The Australian Dollar (AUD) continued its upward momentum for the sixth straight session on Wednesday, with the AUD/USD pair remaining resilient following the release of Australia’s Westpac Leading Index. The index, which forecasts economic growth over the next three to nine months, showed a slower pace—easing to 0.6% in March from 0.9% in February.
Supporting the Aussie further, China’s economic data came in stronger than expected. The country’s GDP expanded by 5.4% year-on-year in Q1 2025, matching Q4 2024’s pace and exceeding the 5.1% consensus forecast. On a quarterly basis, GDP rose 1.2%, slightly below the projected 1.4%, but still reflecting steady momentum.
China’s Retail Sales jumped 5.9% year-over-year in March—well above the expected 4.2% and February’s 4%—while Industrial Production surged by 7.7%, beating both the 5.6% forecast and February’s 5.9% figure.
The Aussie also found support from improved global risk sentiment after U.S. President Donald Trump announced exemptions on certain key tech products from new proposed tariffs. These exemptions include smartphones, semiconductors, computers, solar panels, and flat-panel displays—many of which are produced in China, Australia’s top trading partner and a major destination for its exports.
On the domestic front, Australia’s 10-year government bond yield edged down to 4.33% after the Reserve Bank of Australia (RBA) released minutes from its March 31–April 1 policy meeting. The minutes revealed that trimmed mean inflation had fallen below 3% in Q1, while consumer demand showed signs of recovery.
Although the RBA acknowledged the May meeting as a possible opportunity to reassess monetary policy, no definitive stance was taken. Markets are currently pricing in a 25-basis point rate cut in May and anticipating around 120 basis points of easing over the next 12 months.
Attention now turns to Thursday’s employment data, which could offer critical insight into labor market conditions and influence the RBA’s upcoming decisions.
