Australian Dollar strengthens as Trump confirms talks with China

• The Australian dollar appreciates the US dollar being soft amid growing economic concerns.
• Trump hit an optimistic tone, suggesting that a trade deal with China could be finalized within three to four weeks.
• Fed Chair Jerome Powell warned that the risk of stability in a weak economy combined with continuous inflation could be increased.

The Australian Dollar (AUD) expands its rally that began on 9 April, the US Dollar (USD) with the AUD/USD pair is weak amidst increasing concerns over the economic impact of tariffs on the United States (US). Market participants are closely monitoring the US trade talks, although the good Friday holiday is expected to be under the control of trading activity.

Late on Thursday night, US President Donald Trump said that China has done many overtrains and said, “I don’t want to go much on China’s tariff. If China goes more, people will not buy.” Trump expressed optimism that a trade agreement with China could be reached within three to four weeks.

AUD was promoted after President Trump announced exemption for major technology products from the new proposed “mutual” tariffs. These discounts-smartphones, computers, semiconductors, solar cells, and the goods covering items such as flat-panel displays, mainly produced in-China, Australia’s largest trading partner and an important consumer of its commodity exports.

The Reserve Bank of Australia (RBA) 31 March -April 1 meeting minutes indicated the uncertainty running around the time of next interest rate adjustment. Although the board considered a suitable point meeting to review the monetary policy on May on May, it insisted that no decisions had been taken in advance. The board also pointed to both upside down and negative risk in front of Australia’s economy and inflation trajectory.

Australian dollar appreciates as US dollar conflict amid growing economic concerns

• The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, is trading less at around 99.30 at the time of writing. However, the US dollar received some support after the Hawkish comments of the Federal Reserve Chair Zerome Powell, which warned that a dull economy combined with frequent inflation could challenge the objectives of the Fed and increase the risk of stability.
• According to the CME Fedwatch Tool, the money market traders are currently pricing in about 86 base points of fed rate cuts by the end of 2025, with the first decrease in July.
• On the labor front, the US Labor Department reported on Thursday that the initial unemployed claims fell to 215,000 for the week ended on April 12, below expectations and last week below the revised figure of 224,000 (originally 223,000). However, continuous unemployed claims were increased from 41,000 to 1.885 million for the week ended on 5 April.
• The US Consumer Price Index (CPI) inflation fell 2.4% year-on-year in March, below 2.8% in February and below 2.6% market forecast. The core CPI, which excludes food and energy prices, increased 2.8% annually compared to 3.1% earlier and was missing 3.0% estimate. On a monthly basis, the headline CPI drowned 0.1%, while the core CPI increased 0.1%.
• Australia’s unemployment rate increased to 4.1% in March, slightly below the market forecast of 4.2%. Meanwhile, the employment change came at 32.2K against the consensus of the 40K unanimous forecast.
• The six -month annual growth rate of the major index of Australia’s Westpack, which estimates the economic speed relative to the trend in the next three to nine months, decreased from 0.9% to 0.6% in March in February.
• China’s Foreign Ministry said on Thursday that if the United States continues to engage in the excitement related to tariffs, China would simply disregard them.
• China’s economy grew at an annual rate of 5.4% in the first quarter of 2025, which matches the speed seen in Q4 2024 and crosses the market expectations of 5.1%. Depending on the quarter, GDP increased by 1.2% in Q1, after an increase of 1.6% in the previous quarter, a decrease of 1.4% profit.
• Meanwhile, China’s retail sales increased from 5.9% year-on-year, defeating 4.2% expectations and increased by 4% in February. Industrial production also increased by 7.7% as compared to 5.6% forecast and February 5.9% print.

Australian dollar may test a psychologist near a four -month height

The AUD/USD pair is hovering near 0.6390 on Friday, with daily chart indicators pointing to a rapid bias. The pair is above the nine-day exponential moving averages (EMA), while the 14-day relative Strength Index (RSI) remains above the neutral 50 marks-moves upwards.

On the contrary, the AUD/USD pair may get significant resistance at a psychologist at 0.6400 level, followed by the last four months high of 0.6408, on 21 February.

On the negative side, the initial support lies in the nine-day EMA of 0.6311, with additional support in the 50-day EMA near 0.6283. A brake below these levels can weaken the short-term rapid outlook and open the door for the lowest level of 0.5914 zone since March 2020.

AUD/USD: Daily Chart