AUD/USD defends its ground as markets await US data, Aussie inflation
- The AUD/USD pair trades at 0.6400, up more than 0.40% on the day.
- US President Trump confirmed trade talks with China, but no major breakthrough was achieved.
- Investors await upcoming US Nonfarm Payrolls (NFP) and GDP data, crucial for the Federal Reserve’s outlook.
- The US Dollar remains under pressure, awaiting further economic clarity from key data this week.
The AUD/USD pair is trading steadily around 0.6400 as investors brace for key economic data from the United States (US) this week. The focus is on Nonfarm Payrolls (NFP) and GDP figures, which will provide insights into the strength of the US labor market and economic growth, potentially influencing the Federal Reserve’s (Fed) monetary policy decisions.
Daily digest market movers: US data in focus as trade tensions persist
- US President Trump confirmed trade talks with China, but no breakthrough was achieved.
- Investors are focused on the upcoming US Nonfarm Payrolls (NFP) and GDP data, which will provide crucial insights.
- The US Dollar Index (DXY) remains near 99.60 as market participants await further economic signals.
- The market is cautious as US trade policies continue to create uncertainty for the global economy.
- The Federal Reserve’s upcoming policy decisions depend on key economic data, including the PCE, NFP, and GDP.
- In Australia, investors await CPI data, with a possible slowdown in inflation pressures influencing the RBA’s next move.
- Uncertainty around US-China trade relations continues to affect global market sentiment and the Australian Dollar.
- The US Dollar’s recent recovery could face challenges depending on the outcome of upcoming economic reports.
- A weaker-than-expected NFP or GDP report could lead to renewed downside pressure on the US Dollar.
- The market’s focus on US economic data underscores the potential for significant market moves this week.
- Trade tensions with China remain a key source of uncertainty for both the US Dollar and global trade.
Technical Analysis: AUD/USD tests resistance, bullish momentum intact
The AUD/USD pair is currently trading at 0.6400, up 0.41% on the day. Price action is contained within the day’s range of 0.6368 and 0.6430. The Relative Strength Index (RSI) is neutral at 59.55, while the Moving Average Convergence Divergence (MACD) is generating a buy signal. The Ultimate Oscillator and Stochastic %K are both neutral, suggesting indecisiveness in market momentum. Short-term moving averages support the bullish outlook, with the 10-day EMA at 0.6368 and the 10-day SMA at 0.6384. However, the 200-day SMA at 0.6466 presents resistance. Support levels are found at 0.6411, 0.6402, and 0.6384, while resistance is at 0.6466. The pair is testing resistance and may break higher if the bullish sentiment continues.
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.
