Australian Dollar extends gains despite increased risk sentiment
- The Australian Dollar may face headwinds as White House confirmed that US tariffs on Chinese goods have climbed to 145%.
- The AUD received a boost following reports that Australia is set to restart trade negotiations with the European Union.
- The US Dollar remains under pressure, weighed down by ongoing concerns about global and domestic economic outlooks.
The Australian Dollar (AUD) extends its gains for the third successive session against the US Dollar (USD) on Friday. However, the upside of the AUD/USD pair could be restrained as the White House confirmed that the cumulative US tariffs on Chinese goods have risen to 145%. The announcement heightened tensions in the ongoing trade dispute between the world’s two largest economies, raising concerns for Australia given its strong trade ties with China.
The AUD found support on Thursday from reports that Australia is preparing to resume trade negotiations with the European Union (EU). Moreover, The Wall Street Journal reported that China also held talks with EU trade chief Maros Sefcovic, expressing interest in strengthening trade, investment, and industrial cooperation with the bloc.
China also raised tariffs on 84% of American imports and added six US firms—including defense and aerospace companies like Shield AI and Sierra Nevada—to its trade blacklist. It also introduced export controls on several American companies, such as American Photonics and BRINC Drones.
Australian Dollar appreciates as US Dollar struggles due to persistent economic concerns
- The US Dollar Index (DXY), which measures the US Dollar against a basket of six major currencies, is trading lower around 100.30 at the time of writing. The DXY continues to slide amid persistent concerns surrounding both the global and US economic outlooks. Investors are now turning their attention to the upcoming release of the US March Producer Price Index (PPI) and the preliminary Michigan Consumer Sentiment data, both due later on Friday.
- The US Consumer Price Index (CPI) inflation eased to 2.4% year-over-year in March, down from 2.8% in February and below the market forecast of 2.6%. Core CPI, which excludes food and energy prices, rose 2.8% annually, compared to 3.1% previously and missing the 3.0% estimate. On a monthly basis, headline CPI dipped by 0.1%, while core CPI edged up by 0.1%.
- In a move aimed at easing trade tensions, President Trump on Wednesday announced a 90-day pause on new tariffs for most US trade partners, lowering rates to 10% to create space for continued 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.”
- Minutes from the latest Federal Open Market Committee (FOMC) Meeting suggested that policymakers are nearly unanimous in recognizing the dual challenge of rising inflation and slowing growth, cautioning that the Federal Reserve faces “difficult tradeoffs” in the months ahead.
- China’s CPI declined 0.1% year-over-year in March, following a 0.7% drop in February and falling short of expectations for a 0.1% increase. Monthly, CPI dropped 0.4%, worse than the previous month’s 0.2% decline and the forecasted figure. China’s PPI also contracted more sharply than expected, falling 2.5% annually in March versus a 2.2% drop in February and a projected 2.3% decline.
- In Australia, subdued business and consumer sentiment has strengthened expectations of a dovish tilt from the Reserve Bank of Australia (RBA). Markets are now pricing in up to 100 basis points in rate cuts this year, beginning in May, with additional reductions likely in July and August.
Technical Analysis: Australian Dollar rises toward 0.6250 near 50-day EMA
The AUD/USD pair is hovering near 0.6230 on Friday, with daily chart indicators showing a slight bullish tilt as the pair trades above the nine-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) remains just below the 50 mark, indicating that bearish pressure hasn’t fully faded.
Immediate support is seen at the nine-day EMA, currently at 0.6176. A decisive break below this level could undermine short-term bullish momentum and open the door for a move toward the 0.5914 zone—its lowest point since March 2020—followed by the key psychological support at 0.5900.
To the upside, initial resistance is located at the 50-day EMA, around 0.6262. A sustained move above this level could pave the way for a stronger recovery, potentially pushing the AUD/USD pair toward the four-month high of 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 | -0.92% | -0.31% | -0.56% | -0.29% | -0.14% | -0.63% | -0.43% | |
| EUR | 0.92% | 0.59% | 0.28% | 0.60% | 0.77% | 0.26% | 0.47% | |
| GBP | 0.31% | -0.59% | -0.26% | 0.02% | 0.18% | -0.35% | -0.12% | |
| JPY | 0.56% | -0.28% | 0.26% | 0.27% | 0.46% | 0.00% | 0.23% | |
| CAD | 0.29% | -0.60% | -0.02% | -0.27% | 0.14% | -0.34% | -0.13% | |
| AUD | 0.14% | -0.77% | -0.18% | -0.46% | -0.14% | -0.50% | -0.29% | |
| NZD | 0.63% | -0.26% | 0.35% | -0.01% | 0.34% | 0.50% | 0.22% | |
| CHF | 0.43% | -0.47% | 0.12% | -0.23% | 0.13% | 0.29% | -0.22% |
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.
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