AUD/USD in Focus: US-China Trade Headlines and RBA Bets
Shifting focus to the Aussie dollar, the reports of a US-China trade deal will influence AUD/USD trends ahead of crucial Aussie labor market data on May 15.
A zero-tariff trade agreement may lift risk appetite and support the AUD, as removing tariffs could fuel demand for Chinese goods. With nearly a third of Australian exports heading to China, stronger trade could ease expectations of multiple 2025 RBA rate cuts. On the other hand, a high-tariff deal could raise concerns about China’s economy, weighing on the AUD/USD pair.
American author and philanthropist Dmitri Alperovitch remarked on the impact of tariffs on China’s economy, stating:
“Behind closed doors, Chinese officials have grown increasingly alarmed about tariffs’ impact on the economy and the risk of isolation as China’s trading partners have started negotiating deals with Washington.”
AUD/USD: Key Scenarios to Watch
- Bearish Aussie dollar Scenario: A high-tariff trade deal or dovish RBA rhetoric may send AUD/USD toward the $0.63623 support level.
- Bullish Aussie dollar Scenario: A zero-tariff agreement, Beijing stimulus, or hawkish RBA signals could drive the pair toward the $0.65 mark.
Click here for a more comprehensive analysis of AUD/USD trends and trade data insights.
Aussie Dollar Daily Outlook: Will the Fed Signal Rate Cuts?
Later today, Fed speakers could affect US-Aussie rate differentials. Hawkish signals supporting a near-term pause on rate cuts may widen the rate differential. Easing bets in Fed rate cuts may pull the AUD/USD pair below the 200-day EMA. A fall through the 200-day EMA would bring the 0.63623 support level into play.
However, rising support for a June Fed rate cut may narrow the rate differential in favor of the Aussie dollar. A more dovish Fed stance could drive AUD/USD toward $0.65.