The AUD/USD pair remains under selling pressure around 0.6280 during the early Asian session on Thursday. The Australian Dollar (AUD) managed to trim some of its losses against the U.S. Dollar (USD) following stronger-than-expected economic data from China. However, the upside remains limited as traders remain cautious after U.S. President Donald Trump announced sweeping global tariffs, igniting risk-off sentiment in the markets.
US Tariffs Weigh on Market Sentiment
On Wednesday, the Trump administration unveiled plans to impose a 10% baseline tariff on all U.S. imports and additional duties on around 60 countries with significant trade imbalances with the U.S. China bore the brunt of the tariffs, with duties on many Chinese goods expected to exceed 54%. This policy announcement triggered a risk-off reaction in the markets, putting pressure on the Aussie due to China’s critical role as Australia’s largest trading partner.
Positive Chinese Economic Data Offers Limited Support
Despite the bearish global outlook, China’s Caixin Services Purchasing Managers’ Index (PMI) for March showed an improvement, rising to 51.9 from 51.4 in February, beating expectations of 51.6. This positive data may help cushion the AUD’s decline, as stronger economic performance from China often benefits Australian exports.
Australian Trade Data Shows Decline in Surplus
Further weighing on the AUD, data released by the Australian Bureau of Statistics on Thursday revealed a decrease in Australia’s trade surplus to 2.968 billion AUD in February, down from expectations of 5.6 billion AUD. Exports fell by 3.6% month-on-month, while imports rose by 1.6%. These figures point to a slowdown in Australia’s trade sector, adding to concerns over the country’s economic outlook.
US Economic Data in Focus
In contrast, concerns over a potential slowdown in the U.S. economy may limit the upside for the USD. Traders are awaiting key U.S. economic reports, including the weekly Initial Jobless Claims, the final S&P Global Services PMI, and the ISM Services PMI. Weaker-than-expected outcomes in these reports could undermine the USD, providing some support for AUD/USD in the near term.
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