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The Australian dollar floated to its lowest level in a week as markets were nervous before crucial trade talks between US and Chinese leaders.
The Australian has fallen around 0.7225 USD, not far from the low of last week, which was 0.7202 USD.
The trade-sensitive currency has so far recorded strong gains in November, rising by around 2%, as investors have hoped for a solution to the fierce conflict between the Sino-US customs tariff.
US President Donald Trump, however, curbed this optimism in an interview with the Wall Street Journal Monday night.
He told the newspaper that he hopes to go ahead with an increase in customs duties on Chinese imports of 200 billion US dollars, from 10% currently to 25%.
He said that it was "very unlikely" that he accepts China's request to delay the increase, scheduled for Jan. 1.
Trump and his Chinese counterpart Xi Jinping are expected to meet later this week at the G20 summit in Buenos Aires.
The Australian economy is heavily dependent on exports and its wealth is closely linked to China.
The rise of global protectionism is bad for the country as well as for its currency.
In addition to the Trump-Xi meeting, the market will focus on a speech by Vice President of the US Federal Reserve, Richard Clarida, later Tuesday, before President Jerome Powell's appearance the next day.
Traders will determine if "the less hawkish tone continues to permeate the public appearances of the Fed," said ANZ in a note to customers.
"A soft tone can help the AUD, but we still prefer to sell rallies."
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