The Australian Dollar (AUD) has fallen against the US Dollar (USD), ending a six-day winning streak. The decline follows the release of Australia’s March employment data, which showed a slight increase in the unemployment rate to 4.1%, slightly better than the expected 4.2%. However, employment growth was lower than expected, with a gain of 32,200 jobs, falling short of the forecasted 40,000.
While the AUD faced downward pressure, it found some support due to improved global risk sentiment after US President Donald Trump announced exemptions for key technology products from proposed tariffs. These exemptions, covering items like smartphones, semiconductors, and solar cells, mainly benefit goods produced in China, Australia’s largest trading partner and a significant buyer of its commodities.
However, markets remain cautious due to ongoing uncertainty regarding US trade policy. The Trump administration is now considering tariffs on semiconductors and pharmaceuticals. Domestically, the Reserve Bank of Australia‘s (RBA) April policy meeting minutes highlighted uncertainty regarding the timing of future interest rate changes. While the RBA suggested that May could be an appropriate time to reassess monetary policy, no firm decisions have been made. Market expectations currently point to a 25-basis point rate cut in May, with about 120 basis points of easing expected over the next year. The upcoming employment report on Thursday is anticipated to provide crucial labor market data, potentially influencing the RBA’s next move.
Meanwhile, the US Dollar is gaining ground, with the US Dollar Index (DXY) rising to nearly 99.60. The US economy showed strength as Retail Sales rose 1.4% in March, surpassing expectations of a 1.3% increase. This follows a 0.2% increase in February. A recent consumer sentiment survey from the Federal Reserve Bank of New York revealed growing concerns about higher inflation, weaker job prospects, and worsening credit conditions in the US. Additionally, Atlanta Fed President Raphael Bostic suggested that the US central bank still faces a long road to its 2% inflation target, raising doubts about the likelihood of further interest rate cuts.
US Consumer Price Index (CPI) inflation eased to 2.4% year-over-year in March, down from 2.8% in February and below the market forecast of 2.6%. Core CPI, which excludes food and energy prices, rose by 2.8%, missing the expected 3.0%. On a monthly basis, headline CPI fell by 0.1%, while core CPI edged up by 0.1%.
In Australia, the Westpac Leading Index’s six-month annualized growth rate slowed to 0.6% in March from 0.9% in February, signaling weaker economic momentum.
Elsewhere in Asia, China’s economy grew at an annual rate of 5.4% in the first quarter of 2025, exceeding market expectations of 5.1%. However, on a quarterly basis, GDP growth was 1.2%, slightly missing the forecasted 1.4%. China’s Retail Sales surged by 5.9%, well above expectations of 4.2%, and Industrial Production also outperformed, rising 7.7%.
On the technical front, the AUD/USD pair is trading near the 0.6360 mark. Despite the recent pullback, indicators suggest a bullish bias remains intact, with the pair holding above its nine-day Exponential Moving Average (EMA) and the 14-day Relative Strength Index (RSI) staying above 50. Immediate resistance is seen at the 0.6400 level, with further resistance at the four-month high of 0.6408. Key support lies at the 9-day EMA around 0.6285, with a break below this level potentially signaling further downside towards the 0.5914 region, its lowest since March 2020.
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