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The AUD/USD: US Tariffs and China in Focus
For the Australian dollar, US tariff developments will continue influencing AUD/USD trends.
On February 6, Australia’s trade surplus narrowed from A$6.792 billion in November to A$5.085 billion in December. Significantly, exports rose 1.1% month-on-month, down from 4.2% in November, reflecting softer overseas demand.
An escalation in the US-China trade war could further impact Australian trade terms. Australia has a trade-to-GDP ratio of over 50%, with 20% of its workforce in trade-related jobs.
Given that China accounts for one-third of Aussie exports, a full-blown US-China trade war could impact Aussie exports, the economy, and the RBA rate path.
In December, RBA Governor Michele Bullock commented on President Trump’s policies, China, and the Australian economy, stating:
“US moves against China could affect Aussie trade terms with China, potentially impacting the Aussie economy.”
Governor Bullock’s comments suggested the need for policy easing if there is a US-China trade war. A more dovish RBA rate path would weaken Aussie dollar demand.
For a comprehensive analysis of AUD/USD trends and trade data insights, visit our detailed reports here.
Australian Dollar Daily Chart
Turning to the US session, softer US labor market data could narrow the US-Aussie interest rate differential. Rising bets on an H1 2025 Fed rate may drive the AUD/USD pair above the 50-day EMA, bringing the $0.63623 resistance level into play.
Conversely, tighter US labor market conditions may sink Fed rate cut bets, potentially pulling the pair toward $0.61500 and the upper band of the descending channel.
Additionally, US-China tariff developments remain a risk factor. The AUD/USD pair could break out if the US and China progress toward a trade agreement.
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