China tensions weigh on Aussie, NFP looms
The Australian dollar is slightly higher in Thursday trade. In the North American session, AUD/USD is trading at 0.7756, up 0.12% on the day. On the fundamental front, the RBA releases its quarterly policy statement on Friday (1:00 GMT).
Relations between China and Australia continue to spiral downwards. China has engaged in a trade war against Australia, which included tariffs on Australian wine exports in November. Last month, the Australian government made the unusual move of cancelling an infrastructure agreement between China and the State of Victoria, which was connected to China's Belt and Road initiative. Predictably, the move was harshly criticised by the Chinese government.
The latest salvo was fired earlier on Thursday, as China said it was indefinitely suspending the China-Australia Strategic Economic Dialogue. The dialogue has been frozen since 2017, so the move appears to be largely symbolic. The huge trading relationship between the countries will likely not be affected, such as Australian exports of iron ore to China. Still, the announcement of the suspension of the dialogue was enough to send the Australian dollar briefly lower. If there are further negative political developments between the two countries, the Aussie could face a bumpy road.
All eyes will be on US nonfarm payrolls for April, which will be released on Friday (12:30 GMT). The ADP Employment Report is not considered a reliable gauge for the official NFP, but investors couldn't help notice that the ADP reading jumped to 742 thousand, up from 514 thousand. Nonfarm payrolls climbed to 916 thousand in March and with a forecast of 990 thousand, a reading above the symbolic one-million mark is certainly within reach. If nonfarm payrolls outperforms, risk sentiment would improve, which would be bearish for risk commodities like the Australian dollar.
Relations between China and Australia continue to spiral downwards. China has engaged in a trade war against Australia, which included tariffs on Australian wine exports in November. Last month, the Australian government made the unusual move of cancelling an infrastructure agreement between China and the State of Victoria, which was connected to China's Belt and Road initiative. Predictably, the move was harshly criticised by the Chinese government.
The latest salvo was fired earlier on Thursday, as China said it was indefinitely suspending the China-Australia Strategic Economic Dialogue. The dialogue has been frozen since 2017, so the move appears to be largely symbolic. The huge trading relationship between the countries will likely not be affected, such as Australian exports of iron ore to China. Still, the announcement of the suspension of the dialogue was enough to send the Australian dollar briefly lower. If there are further negative political developments between the two countries, the Aussie could face a bumpy road.
All eyes will be on US nonfarm payrolls for April, which will be released on Friday (12:30 GMT). The ADP Employment Report is not considered a reliable gauge for the official NFP, but investors couldn't help notice that the ADP reading jumped to 742 thousand, up from 514 thousand. Nonfarm payrolls climbed to 916 thousand in March and with a forecast of 990 thousand, a reading above the symbolic one-million mark is certainly within reach. If nonfarm payrolls outperforms, risk sentiment would improve, which would be bearish for risk commodities like the Australian dollar.