Ella 
AUD/USD is trading in positive territory around 0.6380 during Monday’s Asian session, supported by a weaker U.S. dollar (USD). Traders were watching developments in U.S.-China trade discussions as tensions between the two largest economies escalate.
The Australian dollar (AUD) was slightly higher against the U.S. dollar (USD) after U.S. President Donald Trump announced exemptions for critical technology products from newly proposed “reciprocal” tariffs. The exemptions, which include smartphones, laptops, semiconductors, solar cells and liquid crystal displays, mainly benefit products made in China, Australia’s largest trading partner and a major buyer of its merchandise exports.
On the other hand, uncertainty remains about the timing of the next rate cut by the Reserve Bank of Australia (RBA) as trade tariff risks dampen the economic outlook. The market is currently pricing in a 25 basis points (bps) rate cut in May, for a total of around 120 bps for the year. The RBA’s dovish bets could weigh on the Australian dollar against the U.S. dollar in the short term.
Late on Monday, the People’s Bank of China (PBOC) was widely expected to keep interest rates unchanged in its monthly benchmark rate fix, a Reuters poll showed, but markets were betting more stimulus would be rolled out soon amid an escalating U.S.-China trade war.
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