Australian Dollar under pressure as US-China trade talks shape global sentiment

• The US Dollar strengthens as trade talks between the US and China progress.
• Chinese copper production expands as domestic supply meets demand.
• The PBoC continues to reduce its Gold purchases amid rising prices.
• The Fed is expected to hold rates steady at 4.25%-4.50% through mid-2025.

The Australian Dollar (AUD) is facing downward pressure as global trade dynamics shift, particularly between the United States (US) and China. Despite signs of stronger Chinese copper production, trade agreements and Federal Reserve (Fed) policies continue to shape investor sentiment, with the Fed expected to hold rates steady through the next few months.

Daily digest market movers: USD surges as trade war cools

• The US Dollar gains as the DXY approaches key resistance levels after news of a 90-day tariff pause between the US and China.
• China's copper production shows signs of expansion, alleviating concerns about global supply shortages.
• The People's Bank of China (PBoC) reduced its Gold purchases, marking the lowest buying activity in months.
• Fed's stance on monetary policy remains firm, with no rate cuts expected until late 2025.
• The Australian Dollar struggles against a strong US Dollar as the markets digest the impact of trade talks and Fed policy.
• The market is increasingly pricing in a protracted period of rate cuts by the Fed, starting as soon as September 2025.
• Copper ore imports in China rose to record levels, signaling robust domestic production.
• The PBoC's Gold reserves saw a small increase, though the pace of purchases has slowed.
• The US Dollar continues to be supported by strong Treasury yields, particularly as the 10-year yield reaches 4.45%.
• Commodity markets are experiencing mixed signals, with Gold prices weakening while WTI crude shows signs of recovery.
• The global economic outlook is in flux, with many analysts expecting a slowdown due to ongoing trade uncertainties.
• As trade tensions ease, the AUD benefits from a reduced risk premium, but remains under pressure against the US Dollar.
  

Technical Analysis: Bear knocks on the door

The AUD/USD pair is showing bearish momentum, currently trading around 0.6370, down approximately 0.66% on the day. The Relative Strength Index (RSI) is neutral, hovering in the 50s, while the Moving Average Convergence Divergence (MACD) suggests a sell signal. Short-term moving averages, including the 20-day and 200-day Simple Moving Averages (SMAs), indicate selling pressure, while the 100-day SMA signals a potential buy. Key support levels are found at 0.6366, 0.6352 and 0.6344, with resistance at 0.6387, 0.6392 and 0.6395. The technical outlook remains negative, particularly with the recent decline in commodity prices and the strength of the US Dollar.