The Australian Dollar pares losses against the USD amid stronger domestic PMIs, though Fed rate hike bets and trade risks limit gains.
The AUD/USD pair rebounds during Friday’s Asian session, recovering from Thursday’s slide to a weekly low near 0.6900. Buyers step in after domestic flash PMIs show private sector expansion for a second month, supporting the Aussie. However, gains remain capped by broader USD strength and rising geopolitical risks.
The USD holds near five-week highs, bolstered by Fed rate hike expectations amid elevated oil prices and inflation concerns. US-Iran tensions and President Trump’s new tariffs—targeting 60 trading partners with 10%-12.5% levies—further dampen risk appetite, reinforcing the Greenback’s safe-haven appeal. The mixed backdrop leaves traders cautious about the AUD’s near-term trajectory.
Earlier data showed Australian employment growth exceeding forecasts, adding to signs of economic resilience. Still, the pair’s upside may be limited as markets weigh the impact of US trade policy and monetary policy divergence.