The Australian dollar fell against the US dollar on Monday as investors moved toward safer assets following signs of easing tensions between the United States and China. The shift strengthened the greenback, putting pressure on risk-sensitive currencies like the Aussie.
The US dollar index climbed to a two-week high after reports indicated that Washington and Beijing were making progress in trade and diplomatic discussions. Markets interpreted the news as a signal that global stability could improve, boosting demand for the US dollar’s relative safety. In contrast, the Australian dollar, often seen as a proxy for Chinese growth, slipped by nearly 0.5% to 0.6480 against the greenback.
AUD/USD 1-D Chart as of April 28th, 2025 (Source: TradingView)
Analysts noted that while improved US-China relations generally support global risk sentiment, they can also bolster expectations of stronger US economic performance, reinforcing the dollar’s strength. “There’s a tug of war between global optimism and the underlying demand for US assets,” one strategist said. “For now, the dollar is winning.”
Adding to the greenback’s momentum were stronger-than-expected US economic data released late last week, which helped fuel speculation that the Federal Reserve could delay interest rate cuts longer than previously anticipated. A more resilient US economy tends to attract foreign investment, further lifting the dollar.
Markets will be closely watching upcoming US inflation figures and fresh comments from Federal Reserve officials later this week. Meanwhile, the Australian dollar could face additional headwinds if China’s economic recovery continues to show uneven signs, putting further pressure on Australia’s export-driven economy.
