AUD/USD softens to around 0.6280 in Monday’s early Asian session.
Global trade concerns ahead of potential US tariffs weigh on the Aussie.
US core inflation climbed 2.8% YoY in February, hotter than expected.
The AUD/USD pair trades in negative territory near 0.6280 during the early Asian session on Monday. The Australian Dollar (AUD) weakens due to global trade concerns ahead of a planned announcement on Wednesday by US President Donald Trump on reciprocal tariffs.
Last week, Trump issued an order imposing a 25% tariff on auto imports, exacerbating global trade tensions. These aggressive trade measures are expected to strain ties with key trading partners, even before his proposed retaliatory tariffs on April 2. The fears of escalating trade tensions exert some selling pressure on the Aussie against the US Dollar (USD).
On the other hand, fresh stimulus measures from China could boost China-proxy Aussie, as China is a major trading partner with Australia. China’s finance ministry stated that it will inject 500 billion yuan ($69 billion) into four of the nation’s largest state banks, following through on Beijing’s earlier effort to strengthen the financial sector, per Bloomberg.
The US core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation, rose 0.4% MoM in February, compared to 0.3% in January, the Bureau of Economic Analysis reported Friday. On an annual basis, the core PCE climbed 2.8% in February versus 2.7% prior (revised from 2.6%).
The report indicated sticky inflation in the US economy. However, his aggressive trade policy could raise concerns that the economy may fall into stagflation or even recession, which might weigh on the Greenback. Swaps traders continued to price in about two quarter-point rate cuts this year, with the first seen coming in July, according to the CME FedWatch tool.
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