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The Australian dollar (AUD) was slightly lower against the U.S. dollar (USD) on Friday, retreating from gains made in the previous session. The decline in the AUD/USD currency pair was driven by ongoing US-China trade tensions, with Australia’s close trading ties with China making it particularly sensitive to developments between the two largest economies.
Traders continue to focus on fluid global trade patterns. Market sentiment remained mixed following reports that the Trump administration may reduce tariffs on Chinese imports depending on progress in potential negotiations with Beijing. China has said it is willing to engage in discussions, provided the United States stops making new threats. However, U.S. Treasury Secretary Scott Bessent played down the optimism, clarifying that no unilateral tariff reduction proposals had been made and formal negotiations had yet to begin.
China’s Ministry of Finance said on Friday that global economic growth remains weak and tariffs and trade wars continue to undermine economic and financial stability. The ministry called on all parties to improve the international economic and financial system by strengthening multilateral cooperation, Reuters reported.
On Thursday, Westpac predicted that the Reserve Bank of Australia (RBA) will cut interest rates by 25 basis points at its upcoming meeting on May 20. The RBA has adopted a data-driven approach in recent quarters, making it difficult to predict its actions beyond its next meeting.
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