AUD/USD Weakens as Markets Eye US Jobs Report and Trade Talks

Australian Dollar Remains Under Pressure Before US Jobs Data

The Australian Dollar (AUD) continues to slide against the US Dollar (USD) as the market adopts a cautious tone ahead of the US Nonfarm Payrolls (NFP) report, due later today. The AUD/USD pair trades with a softer bias, reflecting both global uncertainty and domestic policy concerns.

US Dollar Strengthens Ahead of NFP

The US Dollar has been recovering as expectations mount around a potential 130,000 job increase in the May NFP report, with the Unemployment Rate expected to hold steady at 4.2%. Strong labor market data could support the case for a firmer USD, pressuring AUD/USD further.

US-China Trade Talks: Progress but Tension Remains

Investor sentiment improved slightly following a phone call between President Trump and President Xi Jinping, described by Trump as “productive.” However, behind closed doors, tensions remain in negotiations, potentially delaying a lasting agreement.

Because Australia’s economy is tightly linked to China’s, any deterioration in Chinese economic conditions or trade relationships often weighs on the AUD, making the currency highly sensitive to developments in US-China trade policy.

RBA Outlook: Dovish Bias Adds to AUD Weakness

The Reserve Bank of Australia (RBA) revealed in its May meeting minutes that the case for a 25 basis point rate cut was becoming more compelling. RBA Assistant Governor Sarah Hunter added that heightened US tariffs could drag on global growth and lead to weaker Australian investment and employment.

These dovish signals add pressure to the AUD, particularly in an environment where the US economy shows resilience and risk sentiment remains volatile.