Australian Dollar (AUD) regained its ground against the US Dollar (USD) on Thursday following the news that Australia is gearing up for renewed trade negotiations with the European Union (EU). The EU decided to revisit the stalled talks. During a one-hour video meeting on Wednesday evening, EU Trade Commissioner Maros Sefcovic suggested setting a new timeline to restart discussions with his Australian counterpart, Don Farrell. The previous round of extensive negotiations broke down two years ago due to disagreements over agricultural access to the EU's 450 million consumers.

The AUD/USD pair weakened after US President Donald Trump escalated trade tensions with China by raising tariffs on Chinese imports to 125%, prompting concern due to Australia's close trade ties with China.

China is increasing tariffs on all US imports to 84% and has added six American firms—such as defense and aerospace companies Shield AI and Sierra Nevada—to its trade blacklist. It also imposed export controls on a dozen US companies, including American Photonics and BRINC Drones.
China's Consumer Price Index (CPI) fell 0.1% year-over-year in March, following a 0.7% decline in February and missing the forecasted 0.1% rise. The monthly CPI inflation fell by 0.4%, worse than February's 0.2% decline and market expectations. Meanwhile, the Producer Price Index (PPI) dropped 2.5% annually in March, deeper than the 2.2% fall in February and the projected 2.3% decline.

Australia's economic outlook remains fragile, with business and consumer confidence lagging. The weak data has strengthened expectations of a more dovish Reserve Bank of Australia (RBA), with markets now pricing in up to 100 basis points in rate cuts this year—beginning in May, with further reductions expected in July and August.

Source: Fxstreet