04 Apr 2025

The AUD/USD pair experiences significant selling pressure on Friday, influenced by multiple factors. The ongoing US-China trade conflict, a prevailing risk-averse sentiment, and expectations of a rate cut by the Reserve Bank of Australia (RBA) are all contributing to the Australian Dollar's decline. Despite a general trend of USD selling, this does not provide support for the pair as traders await the US Non-Farm Payroll (NFP) report.

During the Asian trading session on Friday, the AUD/USD pair faces considerable downward momentum, moving away from a nearly three-week peak near the 0.6400 level reached the previous day. This sharp intraday decline pushes the spot price down to a new daily low around the 0.6245 mark in the final hour, driven by a confluence of factors.

US President Donald Trump announced reciprocal tariffs of at least 10% on all imports, with China facing tariffs as high as 54% under this new policy. In retaliation, China's Commerce Ministry declared its intention to implement countermeasures to protect its rights and interests. This development heightens the risk of further escalation in the trade conflict between the two largest economies, significantly impacting the Australian Dollar (AUD), which is often viewed as a proxy for China.

Trump's extensive trade tariffs have raised alarms regarding global economic growth and the potential for a recession in the United States, which continues to negatively impact investor sentiment, as reflected in the widespread declines across global equity markets. Additionally, speculation that a slowdown driven by tariffs may compel the Reserve Bank of Australia (RBA) to implement up to four interest rate cuts in 2025 further diverts investment away from the Australian dollar, which is viewed as riskier.

Conversely, the US Dollar (USD) is finding it difficult to build on the previous day's slight recovery from its lowest point since October, amid expectations that the Federal Reserve (Fed) will soon resume its cycle of rate cuts. However, this situation does not provide significant support for the AUD/USD pair. Traders are now anticipating the upcoming release of the US Nonfarm Payrolls (NFP) report for new direction. Despite this, spot prices are still poised to experience modest losses for the week.