- The AUD/USD weakens around 0.6390 in the early Asian session on Monday.
- The one -display in the tariff war between the US and China provides some support to the US dollar.
- China promised to support companies and workers affected by tariffs.
The Aud/USD pair operates in negative territory about 0.6390 during the early Asian session on Monday. The US dollar (USD) can be seen against the Australian dollar in the middle of relaxation signals between the US and China. China will hold a press conference on policies and measures to stabilize employment and ensure stable growth on Monday, which will be closely followed by operators.
The US dollar registered its first weekly gain since mid -March on Friday, after China granted some tariff exemptions for US imports. This increases the hopes that the commercial war between the two largest economies in the world is close to its end. China exempt some US imports from its 125% tariffs on Friday, according to companies, although China quickly denied the statement of US President Donald Trump that negotiations between the two countries were underway.
Friday’s statement on Friday focused on efforts to maintain stability in the country supporting companies and workers most affected by US Tariffs. The National Development and Reform Commission, the Ministry of Human Resources and Social Security, the Ministry of Commerce and the Popular Bank of China (PBOC) will hold together the conference on Monday.
Chinese authorities reiterated their plans to accelerate debt issuance, relax monetary policy and pledged to support employers to safeguard jobs. Any sign of great stimulus plans could boost the Australian dollar (AUD), since China is an important commercial partner of Australia.
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 AU, 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.
