- Aud/USD is tumbling on Thursday as the US dollar strengthens in the midst of renewed trade policy concerns.
- Trump’s customs threat threats Fuel risk version overshadowing softer than expected US inflation data.
- US PPI data signals weaker inflation, but investors remain focused on escalating merchant stresses.
- Technical indicators suggest additional disadvantage of AUD/USD that lose the most important support levels.
Aud/USD is tumbling to nearly 0.6280 as the US dollar transfers to the Trump administration’s customs agenda. The couple was facing a sharp sales pressure on Thursday when renewed fear of a global economic downturn triggered a flight to the US dollar.
Investors ignored largely softer US CPI and PPI data for February, rather than focusing on US President Donald Trump’s aggressive trade position. His renewed obligation to “America First” policies stood fear of retaliatory measures weighing at risky assets like the Australian dollar.
Daily Digest Market Movers: Australian Dollar Under Pressure As Trade Fears Escales
- The US Dollar Index (DXY) rebound sharply and reached 104.00 after recovering from a four -month low of 103.20. Greenback got when dealers approached SAFE-HAVEN-ACTIVES in the midst of increased concern about trade policy.
- Trump repeated his protectionist attitude and said the United States does not have “free trade” but “stupid trade” in a true social speech. His comments reinforced the expectations of further tariffs on the most important trading partners.
- New tariffs on European imports raised the markets further. Trump confirmed retaliatory tasks of EUR 26 billion worth of euro areas after the EU introduced countermeasures against the 25% universal import duty that the United States placed on steel and aluminum.
- US inflation data was softer than expected, but failed to weaken the US dollar. Manufacturer Price Index (PPI) dropped to 0.0%in February, well below the estimate of 0.3%, while the core PPI contracted by 0.1%. Despite weak inflation figures, markets focused on rising geopolitical and trade risks.
- The Australian dollar fought in the midst of worsening risk mood. The currency, which closely reflects the Chinese economic performance, faces headwinds as the United States maintained 20% customs duties on Chinese imports, which raised fears of a further slowdown in Australia’s most important trading partner.
- Markets also monitor diplomatic developments as US officials visit Russia to discuss a potential ceasefire agreement with Ukraine. However, geopolitical tension remains increased, adding additional support to the US dollar.
- Looking ahead, the merchants will carefully see Australia’s labor market report due to March 20, for insight into the Reserve Bank of Australia’s (RBA) potential political direction.
AUD/USD Technical Analysis: Disadvantage Press intensifies when the main support breaks
Aud/USD fell Thursday and moved towards the 0.6280 region during the US session when the sales of Momentum were intensified. The couple struggled to find support with trade risks and a stronger US dollar that keeps pressure on Aussie.
The moving average convergence divation (MacD) indicator continues to print flat red beams that signalize fading momentum but maintain a bearish bias. Meanwhile, the relative strength index (RSI) has fallen to 48 that falls sharply into negative territory, reflecting growing downward risks. The couple has lost its 20-day simple moving average (SMA), confirming a deteriorating technical view. Longer disadvantage could target the 0.6250 region where stronger demand can occur. On the head, the resistance is seen around 0.6320, but there would be a need for a break above this level to change mood against improvement.
Australian questions
One of the most significant factors for the Australian dollar (AUD) is the level of interest rates set by Reserve Bank of Australia (RBA). Because Australia is a resourceful country, another important drives the price of its largest export, iron ore. The health of the Chinese economy, its largest trading partner, is a factor as well as inflation in Australia, its growth rate and trade balance. Market mood-in-investors take on more risky assets (risk-on) or seek safely ports (risk-off)-are also a factor of risk-on positive for AUD.
Reserve Bank of Australia (RBA) affects the Australian dollar (AUD) by setting the level of interest rates that Australian banks can borrow to each other. This affects the level of interest rates in the economy as a whole. RBA’s main target is to maintain a stable inflation of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support AUD and the opposite of relatively low. RBA can also use quantitative easing and tightening to influence the credit conditions with the former Aud-negative and the latter Aud positive.
China is Australia’s largest trading partner, so the health of the Chinese economy is a major impact on the value of the Australian dollar (AUD). When the Chinese economy is doing well, it buys more raw materials, goods and services from Australia, raises the demand for AUD and pushes up its value. The opposite is the case when the Chinese economy does not grow as fast as expected. Positive or negative surprises in Chinese growth data therefore often have a direct impact on the Australian dollar and its couple.
Iron Ore is Australia’s largest export and accounts for $ 118 billion a year according to data from 2021 with China as its primary destination. The price of iron ore can therefore be a driving force for the Australian dollar. Generally, if the price of iron ore rises, AUD is also going up as the overall demand for the currency rises. The opposite is the case if the price of iron ore falls. Prices on higher iron ore also tend to result in a greater likelihood of a positive trade balance for Australia, which is also positive for AUD.
The trade balance, which is the difference between what a country earns from its export versus what it pays for its imports is another factor that can affect the value of the Australian dollar. If Australia produces much sought -after export, its currency will win in value exclusively from excess demand created from foreign buyers trying to buy their exports versus what it uses to buy imports. Therefore, a positive Net Distance Balance Aud strengthens with the opposite effect if the trade balance is negative.