Insights 
AUD/USD hovers near 0.6400 after recent Chinese trade data. The pair had previously faced downward pressure due to stalled US-China trade negotiations.
China’s trade balance for April stood at $96.18 billion, exceeding expected figures yet slightly below the previous $102.63 billion. The Australian Dollar remains sensitive to Chinese economic performance due to their strong trading relationship.
Chinese Trade Figures
In April, Chinese exports grew by 8.1% year-on-year, surpassing expectations but down from 12.4% previously. Imports contracted slightly by 0.2%, showing improvement over both anticipated and prior figures.
China’s trade surplus with the US decreased in April to $20.46 billion from March’s $27.6 billion. Discussions persist on US-China tariffs, contributing to market uncertainty.
Regarding the Australian Dollar, key factors include the Reserve Bank of Australia’s interest rates and Australia’s export prices for goods like Iron Ore. As China’s largest trading partner, Australia’s currency is influenced by the Chinese economy’s health.
Iron Ore’s price changes also impact the Australian Dollar, given the significance of this commodity in Australian exports. A strong Trade Balance supports the Australian Dollar, while a weaker one can cause depreciation.
Market Positioning and Volatility
With AUD/USD holding steady around the 0.6400 level, following the latest figures out of China, a few things have come into focus. The data, while not far off expectations, still delivered a slight miss when compared to last month’s totals. There’s a moderate pullback in Chinese exports and a smaller shortfall in imports – both of which suggest a shift in foreign demand patterns and perhaps an easing of global inventory builds.
Looking at the surplus figure—China booked $96.18 billion for April—it remains robust, though shy of March’s $102.63 billion. Taken together with a narrowing surplus with the US, from $27.6 billion to $20.46 billion, this suggests there’s some softening in key trade routes, or at least a recalibration of shipping volumes.
Now, why this matters for market positioning is relatively straightforward. Australia’s economic health is closely linked to how China spends, particularly on input-heavy manufacturing. Iron Ore exports are often treated as a bellwether, and any moderation in China’s construction or steel output can feed into the Australian Dollar swiftly.
On the trade side, the 8.1% year-on-year export growth out of China looks optimistic, though it’s cooling from the prior 12.4%. That’s a deceleration worth tracking, especially since the domestic rebound story in China has remained uneven. At the same time, imports only edged down by 0.2% instead of a sharper drop-off, which points to tentative signs of stabilisation in Chinese consumer or industrial buying. It may not spell a broad pickup, but it’s less of a drag than anticipated.
This kind of environment tends to create choppier sessions. With the AUD often treated as a proxy for Chinese activity, any forward-looking weakness or resilience in Chinese data will almost never stay local. There are also adjustments happening behind the scenes as traders weigh the Reserve Bank’s next steps on rate policy, which goes hand-in-hand with how inflation trends unfold domestically. There’s little room for policy surprises unless macro conditions shift dramatically.
Looking ahead, we might want to watch the Iron Ore flow and pricing closely, not only for their headline impact but also in terms of their knock-on effects on Australia’s terms of trade. Given AUD’s historical tendency to react sharply to commodity-linked variations, even minor interruptions in seaborne shipments or demand forecasts out of China can provoke noticeable volatility in the pair.
With talk around US-China tariff frameworks still unresolved, skepticism continues to shape sentiment. Elevated uncertainty won’t vanish without clarity, and that bleeds into correlated assets. As such, it would make sense to assess positioning through the lens of near-term volatility bands and remain aware of offshore developments on both sides of the Pacific.
In short, the current stretch near the 0.6400 handle may not hold, given the underlying cadence of macro numbers and external influence. It’s not simply a question of risk-on or risk-off anymore—it’s about the directions in which trade flows evolve, and how well they synchronise with expectations vs. previous momentum.
