The Australian Dollar staged a strong comeback on Wednesday, pushing the AUD/USD pair near 0.6420 during the European session. This recovery follows a sharp pullback to 0.6350 earlier in the day, which interrupted the Aussie’s rise to a four-month high of 0.6440 on Tuesday.
Driving the rebound is a renewed sense of optimism in global trade relations. U.S. President Donald Trump suggested that ongoing talks with China are progressing positively. While noting that tariffs won’t be eliminated entirely, Trump emphasized they “would not be as high as 145%.” Markets took these remarks as a de-escalation signal, boosting risk sentiment and demand for the Aussie dollar.
The AUD often serves as a proxy for Chinese economic outlook, due to Australia’s heavy export dependence on China. Consequently, any development hinting at a thaw in U.S.-China tensions tends to favor the Aussie.
Beijing Seeks Mutual Respect in Talks
The latest remarks from Chinese officials indicate Beijing’s willingness to continue trade negotiations—albeit with conditions. Guo Jiakun, spokesperson for China’s Ministry of Commerce, emphasized the need for “respect and mutual benefit” in any agreement with Washington.
Key statements from Beijing include:
- The U.S. should stop using threats to influence negotiations
- Dialogues must be conducted “on equal footing”
- Cooperation is feasible, but not under pressure
These comments underline China’s firm stance while still leaving the door open for a potential deal. For markets, this balance between assertiveness and openness is seen as a positive sign.
U.S. Data and Dollar Performance in Focus
While optimism on trade supports the Aussie, the U.S. Dollar Index (DXY) slipped back to 99.00, erasing earlier gains. Traders appeared unfazed by Trump’s assurance that he would not attempt to oust Federal Reserve Chair Jerome Powell—another move that might have sparked market volatility.
Instead, attention now turns to upcoming U.S. macroeconomic data. At 13:45 GMT, investors will closely monitor the preliminary S&P Global PMI data for April, which could provide fresh insights into the strength of U.S. business activity.
What to Watch Next:
- AUD/USD technical resistance near 0.6440
- S&P Global U.S. PMI flash data at 13:45 GMT
- Shifts in U.S.-China rhetoric as talks evolve
With geopolitical tension easing and market data on the horizon, the Aussie may be poised for further gains—provided risk sentiment holds firm.
