Market Overview
Global markets faced significant pressure this week, as recession fears and escalating trade frictions triggered sharp volatility. While Wall Street experienced a major correction, Chinese stock markets continued their upward momentum. The U.S. dollar index saw a notable 3% decline before paring some losses, fluctuating within the 103–104 range and ultimately closing the week down 0.06% at 103.83.
The Australian dollar traded around 0.63 against the U.S. dollar, briefly dipping to a low of 0.6259 before rebounding above 0.6300. The AUD found support from a combination of factors, including improved market risk sentiment, signs of stabilization in U.S. equities, growing optimism over a potential ceasefire in the Russia-Ukraine conflict, and the easing of U.S. tariff threats against Canada. These factors collectively helped sustain the AUD’s resilience.
Signs of Economic Recovery in Australia
Indicators of economic recovery in Australia have emerged, with consumer confidence showing a notable rebound. The Westpac Consumer Confidence Index rose to 95.9 in March, marking a 4% month-on-month
increase, driven by easing cost-of-living pressures and expectations of rate cuts by the Reserve Bank of Australia (RBA). Although the “household financial conditions” and “major purchase intentions” indices remain below long-term averages, improvements in inflation and interest rates led to respective increases of 2.1% and 6.9% in March.
Forward-looking economic indicators remain optimistic, with positive expectations for the labor market further boosting confidence. However, the National Australia Bank (NAB) business survey indicates that the recovery remains slow and challenging. The Business Conditions Index stagnated at +4 in February, reflecting continued weakness in trading conditions and corporate profitability. Business confidence remains neutral, aligning with expectations of a “moderate demand recovery.” Meanwhile, rising trade tensions and the upcoming federal election may prompt businesses to adopt a cautious approach in the short term.
Outlook for the AUD
In the coming weeks, the AUD is likely to establish an upward channel, largely unaffected by short-term market fluctuations. The growing uncertainty surrounding U.S. policies has weakened the dollar’s “exceptionalism” advantage, prompting increased market caution. Additionally, the narrowing interest rate differential between the AUD and USD is expected to support the Australian currency. Since the beginning of the year, despite experiencing significant fluctuations, the AUD has maintained a moderate and consistent uptrend.
From a technical perspective, the key support level for AUD/USD is expected at 0.6225, which should provide a solid foundation for further gains. The first major resistance level is at 0.6380, and a breakout above this level could pave the way for further upside. Given U.S. policy uncertainties and the positive impact of interest rate differentials, a sharp decline in the AUD appears unlikely in the short term.
Conclusion
Amid rising global economic uncertainty and intensifying trade frictions, the AUD has demonstrated relative stability. Market risk appetite has improved, and uncertainty surrounding U.S. economic policies has contributed to the AUD’s sustained moderate uptrend. While challenges remain in Australia’s economic recovery, positive forward-looking indicators and interest rate advantages continue to provide support. Looking ahead, the AUD’s upward trajectory is gradually taking shape, and we maintain an optimistic outlook for its performance.
