Australian Dollar Holds Gains as US Dollar Softens Ahead of UoM Consumer Sentiment Index

AUD Rebounds as Trade Tensions Ease, US-China Concerns Linger

The Australian Dollar (AUD) has broken its two-day losing streak against the US Dollar (USD) on Friday, underpinned by easing global trade tensions. The AUD/USD pair is supported by a deal in principle between the US and China, in which the US would reduce tariffs on Chinese imports from 145% to 30%, while China would cut tariffs on US goods from 125% to 10%. This trade agreement has boosted market sentiment, along with optimism surrounding the potential US-Iran nuclear deal.

However, the Australian Dollar's gains have been somewhat limited by news that the Trump administration plans to add several Chinese chipmakers to its export blacklist, or "entity list." Given Australia's close trade relationship with China, any disruptions in the Chinese market can have a significant impact on the Australian Dollar.

Despite this, the broader risk-on sentiment and improved market outlook have provided support to the AUD, as traders remain cautious ahead of the upcoming University of Michigan Consumer Sentiment Index release, which may further influence market movements.