Forex News
- The Japanese Yen ticks lower as US-China trade deal optimism undermines safe-haven demand.
- Strong Tokyo consumer inflation figures reaffirm bets for additional rate hikes by the BoJ in 2025.
- Dovish Fed expectations might keep a lid on any meaningful USD upside and the USD/JPY pair.
The Japanese Yen (JPY) selling bias remains unabated heading into the European session on Friday, which, along with a modest US Dollar (USD) strength, lifts the USD/JPY pair to a fresh two-week high, around the 143.85 area in the last hour. Investors remain hopeful about a potential de-escalation of the trade war between the US and China, which remains supportive of a positive risk tone and is seen undermining demand for the safe-haven JPY.
Any meaningful JPY depreciation, however, still seems elusive in the wake of the growing acceptance that the Bank of Japan (BoJ) will hike interest rates again in 2025. This marks a big divergence in comparison to the prospects for more aggressive policy easing by the Federal Reserve (Fed), which might cap the USD and help limit losses for the lower-yielding JPY. Nevertheless, the USD/JPY pair remains on track to register gains for the first time in four weeks.
Japanese Yen continues losing ground as optimism over a possible US-China trade deal dampens safe-haven demand
- US President Donald Trump told reporters that the US and China held discussions on Thursday to help resolve the trade war between the world’s two largest economies. Moreover, a White House official said that lower-level in-person talks as well as a phone call between US and Chinese staff had taken place this week.
- Adding to this, China is reportedly mulling to suspend its 125% tariff on some US imports. This fuels hopes of a quick US-China trade resolution, boosts investor confidence, and weakens demand for safe-haven assets like the Japanese Yen.
- However, China's Foreign Ministry spokesperson Guo Jiakun told reporters on Thursday that China and the US have not conducted consultations or negotiations on tariffs. Furthermore, the prospects for additional interest rate hikes by the Bank of Japan should limit deeper losses for the JPY.
- Data released earlier this Friday showed that Tokyo Consumer Price Index (CPI) grew 3.5% year-on-year in April from 2.9% in the prior month. Adding to this, Tokyo core CPI, which excludes volatile fresh food prices, rose 3.4% YoY, or a two-year high, compared to the 3.2% expected and sharply higher than the 2.4% in March.
- Furthermore, a gauge that excludes both fresh food and fuel costs and is closely watched by the BoJ rose 3.1% in April from a year earlier after a 2.2% rise in the previous month. This points to broadening inflation in Japan and gives the BoJ headroom to raise interest rates further after a 50 basis point rate hike earlier this year.
- On the other hand, Federal Reserve Governor Christopher Waller said on Thursday that he would support an interest rate cut if tariffs start weighing on the job market. Separately, Cleveland Fed President Beth Hammack stated that a rate cut as soon as June could be possible if clear evidence of economic direction is obtained.
- This counters Fed Chair Jerome Powell’s remarks last week that the US central bank is well-positioned to wait for greater clarity before considering any adjustments to our policy stance. Nevertheless, traders are still pricing in the possibility that the Fed will lower borrowing costs at least three times by the end of this year.
- The prospects for more aggressive easing by the Fed, to a larger extent, overshadowed mostly upbeat US macro data released on Thursday. In fact, the US Department of Labor reported that Initial Jobless Claims increased modestly to 222,000 for the week ending 19 April and pointed to continued labor market resilience.
- Furthermore, the US Census Bureau reported that Durable Goods Orders surged 9.2% in March, marking the third consecutive monthly increase and far exceeding market expectations of a 2% rise. Transportation equipment, which also recorded its third straight monthly gain, led the increase with a jump of 27% in April.
- Meanwhile, the divergent BoJ-Fed policy expectations, along with hopes that Japan will strike a trade deal with the US, should act as a tailwind for the lower-yielding JPY. Japan's chief negotiator, Economy Minister Ryosei Akazawa, will hold a second round of trade talks with US Treasury Secretary Scott Bessent next week.
USD/JPY could appreciate further once 144.00 is conquered; technical setup some warrants caution for bulls
The USD/JPY pair showed some resilience below the 23.6% Fibonacci retracement level of the March-April downfall and the subsequent move back above the 143.00 mark favors bullish traders. Moreover, oscillators on hourly charts have been gaining positive traction and support prospects for additional gains. However, technical indicators on the daily chart – though they have been recovering – are yet to confirm a positive bias. Hence, any further move up might confront stiff resistance near the 144.00 round figure. Some follow-through buying, however, could lift spot prices further to the 144.40 area, or the 38.2% of Fibo. level, which if cleared decisively should pave the way for a further near-term recovery.
On the flip side, dips below the 23.6% Fibo. level might continue to attract some dip-buyers near the overnight swing low, around the 142.30-142.25 region. This is followed by the 142.00 round figure, below which the USD/JPY pair could slide to mid-141.00s en route to the 141.10-141.00 region. The downward trajectory could extend further towards intermediate support near the 140.50 area and expose the multi-month low – levels below the 140.00 psychological mark touched on Tuesday.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- The Australian Dollar remains subdued as market sentiment remains mixed, as the Trump administration could consider reducing tariffs on Chinese imports.
- China is considering the suspension of its 125% tariff on certain US imports.
- AmCham China President Michael Hart remarked that it's encouraging to see the US and China reviewing tariffs.
The Australian Dollar (AUD) extends gains for the second successive session against the US Dollar (USD) on Friday following a Bloomberg report, citing sources familiar with the matter, China is weighing the suspension of its 125% tariff on certain US imports, including medical equipment, ethane, and aircraft leasing. The sources also indicated that officials are specifically discussing a possible waiver on tariffs for plane leases. China’s Ministry of Finance and the General Administration of Customs have yet to comment on the matter.
However, the AUD/USD pair faced headwinds amid persistent US-China trade tensions. Australia's close trade relationship with China makes it particularly sensitive to developments between the two economic giants.
Traders continued to track the fluid global trade landscape. Market sentiment remained mixed following reports that the Trump administration might reduce tariffs on Chinese imports, depending on the progress of potential talks with Beijing. China expressed a willingness to engage in discussions, provided the US stops issuing new threats. However, US Treasury Secretary Scott Bessent downplayed the optimism, clarifying that no unilateral tariff cuts had been proposed and that formal negotiations have not yet commenced.
China's Finance Ministry stated on Friday that global economic growth remains sluggish, with tariffs and trade wars continuing to undermine economic and financial stability. The ministry urged all parties to enhance the international economic and financial system through stronger multilateral cooperation, per Reuters.
On Thursday, Westpac forecasted that the Reserve Bank of Australia (RBA) would lower interest rates by 25 basis points at its upcoming May 20 meeting. The RBA has adopted a data-driven approach in recent quarters, making it difficult to predict its actions beyond the next meeting with confidence.
Australian Dollar depreciates as US Dollar appreciates amid improved market sentiment
- The US Dollar Index (DXY), which measures the USD against six major currencies, retraces its recent losses from the previous session, trading near 99.60 at the time of writing. However, the Greenback faced headwinds following the release of the Initial Jobless Claims data on Thursday. The final reading of the US Michigan Consumer Sentiment will be eyed later on Friday.
- Michael Hart, President of the American Chamber of Commerce in China, remarked that it's encouraging to see the US and China reviewing tariffs. Hart noted that while exclusion lists for specific categories are reportedly in the works, no official announcements or policies have been released yet. Both China’s Ministry of Commerce and the US Department of Commerce are currently gathering input on the matter.
- The US Department of Labor (DOL) reported on Thursday that initial applications for unemployment benefits rose for the week ending April 19. Initial Jobless Claims increased to 222,000, slightly above expectations and up from the previous week’s revised figure of 216,000. Meanwhile, Continuing Jobless Claims declined by 37,000, falling to 1.841 million for the week ending April 12.
- The flash S&P Global Composite PMI for April dropped to 51.2 from 53.5, indicating a slowdown in overall business activity. Although the Manufacturing PMI inched up to 50.7, the Services PMI declined sharply to 51.4 from 54.4, pointing to softening demand in the services sector.
- S&P Global’s Chris Williamson commented that growth momentum is losing steam, while persistent inflationary pressures continue to complicate the Federal Reserve’s efforts to strike a balance.
- According to the Fed’s April Beige Book, concerns over tariffs have worsened the economic outlook across several regions in the United States (US). Consumer spending presented a mixed picture, while the labor market showed signs of softening, with many districts reporting flat or slightly declining employment levels.
- US Treasury Secretary Scott Bessent acknowledged on Wednesday that current tariffs—145% on Chinese goods and 125% on US goods—are unsustainable and must be lowered for meaningful dialogue to begin.
- National Economic Council Director Kevin Hassett, President Trump's chief economic adviser, stated that the US Trade Representative (USTR) has 14 meetings scheduled with foreign trade ministers. Hassett also noted that 18 written proposals have been received from these ministers. According to Hassett, China remains open to negotiations.
- Market sentiment was boosted by US President Donald Trump, who reassured investors that he has no intention of removing Federal Reserve (Fed) Chair Jerome Powell, helping ease concerns about central bank independence and policy direction.
- The White House announced on Tuesday that the Trump administration is making headway in negotiating trade deals aimed at easing the broad tariffs introduced earlier this month. According to US Press Secretary Karoline Leavitt, 18 countries have already submitted trade proposals to the US, and President Trump’s trade team is scheduled to meet with representatives from 34 nations this week to explore potential agreements.
- The Judo Bank Manufacturing PMI edged down to a two-month low of 51.7 in April, compared to 52.1 in March. While manufacturing output remained in expansion territory, the increase in new orders was modest. Meanwhile, the Services PMI dipped slightly to 51.4 from 51.6 in the previous month, and the Composite PMI also eased to 51.4 from 51.6.
Australian Dollar finds resistance near four-month highs, 0.6450 level
The AUD/USD pair is hovering around 0.6410 on Friday, with daily chart technicals maintaining a bullish bias. The pair remains above the nine-day Exponential Moving Average (EMA), while the 14-day Relative Strength Index (RSI) holds steady above the 50 mark, indicating continued upward momentum.
To the upside, immediate resistance is located at the recent four-month high of 0.6439, set on April 22. A clear break above this level could open the door for a rally toward the five-month high of 0.6515.
The initial support lies at the nine-day EMA, currently at 0.6365, with stronger support near the 50-day EMA at 0.6302. A sustained move below these levels would weaken the bullish outlook and may trigger deeper losses, potentially exposing the March 2025 low near 0.5914.
AUD/USD: Daily Chart
Australian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.48% | 0.43% | 0.75% | 0.19% | 0.25% | 0.56% | 0.72% | |
| EUR | -0.48% | -0.05% | 0.24% | -0.31% | -0.22% | 0.09% | 0.23% | |
| GBP | -0.43% | 0.05% | 0.31% | -0.24% | -0.16% | 0.13% | 0.25% | |
| JPY | -0.75% | -0.24% | -0.31% | -0.54% | -0.49% | -0.22% | -0.07% | |
| CAD | -0.19% | 0.31% | 0.24% | 0.54% | -0.02% | 0.37% | 0.49% | |
| AUD | -0.25% | 0.22% | 0.16% | 0.49% | 0.02% | 0.30% | 0.42% | |
| NZD | -0.56% | -0.09% | -0.13% | 0.22% | -0.37% | -0.30% | 0.12% | |
| CHF | -0.72% | -0.23% | -0.25% | 0.07% | -0.49% | -0.42% | -0.12% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest 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 sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (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 interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence 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 influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- USD/CHF appreciates as the US Dollar is strengthening, as investor sentiment improves.
- AmCham China President Michael Hart remarked that it's encouraging to see the US and China reviewing tariffs.
- Analysts argue that currency intervention by the SNB may be more effective than additional rate cuts.
USD/CHF recovered its previous session losses and is trading around 0.8320 during the Asian session on Friday. The US Dollar (USD) is strengthening as investor sentiment improves, driven by a Bloomberg report suggesting China may suspend its 125% tariffs on select US imports, including medical equipment, ethane, and aircraft leasing.
Sources familiar with the matter indicated that Chinese officials are particularly considering a waiver on tariffs for aircraft leases. However, China’s Ministry of Finance and the General Administration of Customs have yet to issue any official comments.
Michael Hart, President of the American Chamber of Commerce in China, remarked that it's encouraging to see the US and China reviewing tariffs. Hart noted that while exclusion lists for specific categories are reportedly in the works, no official announcements or policies have been released yet. Both China’s Ministry of Commerce and the US Department of Commerce are currently gathering input on the matter.
Optimism around US trade negotiations is also supporting the Greenback, with Reuters reporting progress in early talks with key Asian allies such as South Korea and Japan. The Trump administration could reduce tariffs on Chinese imports, depending on the progress of potential talks with Beijing. China expressed a willingness to engage in discussions.
However, the Swiss Franc (CHF) gained ground, reaching its strongest level in over a decade against the USD as of April 21. This strength is largely due to increased demand for safe-haven assets amid global trade uncertainties.
The appreciation of the CHF has put downward pressure on import prices, challenging the Swiss National Bank’s (SNB) inflation target of 0–2%, especially with inflation hovering near zero. With the SNB’s key interest rate at just 0.25% and likely to decline further, analysts believe that currency intervention may be a more effective approach than rate cuts. Nonetheless, the SNB has reiterated that it does not manipulate the currency, emphasizing that any interventions are solely aimed at maintaining price stability.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
West Texas Intermediate (WTI) Oil price advances on Friday, early in the European session. WTI trades at $62.84 per barrel, up from Thursday’s close at $62.61.
Brent Oil Exchange Rate (Brent crude) is also up, advancing from the $65.65 price posted on Thursday, and trading at $65.88.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- The UK Retail Sales rose 0.4% MoM in March, a positive surprise.
- Monthly core Retail Sales for the UK jumped 0.5% in March.
- GBP/USD keeps range near 1.3280 after upbeat UK consumer data.
The United Kingdom (UK) Retail Sales jumped 0.4% month-over-month (MoM) in March after advancing 0.7% in February, the latest data published by the Office for National Statistics (ONS) showed Friday. Markets expected a 0.4% drop in the reported month.
The core Retail Sales, stripping the auto motor fuel sales, rose 0.5% MoM, compared to the previous revised growth of 0.7% and the estimated -0.3% reading.
The annual Retail Sales in the UK rose 2.6% in March versus February’s 2.2%, while the core Retail Sales also grew 3.3% in the same month versus 1.8% previous revision. Both readings outpaced market expectations.
Market reaction to UK Retail Sales report
GBP/USD is little impressed by the upbeat UK data, trading 0.43% lower on the day at 1.3280 as of writing.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.51% | 0.45% | 0.73% | 0.22% | 0.24% | 0.53% | 0.67% | |
| EUR | -0.51% | -0.08% | 0.24% | -0.31% | -0.27% | 0.01% | 0.14% | |
| GBP | -0.45% | 0.08% | 0.31% | -0.22% | -0.21% | 0.08% | 0.18% | |
| JPY | -0.73% | -0.24% | -0.31% | -0.52% | -0.51% | -0.25% | -0.12% | |
| CAD | -0.22% | 0.31% | 0.22% | 0.52% | -0.07% | 0.30% | 0.41% | |
| AUD | -0.24% | 0.27% | 0.21% | 0.51% | 0.07% | 0.29% | 0.39% | |
| NZD | -0.53% | -0.01% | -0.08% | 0.25% | -0.30% | -0.29% | 0.11% | |
| CHF | -0.67% | -0.14% | -0.18% | 0.12% | -0.41% | -0.39% | -0.11% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
China held the Politburo meeting on Friday, with the key takeaways noted below.
- Will cut the Reserve Requirement Ratio (RRR) and interest rates in a timely manner.
- Will maintain abundant liquidity, and strengthen support for the real economy.
- Will create new structural monetary policy tools and new policy-based financial instruments to support scientific and technological innovation, expand consumption, and stabilize foreign trade.
- Will focus on stabilizing employment, enterprises, markets and expectations.
- Necessary to increase income of low- and middle-income groups.
- Necessary to vigorously develop service consumption, and enhance the role of consumption in stimulating economic growth.
- Will set up service consumption and pension reloans.
- Will accelerate the integration of domestic and foreign trade.
- Will work with the international community to uphold multilateralism and oppose unilateral bullying.
- Will continue to make efforts to prevent and resolve risks in key areas.
- For enterprises that are greatly affected by tariffs, will increase the proportion of unemployment insurance funds to stabilize jobs.
- Strengthen agricultural production and stabilize the prices of grain and other important agricultural product.
- Necessary to continuously improve the policy toolbox for stabilizing employment and stabilizing the economy.
- Will implement established policies early.
- Introduce incremental reserve policies in a timely manner according to changes in the situation.
- Strengthen unconventional counter-cyclical adjustments, and make every effort to consolidate the fundamentals of economic development and social stability.
- Will continue to implement the policy of reducing local government arrears owed to enterprises.
Market reaction
AUD/USD holds lower ground near 0.6400 following these headlines, down 0.08% on the day at the press time.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest 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 sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (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 interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence 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 influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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