- The Australian Dollar is still facing headwinds as the US Dollar gains strength, bolstered by indications of reduced friction between the US and China.
- China’s decision to waive tariffs of 125% on specific US goods has generated some positive sentiment regarding improved trade dynamics.
- The Federal Reserve is observing a quiet period before the upcoming May 7 Federal Open Market Committee meeting.
The Australian Dollar (AUD) is experiencing further declines, marking its second consecutive day of losses on Monday. The AUD/USD exchange rate is being weighed down by a stronger US Dollar (USD), which is benefiting from emerging signs of de-escalation in US-China relations.
Reports from business contacts indicate that China removed certain US imports from its list of goods subject to tariffs of 125% on Friday. This action has raised expectations that the extended trade dispute between the world’s two leading economies may be nearing resolution.
Nevertheless, Reuters reported on Friday that a Chinese embassy representative refuted any ongoing discussions with the US, asserting, “China and the US are not engaged in any consultation or negotiation pertaining to tariffs.” The spokesperson called on Washington to “refrain from generating uncertainty.”
