The Australian Dollar (AUD) strengthened on Wednesday, with the AUD/USD pair gaining traction after the United States (US) reported mixed ISM Services PMI and softer ADP Employment Change figures. The US Dollar (USD) remains under pressure amid concerns over slowing economic momentum, keeping the Aussie buoyed.
Post-ISM, ADP data shape currency flows amid tariff warnings
Renewed US tariffs on Chinese imports add more strain to global risk sentiment. The 10% levy from President Donald Trump compounds earlier duties and the potential for Chinese retaliation remains high, particularly concerning for commodity-linked currencies like the Aussie, given China's status as Australia's largest trade partner.
On the US data front, the ISM Services PMI showed continued expansion at 53.5, while the ADP report indicated softer private-sector job gains compared to forecasts. These mixed signals weigh on the US Dollar, as traders assess the likelihood of Federal Reserve (Fed) policy adjustments in response to possible economic headwinds.
The Reserve Bank of Australia (RBA) has held off announcing more rate cuts since lowering the Official Cash Rate by 25 basis points to 4.10% in February, reiterating concerns about inflation. Market expectations for additional easing remain uncertain, depending on upcoming data.
Investors cautiously evaluate riskier assets as the US Dollar's softness fails to spark a strong Aussie rally. Demand for Australian commodity exports could suffer if trade conflicts escalate. Meanwhile, the Aussie retains some bullish impetus on the back of the subdued Greenback.

Source: Fxstret