Australian dollar climbs, China holds key lending rates

The Australian dollar has posted gains on Monday. In the North American session, AUD/USD is trading at 0.6408, up 0.58% on the day.

US dollar slides as Trump threatens to fire Powell

The US dollar has retreated against the major currencies on Monday, including against the Australian dollar. The greenback has taken a hit after President Trump's top economic advisor said that Trump was considering the dismissal of Fed Chair Jerome Powell.

Trump has been increasingly critical of Powell for not lowering interest rates and said last week that "Powell's termination cannot come fast enough". Trump fired his latest salvo after Powell said that US tariffs would raise inflation and that the Fed could find itself having to balance keeping a lid on inflation and supporting economic growth. Powell added that tariffs are "likely to move us further away from our goals", a statement which surely has irritated the President.

PBOC holds rates after strong data

China's central bank kept its loan prime rates unchanged on Monday, as expected, with the 1-year LPR remaining at 3.1%. The PBOC's decision reflected solid economic data which was stronger than expected. GDP rose 5.4% y/y in the first quarter and retail sales and industrial output easily beat the forecast.

China's April data, which will be released next month, will reflect the impact of the US tariffs. The US-China trade war has escalated and will likely mean higher inflation and lower growth for China's economy. On Monday, China warned countries against negotiating tariff exemptions with the US at China's expense.

Australia is closely following the US-China trade war, as China is Australia’s largest trading partner.

AUD/USD Technical

• There is resistance at 0.6422 and 0.6467
• 0.6348 and 0.6303 are the next support levels