• The Australian Dollar appreciates as Australia is preparing for renewed trade negotiations with the European Union.
  • China’s Consumer Price Index declined 0.1% YoY in March, following a 0.7% drop in February.
  • President Trump announced a 90-day pause on new tariffs for most US trade partners, reducing them to 10%.

The Australian Dollar (AUD) regained its ground against the US Dollar (USD) on Thursday following the news that Australia is gearing up for renewed trade negotiations with the European Union (EU). The EU decided to revisit the stalled talks. During a one-hour video meeting on Wednesday evening, EU Trade Commissioner Maros Sefcovic suggested setting a new timeline to restart discussions with his Australian counterpart, Don Farrell. The previous round of extensive negotiations broke down two years ago due to disagreements over agricultural access to the EU’s 450 million consumers.

The AUD/USD pair weakened after US President Donald Trump escalated trade tensions with China by raising tariffs on Chinese imports to 125%, prompting concern due to Australia’s close trade ties with China.

China is increasing tariffs on all US imports to 84% and has added six American firms—such as defense and aerospace companies Shield AI and Sierra Nevada—to its trade blacklist. It also imposed export controls on a dozen US companies, including American Photonics and BRINC Drones.

China’s Consumer Price Index (CPI) fell 0.1% year-over-year in March, following a 0.7% decline in February and missing the forecasted 0.1% rise. The monthly CPI inflation fell by 0.4%, worse than February’s 0.2% decline and market expectations. Meanwhile, the Producer Price Index (PPI) dropped 2.5% annually in March, deeper than the 2.2% fall in February and the projected 2.3% decline.

Australia’s economic outlook remains fragile, with business and consumer confidence lagging. The weak data has strengthened expectations of a more dovish Reserve Bank of Australia (RBA), with markets now pricing in up to 100 basis points in rate cuts this year—beginning in May, with further reductions expected in July and August.

Australian Dollar may face headwinds ahead of US CPI data

  • The US Dollar Index (DXY), which tracks the USD against a basket of six major currencies, is trading lower near 102.60 at the time of writing. Attention now turns to the US Consumer Price Index (CPI) inflation report, due later on Thursday.
  • On Wednesday, President Trump announced a 90-day pause on new tariffs for most US trade partners, lowering them to 10% to allow room for ongoing negotiations. “The 90-day pause is an encouraging sign that negotiations with most countries have been productive,” said Mark Hackett of Nationwide. “It also injects some much-needed stability into a market rattled by uncertainty.”
  • The Federal Open Market Committee (FOMC) Meeting Minutes suggested that policymakers nearly unanimously agree that the US economy faces the dual risk of rising inflation and slowing growth, warning of “difficult tradeoffs” ahead for the Federal Reserve.
  • Fed officials continue to downplay the immediate impact of escalating trade tensions, maintaining that policy decisions will remain data-driven. Market participants are now pricing in just a 40% chance of a rate cut at next month’s Fed meeting, according to the CME FedWatch tool.
  • Adding to the global trade landscape, The Wall Street Journal reported that China held discussions with European Union trade chief Maros Sefcovic, expressing its willingness to deepen trade, investment, and industrial cooperation with the EU.
  • In Australia, consumer sentiment weakened notably, with the Westpac Consumer Confidence Index falling 6% in April after a 4% gain in March—the first decline since January.
  • Australia’s business sentiment also softened as the NAB Business Confidence Index slipped to -3 in March from a revised -2, its lowest reading since November. Business conditions remained relatively steady but slightly below average, improving modestly from 3 to 4.

Australian Dollar pulls back from nine-day EMA near 0.6150

The AUD/USD pair is trading near 0.6140 on Thursday, with technical indicators on the daily chart pointing to a sustained bearish bias, as the pair has retreated from the nine-day Exponential Moving Average (EMA). Additionally, the 14-day Relative Strength Index (RSI) sits below 50, suggesting the reinforcement of the bearish bias.

Immediate support is seen at the 0.5914—marking the lowest level since March 2020, followed by the psychological level of 0.5900.

On the upside, initial resistance lies at the nine-day EMA around 0.6147, followed by the 50-day EMA at 0.6261. A stronger recovery could be seen in the pair, testing the four-month high at 0.6408.

AUD/USD: Daily Chart

Australian Dollar PRICE Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.25% 0.00% -0.62% -0.08% -0.57% -0.88% -0.23%
EUR 0.25% 0.02% -0.40% 0.14% -0.37% -0.67% -0.01%
GBP -0.01% -0.02% -0.42% 0.12% -0.39% -0.70% -0.14%
JPY 0.62% 0.40% 0.42% 0.53% 0.02% -0.34% 0.50%
CAD 0.08% -0.14% -0.12% -0.53% -0.51% -0.81% -0.26%
AUD 0.57% 0.37% 0.39% -0.02% 0.51% -0.31% 0.26%
NZD 0.88% 0.67% 0.70% 0.34% 0.81% 0.31% 0.57%
CHF 0.23% 0.01% 0.14% -0.50% 0.26% -0.26% -0.57%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Australian Dollar FAQs

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

Source: Fxstreet