Australian dollar gains against the US dollar after a US stock market sell-off, a US credit downgrade and a Chinese slowdown.

Key points: – The Australian dollar has gained against the greenback, with the US and the European Central Bank signalling they will step up their bond buying to support the dollar’s value.

– But it has also risen against the euro and the Japanese yen, with both of those measures causing the AUD to rise sharply.

The dollar fell more than 7 per cent against the Japanese Yen to as low as 61.55 yen to the US Dollar, and has since recovered to as high as 62.07 yen to euro.

Analysts expect the AUD’s strength against the yen to continue and the recent rise in the dollar will help the Australian economy to expand at a faster pace.

But the AUD is not going to take the global economic slowdown that has affected many countries very well, with Mr Turnbull predicting the US could see the worst of the slowdown this year.

“The US is on track for a slowdown in the third quarter and the global economy is on course for a much sharper downturn than it has been in years,” he said.

He said the US would likely see a further cut to the federal deficit this year as well.