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The Australian dollar (AUD) edged lower on Tuesday after rising more than 0.50% against the U.S. dollar (USD) in the previous session. The AUD/USD pair depreciated while the U.S. dollar strengthened as global trade tensions eased.
U.S. President Donald Trump expressed a willingness to reduce tariffs on China, while Beijing exempted some U.S. goods from 125% tariffs. The move sparked hopes that the long-running trade war between the world’s two largest economies may be coming to an end. Chinese Foreign Minister Wang Yi said on Tuesday that making concessions and backing down would only embolden bullies, stressing that dialogue is key to resolving differences.
President Trump said progress had been made and that he had spoken with Chinese President Xi Jinping. However, a spokesperson for the Chinese Embassy in the United States strongly denied any current negotiations with the United States on Friday, saying “there are no consultations or negotiations between China and the United States on tariffs.” The spokesperson called on Washington to “stop making chaos.”
Traders will now turn their attention to the upcoming Australian inflation report due on Wednesday, which could affect market expectations for Reserve Bank of Australia policy. The Reserve Bank of Australia is widely expected to cut interest rates by another 25 basis points in May to counter the potential impact of newly imposed US tariffs.
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