The AUD/USD pair commenced the week with upward momentum, trading near 0.6300, supported by improved risk sentiment. Market optimism stems from the announcement of reduced US tariffs on Chinese semiconductors and electronics, alleviating concerns regarding potential trade escalations. Investor focus will now shift to forthcoming Chinese trade data and statements from Federal Reserve officials for further market direction. The AUD/USD is currently sustaining a three-day recovery from five-year lows, exhibiting modest gains near the 0.6300 level.
The recent appreciation in the pair is correlated with the continuation of risk-on sentiment observed during Friday’s US trading session into early Asian trading on Monday. Market participants reacted positively to the weekend announcement regarding US tariffs on Chinese semiconductor and electronics imports. Clarification from the US administration indicated that these products would be subject to existing 20% tariffs on fentanyl rather than the previously speculated 145% levies.
Positive risk appetite is reflected in higher US equity futures, with S&P 500 futures showing gains of approximately 0.80%. However, the sustainability of the AUD/USD’s upward trajectory remains uncertain, as the US Dollar may experience a moderate rebound from three-year lows amid the improving risk environment. The US Dollar previously reached a three-year low against major currencies following heightened US-China trade tensions on Friday. China responded by increasing tariffs on US goods from 84% to 125%, while indicating a reluctance to further escalate the situation in response to additional US actions.
