Australian Dollar Weakens as US Dollar Remains Firm Ahead of Initial Jobless Claims.

Australian Dollar Slips as Trade Balance Misses Forecasts Amid US-China Trade Tensions

The Australian Dollar (AUD) weakened against the US Dollar (USD) on Thursday after Australia’s latest Trade Balance data fell short of expectations. The AUD/USD pair faced additional downward pressure due to growing risk-off sentiment, fueled by escalating US-China trade tensions.

Australia’s Trade Surplus Shrinks in December

According to the latest data, Australia’s trade surplus dropped to 5,085M in December, significantly below the expected 7,000M and down from the previous 6,792M. While exports rose by 1.1% month-over-month (MoM), the growth was notably slower than November’s 4.2% increase. At the same time, imports surged by 5.9% MoM, a sharp rise compared to the previous 1.4% gain, adding pressure on the Australian economy.

US-China Trade War Weighs on Market Sentiment

The AUD is also under pressure as traders react to escalating trade tensions between China, Australia’s largest trading partner, and the United States. China has retaliated against the 10% US tariff that took effect on Tuesday, further intensifying concerns about global trade stability. However, US President Donald Trump signaled on Monday that he expects to speak with Chinese officials within the next 24 hours, though he warned that if negotiations fail, tariffs will be “very, very substantial.”

Market Outlook: Key Risks for AUD/USD

The combination of weaker-than-expected trade data and ongoing US-China trade uncertainty is likely to keep the AUD/USD pair under pressure in the near term. Traders will closely monitor further developments in trade negotiations and upcoming economic releases that could influence market sentiment.

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