AUD/USD: China Trade Terms to Spotlight the RBA
Meanwhile, trade data from China would likely fuel speculation about an RBA rate cut, influencing the AUD/USD pair. Economists expect exports to rise 5% year-on-year in June, up from 4.8% in May, while forecasting imports to increase 1.3% (May: -3.4%).
A pickup in demand for Chinese goods and rising domestic demand could raise the appetite for the Aussie dollar. However, weaker trade terms may fuel speculation about an August RBA rate cut, pressuring the Aussie dollar.
Last week, RBA Governor Michele Bullock emphasized the importance of China’s economy, stating that trade terms with China remain crucial. The RBA Governor added:
“If China bolsters its economy with fiscal stimulus, that could cushion the impact of tariffs on Australia’s economy.”
Australia has a trade-to-GDP ratio of over 50%, with China accounting for around one-third of Aussie exports.
AUD/USD: Key Scenarios to Watch
- Bearish AUD/USD Scenario: Escalation in US-China trade friction, weaker China trade data, or Beijing’s silence on stimulus. These factors may pull AUD/USD toward the $0.65 support level.
- Bullish AUD/USD Scenario: Progress toward a US-China trade deal, strong trade data from China, or more policy stimulus from Beijing could drive AUD/USD toward the $0.66 level.
Click here for a more comprehensive analysis of AUD/USD trends and trade data insights.
AUD/USD Daily Outlook: Fed Speakers to Dictate Rate Differentials
Later today, Fed commentary would likely drive US-Australian interest rate differentials and AUD/USD trends.
Dovish Fed cues, favoring a September rate cut, could narrow the rate differential, favoring the Aussie dollar and supporting an AUD/USD move toward $0.66.
Conversely, hawkish rhetoric may widen the rate differential, favoring the US dollar. A wider rate differential could drag the pair toward $0.65.