Australian Dollar remains subdued following China’s Trade Balance data

AUD/USD inches lower after two days of gains, trading around 0.7060 during the Asian hours on Tuesday. The pair holds losses as the Australian Dollar (AUD) moves little following the release of China’s Trade Balance data, which reported a trade surplus of $213.62B in February, exceeding the market expectations of $179.6B and $114.1B prior. However, the trade surplus in terms of Chinese Yuan (CNY) declined to CNY 1.5B in February, from CNY 808.8B in January. The market expectations were CNY 950B

Westpac Consumer Confidence rose 1.2% in March, reversing a 2.6% decline in the previous month and marking the first increase since last November. Meanwhile, National Australia Bank’s (NAB) Business Confidence fell sharply to -1 in February from 4 in the prior month, the first negative reading since April last year. However, NAB Business Conditions remained steady at 7.

The Australian Dollar gained support as Australia’s 10-year government bond yield climbed to around 5.0% on Monday, its highest level since July 2011, as escalating tensions in the Middle East pushed energy prices higher and fueled inflation concerns. Rising inflation worries could prompt the Reserve Bank of Australia (RBA) to adopt a more hawkish policy stance.

The RBA Governor Michele Bullock said last week the central bank is “very ” to the conflict’s potential impact on inflation expectations and stands ready to raise interest rates if necessary.

The AUD/USD pair holds losses as the US Dollar inches higher after a sharp intraday drop in the previous session. The Greenback depreciated as safe-haven demand reduced on hopes for a quick resolution to the Iran conflict. US President Donald Trump said the war with Iran could be resolved “very soon,” as he faces mounting economic and political pressure after days of sharp volatility in Oil markets.

Traders are awaiting key US inflation data, including the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) Price Index, due later this week for fresh signals on the Federal Reserve’s policy outlook.