The Australian Dollar (AUD) remains subdued against the US Dollar (USD) for the fourth consecutive day on Wednesday. The AUD/USD pair remains under pressure after Australia's monthly Consumer Price Index (CPI) showed a 2.5% year-over-year rise in January, matching December's increase. This fell short of market expectations for 2.6% growth.
China's Commerce Ministry announced on Wednesday that the country's International Trade Representative and Vice Minister of Commerce, Wang Shouwen, met with US business leaders. The discussions focused primarily on tariffs, though no further details were disclosed.
A Bloomberg report early Tuesday revealed that the Trump administration plans to tighten chip export controls on China, a key trading partner of Australia. The US is reportedly considering stricter restrictions on Nvidia chip exports and may introduce additional limitations on Chinese companies such as SMIC and CXMT.
The AUD/USD pair struggles amid growing risk sentiment after US President Donald Trump stated late Monday that broad US tariffs on imports from Canada and Mexico "will go forward" once the month-long implementation delay ends next week. Trump asserted that the US has "been taken advantage of" by foreign countries and reaffirmed his intention to impose so-called reciprocal tariffs.
Australian Dollar depreciates amid increased risk aversion
The US Dollar Index (DXY), which measures the USD against six major currencies, rises to near 106.50 with 2-year and 10-year yields on US Treasury bonds improving to 4.12% and 4.32%, respectively, at the time of writing.
Federal Reserve Bank of Chicago President Austan Goolsbee remarked on Monday that the US central bank needs greater clarity before considering interest rate cuts.
The US Composite PMI fell to 50.4 in February, down from 52.7 in the previous month. In contrast, the Manufacturing PMI rose to 51.6 in February from 51.2 in January, surpassing the forecast of 51.5. Meanwhile, the Services PMI declined to 49.7 in February from 52.9 in January, falling short of the expected 53.0.
US Initial Jobless Claims for the week ending February 14 rose to 219,000, exceeding the expected 215,000. Meanwhile, Continuing Jobless Claims increased to 1.869 million, slightly below the forecast of 1.87 million.
President Trump signed a memorandum on Friday instructing the Committee on Foreign Investment in the United States (CFIUS) to limit Chinese investments in strategic sectors. Reuters cited a White House official saying that the national security memorandum seeks to encourage foreign investment while safeguarding US national security interests from potential threats posed by foreign adversaries like China.
China released its annual policy statement for 2025 on Sunday. The statement details strategies to advance rural reforms and promote comprehensive rural revitalization. Additionally, China's state-supported developers are aggressively increasing land purchases at premium prices, driven by the government's relaxation of home price restrictions to revitalize the troubled property market.
The People's Bank of China (PBOC) injected CNY300 billion on Tuesday via the one-year Medium-term Lending Facility (MLF), maintaining the rate at 2%. Additionally, the PBOC injected CNY318.5 billion through seven-day reverse repos at 1.50%, consistent with the prior rate.
The Reserve Bank of Australia (RBA) lowered its Official Cash Rate (OCR) by 25 basis points to 4.10% last week—the first rate cut in four years.
Reserve Bank of Australia (RBA) Governor Michele Bullock acknowledged the impact of high interest rates but cautioned that it was too soon to declare victory over inflation. She also emphasized the labor market's strength and clarified that future rate cuts are not guaranteed, despite market expectations.
Source: Fxstreet
