The Australian Dollar (AUD) weakens against the US Dollar (USD) on Wednesday, weighed down by broad risk aversion.

Concerns intensified due to policy shifts by US President Donald Trump, particularly tariffs that increased the likelihood of a prolonged trade war.

Australian Prime Minister Anthony Albanese stated on Wednesday that "Australia will not impose reciprocal tariffs on the United States (US)" as "retaliatory measures would only raise costs for Australian consumers and drive inflation. His remarks follow Trump's decision to implement a 25% tariff on all imported steel and aluminum.

The AUD also faces pressure from ongoing economic uncertainties and persistent deflationary risks in China, Australia's largest trading partner, as traders await key policy announcements from Beijing.

Market participants remain focused on the Reserve Bank of Australia's (RBA) policy outlook, especially after last week's strong economic data reduced expectations of further rate cuts. Economic growth surpassed forecasts, marking its first acceleration in over a year.

Source: FXStreet