Australian Dollar Remains Weak After China CPI Data
The Australian dollar (AUD) weakened against the US dollar (USD) on Thursday (10/4), retracing some of its more than 3% gain from the previous session. The AUD/USD pair weakened after US President Donald Trump escalated trade tensions with China by raising tariffs on Chinese imports to 125%, raising concerns given Australia’s close trade ties with China.
China increased tariffs on all US imports to 84% and added six American companies—such as defense and aerospace firm Shield AI and Sierra Nevada—to its trade blacklist. China also imposed export controls on dozens of US companies, including American Photonics and BRINC Drones.
China’s Consumer Price Index (CPI) fell 0.1% year-on-year in March, following a 0.7% decline in February and missing estimates for a 0.1% increase. Monthly CPI inflation depreciated by 0.4%, worse than a 0.2% decline in February and market expectations. Meanwhile, the Producer Price Index (PPI) fell 2.5% on-year in March, deepening the 2.2% decline in February and the 2.3% decline forecast.
Australia’s economic outlook remains fragile, with business and consumer confidence declining. The weak data has reinforced expectations for a more dovish Reserve Bank of Australia (RBA), with markets now pricing in up to 100 basis points of interest rate cuts this year—starting in May, with further cuts expected in July and August.
Source: FXStreet
