China tensions weigh on Aussie

The Australian dollar is slightly higher in Thursday trade. In the North American session, AUD/USD is trading at 0.7756, up 0.12% on the day. On the fundamental front, the RBA releases its quarterly policy statement on Friday (1:00 GMT).

Relations between China and Australia continue to spiral downwards. China has engaged in a trade war against Australia, which included tariffs on Australian wine exports in November. Last month, the Australian government made the unusual move of cancelling an infrastructure agreement between China and the State of Victoria, which was connected to China’s Belt and Road initiative. Predictably, the move was harshly criticised by the Chinese government.

The latest salvo was fired earlier on Thursday, as China said it was indefinitely suspending the China-Australia Strategic Economic Dialogue. The dialogue has been frozen since 2017, so the move appears to be largely symbolic. The huge trading relationship between the countries will likely not be affected, such as Australian exports of iron ore to China. Still, the announcement of the suspension of the dialogue was enough to send the Australian dollar briefly lower. If there are further negative political developments between the two countries, the Aussie could face a bumpy road.


Will US nonfarm payrolls exceed the one-million mark?

All eyes will be on US nonfarm payrolls for April, which will be released on Friday (12:30 GMT). The ADP Employment Report is not considered a reliable gauge for the official NFP, but investors couldn’t help notice that the ADP reading jumped to 742 thousand, up from 514 thousand. Nonfarm payrolls climbed to 916 thousand in March and with a forecast of 990 thousand, a reading above the symbolic one-million mark is certainly within reach. If nonfarm payrolls outperforms, risk sentiment would improve, which would be bearish for risk commodities like the Australian dollar.


AUD/USD Technical

  • AUD is putting pressure on resistance at 0.7787. Above, there is resistance at 0.7864
  • On the downside, there are support levels at 0.7665 and 0.7620

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.