FX.co ★ Australian Dollar Weakens

On Friday, the Australian dollar edged closer to $0.650, largely influenced by the Reserve Bank of Australia's (RBA) dovish demeanor, which overshadowed any cautious optimism arising from the renewed US-China trade discussions. Minutes from the RBA's May meeting highlighted that policymakers found more substantial grounds for a 25 basis point rate cut, underscoring a prudent and measured approach. Sarah Hunter, RBA Assistant Governor, cautioned that elevated US tariffs alongside growing uncertainty could potentially hinder global economic growth and negatively impact Australia's economic outlook. Concurrently, a phone conversation took place between President Trump and China's President Xi Jinping on Thursday, where both leaders expressed a willingness to restart negotiations aimed at resolving the ongoing trade conflict. Although this development holds positive implications for the global economy, experts pointed out that significant tensions persist due to the absence of substantial advancements. They also identified the August 12 expiration of the 90-day truce in the US-China trade war as a significant risk factor for the Australian dollar. Nonetheless, the Aussie gained some support as increasing expectations for further Federal Reserve rate cuts applied pressure on the US dollar.