- The AUD/USD is abruptly recovered about 0.6400 at the expense of the US dollar.
- Washington has indicated his willingness to negotiate a commercial agreement with China.
- The RBA is expected to cut interest rates next month.
The Aud/USD pair bounces about 0.6390 during the European negotiation hours on Thursday. The Australian pair recovers as the two -day recovery of the US dollar (USD) has vanished despite the decrease in the fears of an intense commercial war between the United States (US) and China.
The US dollar index (DXY), which measures the value of the dollar against six main currencies, goes back about 99.20 from the maximum of Wednesday around 100.00.
The president of the United States, Donald Trump, has expressed his willingness to make a commercial agreement with China. “The discussions with Beijing are going well, and I think we will reach an agreement,” Trump said Tuesday. The hopes of a decalsed in the tariff war between the two greatest powers in the world have improved even more, since the secretary of the US Treasury., Scott Besent, has shown openness to reduce tariffs. “I do not think that any of the parties believes that the current levels of tariffs are sustainable, so I would not be surprised if they went down in a mutual way,” Besent said.
Meanwhile, the fears of a resurgence of inflation in the US have climbed, since the preliminary report of the Purchase Management Index (PMI) of Global S&P showed that respondents have indicated the transmission of the impact of tariffs on consumers. Such an event will limit the ability of the Federal Reserve (FED) to reduce interest rates.
The decrease in tensions between Washington and China is also a favorable scenario for the Australian dollar (Aud), given the significant dependence on the Australian economy of its exports to China.
At the national level, the increase in the probabilities of an interest rate cut by the Bank of the Australian Reserve (RBA) at the Mayo Policy meeting could weigh on the Australian dollar. According to Westpac analysts, the RBA will reduce its official cash (OCR) rate to 25 basic points (PBS) to 3.85% in May in the midst of growing downward risks for inflation and global economic growth.
Faqs Australian dollar
One of the most important factors for the Australian dollar (Aud) is the level of interest rates set by the Australian Reserve Bank (RBA). Since Australia is a country rich in resources, another key factor is the price of its greatest export, iron mineral. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and commercial balance. The feeling of the market, that is, if investors are committed to more risky assets (Risk-on) or seek safe shelters (Risk-Off), it is also a factor, being the positive risk-on for the AUD.
The Australian Reserve Bank (RBA) influences the Australian dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of the interest rates of the economy as a whole. The main objective of the RBA is to maintain a stable inflation rate of 2% -3% by adjusting the interest rates or the low. Relatively high interest rates compared to other large central banks support the AU, and the opposite for the relatively low. The RBA can also use relaxation and quantitative hardening to influence credit conditions, being the first refusal for the AU and the second positive for the AUD.
China is Australia’s largest commercial partner, so the health of the Chinese economy greatly influences the value of the Australian dollar (Aud). When the Chinese economy goes well, it buys more raw materials, goods and services in Australia, which increases the demand of the AU and makes its value upload. The opposite occurs when the Chinese economy does not grow as fast as expected. Therefore, positive or negative surprises in Chinese growth data usually have a direct impact on the Australian dollar.
Iron mineral is the largest export in Australia, with 118,000 million dollars a year according to data from 2021, China being its main destination. The price of iron ore, therefore, can be a driver of the Australian dollar. Usually, if the price of iron ore rises, the Aud also does, since the aggregate demand of the currency increases. The opposite occurs when the price of low iron ore. The highest prices of the iron mineral also tend to lead to a greater probability of a positive commercial balance for Australia, which is also positive for the AUD.
The commercial balance, which is the difference between what a country earns with its exports and what it pays for its imports, is another factor that can influence the value of the Australian dollar. If Australia produces highly requested exports, its currency will gain value exclusively for the excess demand created by foreign buyers who wish to acquire their exports to what you spend on buying imports. Therefore, a positive net trade balance strengthens the AUD, with the opposite effect if the commercial balance is negative.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.