mehreen Faruqi, similarly accused the Coalition of “racist dog-whistling” and “scapegoating”.
Dutton and his Trump-mirroring Liberals have no solutions to offer on housing or higher education, so as usual they take the divisive, racist route.
In a joint statement, the Coalition said it believed in a “sensible and managed migration program that is in line with our capacity to adequately provide for infrastructure and housing”.
We will not allow high migration settings to erode living standards, overburden our infrastructure and exacerbate housing shortages in our communities.
Caitlin Cassidy
Industry leaders react to Coalition’s proposed international student cut
Business and industry leaders have come out swinging at the Coalition over their proposal to cut at least 80,000 new international students from Australian higher education institutions.
CEO of the International Education Association of Australia, Phil Honeywood, said there had been no consultation with the sector on the proposed enrolment caps or drastic increases to student visa charges, including $5,000 at Group of Eight institutions.
While it must be tempting for Peter Dutton to play the Donald Trump anti-migration card to voters in this election, he would do well to be better advised on a few key facts. According to the ABS, international education provides a $50bn per annum injection into our national economy. It is currently the biggest industry in the states of Victoria and South Australia.
Universities Australia CEO, Luke Sheehy, said the proposed cuts would “take a sledgehammer” to one of Australia’s biggest income generators, estimating a $5bn hit in the short term.
We urge all parties to base policy on facts, not finger pointing. We’re ready to work constructively on real solutions, but cuts like these will only harm the nation’s prosperity at a time we can least afford it.
Emily Wind
Liberals Against Nuclear urges rethink of energy policy amid WFH backflip
Liberals Against Nuclear is urging the Coalition to dump its nuclear energy policy, after this morning’s backflip on working from home.
Spokesperson Andrew Gregson said this shows opposition leader Peter Dutton can “listen to voters and change course when a policy is proving unpopular”.
His willingness to say ‘we have listened’ on the public service issue is commendable. We now urge him to apply that same political flexibility to the $600bn nuclear power plan that’s alienating voters across the country.
Gregson said the Coalition is “struggling to connect with voters, especially women, and nuclear is a major factor in this disconnect”.
If the Coalition can show flexibility on work arrangements for existing public servants, surely it can reconsider a policy that would add thousands more public servants to regulate and operate nuclear plants, while adding $665 to the average household’s annual power bill during a cost-of-living crisis.
Earlier this morning, the shadow treasurer Angus Taylor seemingly ruled out any change to the Coalition’s policy on nuclear.
Australian dollar collapses to Covid levels
Luca Ittimani
The Australian dollar has fallen to its lowest level since Covid against the US dollar as global markets sell off against the prospects of a global recession.
One dollar was buying just 60 US cents on Monday morning after falling to a low of 59.64, its lowest point since April 2020. It was worth 64 US cents on Wednesday, hours before US president Donald Trump set markets reeling with his tariff announcement.
The Australian dollar also reached pandemic-era lows in Europe, with one dollar buying just 54.4 Euro cents or 46.2 British pence at its lowest point on Monday morning.
Markets were even selling off the Australian dollar in Asia. It was worth less than 15,500 Vietnamese dong on Monday, when it had been buying almost 16,500 dong on Wednesday. The dollar slumped in India, Indonesia and New Zealand as well.
The Australian economy and therefore the dollar is heavily engaged in global trade, with investors buying big when they expect a global boom and selling off when they fear a crash, according to AMP economist My Bui:
When there is concern about a global slowdown, and particularly from the tariff and global trade war, then there is less demand for our commodity.
Last day to enrol to vote!
Folks, I’m sure you’re absolutely on top of it – but a reminder that today is 7 April and that means that it’s the last day to enrol to vote!
So if you haven’t already, take a look at our handy explainer which has all you need to know about enrolling:
Jonathan Barrett
ASX rout follows China-US tariff fight
There are few places to hide on the ASX this morning, with everything from banking to mining and energy stocks all down sharply.
Shares in Australia’s two biggest listed companies, Commonwealth Bank and BHP, are both down more than 8% in early trading.
The ASX sell-off follows a sharp fall on Wall Street on Friday, weighed down by China’s retaliatory tariffs to Donald Trump’s new trade regime.
Traders view Australia’s economy as closely tied to China through their significant trading relationship.
Election campaign day 10, through the lens
There’s been plenty of action on the campaign trail this morning, with both leaders visiting electorates they each need to hold – with the PM in McEwan, Victoria and Peter Dutton in Sturt, South Australia.
We’ve got some great pics of what the two have been up to.
