AUD/USD gains traction to near 0.6380 in Monday’s early Asian session.
Trump exempted key technology products from his new reciprocal tariffs, boosting the Aussie.
Traders brace for the PBoC interest rate decision later on Monday, with no change in rate expected.
The AUD/USD pair trades in positive territory around 0.6380 during the Asian session on Monday, bolstered by the weaker US Dollar (USD). Traders await the developments surrounding the United States and China trade discussions, while tensions between the two largest economies are intensifying.
The Australian Dollar (AUD) edges higher against the Greenback after US President Donald Trump announced exemptions for key technology products from the newly proposed “reciprocal” tariffs. These exemptions, which include smartphones, laptops, semiconductors, solar cells, and flat-panel displays, mostly benefit products manufactured in China, Australia's biggest trade partner and a major buyer of its commodity exports.
On the other hand, uncertainty lingers around the timing of the Reserve Bank of Australia's (RBA) next rate cut, as trade tariff risks dampen the economic outlook. Markets are currently pricing in a 25 basis points (bps) cut in May and around 120 bps of total easing over the year. The dovish bets of the RBA could drag the Aussie lower against the USD in the near term.
Later on Monday, the People's Bank of China (PBOC) is widely expected to leave its benchmark lending rates unchanged at the monthly fixing, a Reuters survey showed, but markets are wagering on more stimulus being rolled out soon in the face of an escalating US-China trade war.
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
