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- AUD/USD continues to face downward pressure amid stalled US-China trade negotiations.
- Beijing is unlikely to ease tariffs ahead of the upcoming talks in Switzerland, fueling market uncertainty and weakening risk sentiment.
- President Trump has announced a “major” trade deal with the United Kingdom, although key tariffs will stay at 10%.
The AUD/USD pair recovers its daily losses, trading near 0.6400 during Friday’s Asian session, following China trade balance data. However, the Australian Dollar (AUD) remains under pressure due to stalled progress in US-China trade negotiations. Given the close economic ties between Australia and China, any pressure on the Chinese economy tends to weigh on the AUD.
The trade balance came in at $96.18 billion, surpassing the expected $89 billion but slightly lower than the previous $102.63 billion. Exports grew by 8.1% year-on-year, beating the expected 1.9% but falling short of the prior 12.4%. Imports declined by 0.2% YoY, improving from the expected -5.9% and the previous -4.3%. Meanwhile, China’s trade surplus with the US for April stood at $20.46 billion, down from $27.6 billion in March.
In Chinese Yuan (CNY) terms, it stood at CNY 689.99 billion, reflecting a modest decline from the previous month’s CNY 736.72 billion. Exports grew 9.3% year-on-year in April, compared to 13.5% in March. Imports increased by 0.8% YoY during the same period, reversing the previous decline of -3.5%.
According to the Global Times, citing the Chinese Embassy in the United States, Beijing is unlikely to reduce tariffs ahead of the upcoming talks in Switzerland. This adds to market uncertainty and dampens risk sentiment.
In the United States (US), President Donald Trump has adopted a firm stance on China’s trade policy, following the appointment of a new envoy to Beijing. While there are discussions around tariff exemptions, the administration appears cautious, with Trump stating that they are “not looking for so many exemptions.”
Meanwhile, China is reportedly considering a significant change to its real estate market—banning the pre-sale of homes and allowing only completed properties to be sold. This move, aimed at stabilizing the property sector, is part of a broader reform plan still under development. The regulation would apply to future land sales, excluding public housing, and local governments would have flexibility in implementation.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against a basket of currencies, is trading around 100.60, buoyed by strong US economic data and expectations of prolonged yield differentials. Initial optimism surrounding a US-UK trade agreement has faded, however, as it became clear that existing 10% tariffs will remain in place.
