Insights 
The AUD/USD increased significantly above 0.6400 due to eased US-China trade tariffs, set to drop by 115% for 90 days. The value peaked around 0.6410 amid European trading as both nations moved away from trade conflict, bolstering antipodean currencies closely tied to China.
Australian Dollar observed varied gains against major currencies, especially strengthening against the Canadian Dollar. US Treasury confirmed reduced tariffs to 10% and 30% for 90 days, positively impacting the US Dollar alongside hopes for softened trade war impacts.
Upcoming Australian Labour Market Data
The forthcoming Australian labour market data for April is projected to show an addition of 20K jobs with an unchanged unemployment rate at 4.1%. Concurrently, US CPI data, expected to exhibit stable year-on-year rises of 2.4% and 2.8% in headline and core readings respectively, awaits release.
The US Dollar remains pivotal in global foreign exchange, trading substantial daily volumes. Driven by Federal Reserve monetary policies, shifts in this currency often depend on interest rates and inflation targets, with quantitative easing and tightening having distinct impacts on its value.
As AUD/USD pushed confidently above the 0.6400 handle, market tone showed a distinct shift, buoyed by the diplomatic pivot between Washington and Beijing. What we saw was a direct outcome of coordinated reductions to trade tariffs—cuts that had previously pressured global sentiment, especially among currencies tied to demand from China. When the reduction was announced, it wasn’t merely symbolic; both 10% and 30% band tariffs are set to be relaxed for a finite window of 90 days, and this timeframe already has market participants adjusting models.
European trading hours carried this momentum further, lifting the pair to around 0.6410. That isn’t coincidental. Sentiment across risk-sensitive currencies has long mirrored developments tied to commodities and Asian trading partners, particularly when Chinese trade figures improve. These conditions will need monitoring, particularly as Chinese imports are likely to ramp up following the tariff reprieve.
Elsewhere, the Australian Dollar outpaced several peers—with the Canadian Dollar notably weaker in contrast. That might seem like a minor pairing shift, but in reality, it’s useful in gauging relative commodity exposure expectations between economies that are otherwise in similar export categories. It’s also an early sign of portfolio rebalancing, possibly anticipatory of the upcoming data releases both in Australia and the United States.
Domestic Economic Indicators
Now, back to the domestic side. This week’s labour force update out of Australia could guide expectations for household consumption and wage growth. A headline figure of 20,000 jobs created and a steady 4.1% unemployment rate won’t likely move the Reserve Bank’s stance on its own, but if either number surprises, we ought to watch short-dated interest rate expectations. Higher-than-expected job growth could briefly lift the Aussie, though any tailwind might be faint if global drivers continue to dominate risk narratives.
Attention will also turn to stateside inflation. The US Consumer Price Index numbers due are projected to show little change, sitting at 2.4% year-on-year for headline and 2.8% for core. These levels, while under the Federal Reserve’s upper tolerance, continue to infer sticky inflation. That’s where policy outlook becomes key. Any hints of delayed easing—or even maintenance of higher rates—could tilt US Dollar strength just enough to cap AUD attempts at prolonged rallies.
From our standpoint, activity in US treasuries still acts as a broader signal. Rates determine the carry trade, and once those expectations adjust, we need to be prepared for abrupt market repricings. Keep in mind, the Fed’s dual mandate means short-term surprises in price movement rarely go unanswered—they almost always feed directly into forward guidance.
Quantitative policy still casts a shadow over medium-term forecasting. As tightening measures hold, the US Dollar typically benefits from a scarcity premium, drawing capital away from higher-beta currencies. Although we’re in a short-term relief period from tariff stress, the path for rate differentials remains complex. Treasury markets may confirm or reject the present enthusiasm.
In sessions ahead, trading strategies will need tighter alignment with upcoming data points—particularly USD inflation and Australian employment figures. We’ve already seen heightened sensitivity to central bank narratives this quarter, and positioning too far ahead of major data has led to unnecessary exposure. Sticking close to fundamentals and being ready to pivot quickly remains key.
