Australian Dollar (AUD) recovers its losses from the previous session against the US Dollar (USD) on Monday. The AUD/USD pair held firm following the People's Bank of China's (PBoC) decision to keep its Loan Prime Rates unchanged, maintaining the one-year rate at 3.10% and the five-year rate at 3.60%.

The AUD/USD pair gained support as the USD weakened amid growing concerns over the economic fallout from US tariffs. The AUD was further buoyed after US President Donald Trump announced exemptions for key technology products — many of which are made in China, Australia's top trading partner and a major consumer of its commodity exports — from the proposed "reciprocal" tariffs.

Nonetheless, tensions remained as the White House imposed tariffs on Chinese ships docking at US ports, risking disruption to global shipping routes. However, late Thursday, Trump noted that China had made several overtures and stated, "I don't want to go higher on China tariffs. If China tariffs go higher, people won't buy." He also expressed optimism that a trade deal could be reached within three to four weeks.
The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, dropped over 0.50%, trading around 98.50, its lowest level since April 2022, at the time of writing. The Greenback faces headwinds as the 2-year yield on US Treasury bonds has depreciated by more than 1%, standing at 3.75%.
Federal Reserve (Fed) Chair Jerome Powell warned that a sluggish economy paired with persistent inflation could challenge the Fed's objectives and raise the risk of stagflation. In political developments, reports on Thursday suggested President Trump's frustration with Fed Chair Powell, even considering his removal. Although markets showed little immediate reaction, White House economic adviser Kevin Hassett confirmed that Trump is exploring the possibility.
The US Department of Labor reported on Thursday that Initial Jobless Claims fell to 215,000 for the week ending April 12, below expectations and down from the previous week's revised figure of 224,000 (originally 223,000). However, Continuing Jobless Claims rose by 41,000 to 1.885 million for the week ending April 5.
The US Consumer Price Index (CPI) inflation eased to 2.4% year-over-year in March, down from 2.8% in February and below the market forecast of 2.6%. Core CPI, which excludes food and energy prices, rose 2.8% annually, compared to 3.1% previously and missing the 3.0% estimate. On a monthly basis, headline CPI dipped by 0.1%, while core CPI edged up by 0.1%.

Source; Fxstreet