AUD/USD with gains after soft US data
- The AUD/USD pair trades higher around 0.6400, up 0.26% on the day.
- US GDP data misses expectations, showing a contraction of 0.3% in Q1 2025.
- Market expectations for a Fed rate cut in June rise as weak data weighs on the USD.
- Investors remain cautious ahead of key US data releases, including NFPs and GDP for Q1 2025.
The AUD/USD pair saw a slight uptick as investors weighed weak United States (US) economic data, including a contraction in Q1 GDP. The market now expects potential Federal Reserve (Fed) rate cuts, which have pressured the US Dollar (USD). Despite ongoing trade tensions and uncertainty, the Australian Dollar (AUD) performed well, with the pair trading near the 0.6400 level. The next key focus will be the release of US Nonfarm Payrolls and GDP data later this week.
Daily digest market movers: Weak US GDP, tariff concerns persist
- The AUD/USD pair rises after testing resistance near 0.6417, buoyed by weaker-than-expected US GDP.
- President Donald Trump hints at trade talks with Canada, but uncertainty remains over US-China negotiations.
- China’s weak manufacturing PMI adds to the risk-off sentiment, impacting commodity prices like copper.
- The US Dollar Index (DXY) hovers flat at 99.30, as traders await key economic data releases.
- Personal consumption data shows modest growth, but the overall economic outlook remains uncertain.
- The US labor market shows signs of slowdown, with ADP Employment data missing expectations.
- Traders are closely watching the PCE inflation data, with markets pricing in potential rate cuts.
- President Trump’s comments on tariffs and trade policy keep investors on edge, impacting the USD.
- The DJIA drops 0.51% as the Q1 GDP contraction weighs on market sentiment.
- The Reserve Bank of Australia (RBA) remains cautious on inflation, with softer CPI data increasing rate cut expectations.
- Global uncertainty surrounding trade policies keeps market volatility elevated, particularly in the FX market.
Technical Analysis: AUD/USD maintains bullish outlook despite US Dollar weakness
The AUD/USD pair is showing a bullish signal, trading around 0.6400, up 0.26% on the day. The pair is currently positioned mid-range between 0.6356 and 0.6417. The Relative Strength Index (RSI) is neutral at 56.96, while the Moving Average Convergence Divergence (MACD) indicates a buy signal. The Awesome Oscillator is neutral at 0.0096. Short-term moving averages, including the 10-day SMA at 0.6391 and the 100-day SMA at 0.6281, support the bullish outlook. However, the 200-day SMA at 0.6463 suggests a longer-term sell signal. Support levels are at 0.6391, 0.6377, and 0.6342, while resistance levels sit at 0.6409, 0.6411, and 0.6463.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Author
Patricio Martín
FXStreet
Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.
