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Australian Dollar stays subdued as risk aversion offsets China inflation, hawkish RBA

  • The Australian Dollar remains subdued as risk aversion supports the US Dollar.
  • China’s inflation accelerates in April, reinforcing demand expectations across Asia.
  • The RBA maintains a hawkish stance while markets focus on Donald Trump’s visit to China.

AUD/USD trades around 0.7245 on Monday at the time of writing, virtually unchanged on the day after opening the week with a bearish gap. The pair recovers its initial daily losses, but the Australian Dollar (AUD) remains weighed down by renewed risk aversion supporting the US Dollar (USD).

Market sentiment remains fragile after United States (US) President Donald Trump and Iran rejected each other’s latest proposals aimed at ending the war in the Middle East. According to Bloomberg, Trump described Iran’s latest proposal as “totally unacceptable,” while Iranian officials insisted on a broader settlement including the security of shipping routes through the Strait of Hormuz. This geopolitical backdrop continues to fuel safe-haven demand and support the Greenback.

The US Dollar Index (DXY) therefore holds onto its daily gains, while US Treasury yields also rise following stronger-than-expected US labor market data. The Bureau of Labor Statistics reported on Friday that Nonfarm Payrolls (NFP) increased by 115K in April, above the market consensus of 62K, although the figure slowed from the 185K increase recorded in March. The Unemployment Rate remained steady at 4.3%, in line with expectations.

In Asia, macroeconomic data released in China on Monday nevertheless provides underlying support for the Australian Dollar. China’s Consumer Price Index (CPI) rose 1.2% YoY in April, following a 1% increase in March and above the 0.8% forecast.

These figures reinforce the economic outlook in China, Australia’s largest trading partner, and help limit downside pressure on the Aussie. Investors are also monitoring Donald Trump’s visit to China from May 13 to May 15, during which several sensitive topics are expected to be discussed with Chinese President Xi Jinping, including Middle East tensions, Taiwan, artificial intelligence and critical minerals.

The Australian Dollar also continues to benefit from the hawkish tone recently adopted by the Reserve Bank of Australia (RBA). The Australian central bank raised its policy rate to 4.35% last week for the third consecutive time this year, while signaling that inflation remains too high. According to CNBC, the RBA’s projections now suggest that the policy rate could reach 4.7% by the end of the year, with no rate cuts expected before 2028.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD0.10%0.15%0.27%-0.10%-0.04%0.23%0.21%
EUR-0.10%0.05%0.13%-0.23%-0.12%0.14%0.10%
GBP-0.15%-0.05%0.09%-0.28%-0.18%0.09%0.05%
JPY-0.27%-0.13%-0.09%-0.36%-0.25%-0.00%-0.05%
CAD0.10%0.23%0.28%0.36%0.11%0.31%0.31%
AUD0.04%0.12%0.18%0.25%-0.11%0.25%0.23%
NZD-0.23%-0.14%-0.09%0.00%-0.31%-0.25%-0.02%
CHF-0.21%-0.10%-0.05%0.05%-0.31%-0.23%0.02%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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