The Australian dollar collapsed around 1% versus the US dollar in Asian trading (1/5) following the latest developments in the crisis of US-China trade relations which suddenly crossover with the saga impact of the pandemic. As currencies closely related to China in global markets, the Aussie were strongly affected.

The economy of the US dropped 4.8% in the first quarter of this year, proof that the Covid-19 outbreak was able to cripple the country's economy of the world's largest GDP. This became the second negative GDP for the US after the first quarter of 2014, which was minus 1.1%.

The achievements of the first quarter of 2020 became the worst since the 2008 financial crisis, where the US GDP was minus 8.4% in the fourth quarter of 2008. Economists in the Dow Jones survey had predicted that the GDP of the Superpower would contract or minus -3.5%.

Conversely, domestic investment in the US government bond and spending market helped to put the brakes on the pace of the economic downturn. Public spending, which currently accounts for 67% of US GDP, slipped to 7.6% in the first quarter of 2020 following the closure of stores due to lockdown.

Theoretically, the US has not yet been categorized as entering a recession, because usually the title 'recession' is only pinned when the economy goes down for two consecutive quarters. In the fourth quarter of 2019, the US economy was recorded to grow by 2.1%. 

However, the voice about recession is getting stronger because the effects of the Covid-19 pandemic have only been reflected in the last few weeks so that it does not reflect the situation. Moreover, the US Bureau of Economic Analysis acknowledges that these initial readings may be inaccurate.

Trump Said China is Responsible for The Pandemic that is Ruining The US Economy

At the White House event on Thursday, facing a crisis due to the increasingly swollen number of COVID-19 victims, US President Donald Trump made allegations that the Coronavirus was made by the Wuhan virology laboratory, not from the wildlife market that had been heralded.

Trump also strongly convinced that he has "seen evidence" that the initial emergence of the COVID-19 virus originated from a laboratory in Wuhan. When asked if he had seen strong evidence, Trump said "Yes, that's it. I can't tell you that. I'm not allowed to tell you that." 

Donald Trump also said that the World Health Organization (WHO) "should be ashamed of themselves" and described it as a "press agent" for China. WHO previously claimed that they were not invited to join a Beijing investigation into the virus.

Trump also said there was a possibility that China could not stop the spread of the coronavirus or allow it to spread. He said China doesn’t yet understand how the virus emerged. "At least they seem trying to be rather transparent with us. But we will find out," Trump explained.

China Threatens Will Boycott Imported Products Over Allegations

The US asked China to open access to find out the origin of Covid-19. Trump even said he would claim compensation for the spread of the pandemic. Australia also previously voiced the same with the US. This has strained relations with China and the past few days.

The Bamboo Curtain even threatened that there might be a "boycott" of Australian products. At present, China is Australia's ninth trading partner, for several commodities such as wool and minerals. China has repeatedly denied allegations of the virus from the Wuhan laboratory.

Trump indeed looks increasingly frustrated in recent weeks over the corona pandemic that has claimed tens of thousands of lives in the US, damaging the economy while threatening his chances of winning the November election. Trump said his government was trying to determine whether the coronavirus originated from Wuhan's laboratory.

The Washington Post reported that many parties were discussing the possibility of canceling some US government bonds held by China as a counter-strategy. However, Trump's economic adviser, Larry Kudlow, refuted the report by stressing, "Trust and credit in US debt obligations are sacred"

The analysts said Trump was frustrated by the collapse of his electability in the upcoming US presidential election as a result of the COVID-19 pandemic. Unemployment was rampant and economic conditions deteriorated rapidly, so he lost his competitive advantage over his closest rival from the Democratic Party, Joe Biden.