The Australian Dollar showed little reaction to China’s latest trade figures, even though the data came in stronger than expected. According to China’s customs data, the country’s Trade Balance posted a surplus of $213.62 billion in February, significantly higher than market forecasts of $179.6 billion and the previous $114.1 billion reading. In yuan terms, however, the surplus narrowed to CNY 1,500 billion, though it still exceeded expectations.

Domestically, economic sentiment indicators painted a mixed picture for Australia. The Westpac Consumer Confidence Index increased by 1.2% in March, reversing two months of declines and marking its first improvement since November. Meanwhile, the NAB Business Confidence Index fell to -1 in February from 4 previously, its first negative reading since April of last year. The NAB Business Conditions index remained stable at 7, indicating steady activity across the business sector.

Rising bond yields are also lending support to the Australian currency. Australia’s 10-year government bond yield climbed to around 5%, its highest level since 2011, as geopolitical tensions in the Middle East push energy prices higher and raise concerns about inflation. This environment could encourage the Reserve Bank of Australia to maintain a hawkish stance if price pressures persist. Governor Michele Bullock recently noted that the central bank remains highly alert to the potential inflationary effects of global conflicts and stands ready to adjust policy if needed.

Meanwhile, the US Dollar weakens as investors grow hopeful that tensions involving Iran may ease soon after comments from Donald Trump suggested the conflict could end quickly.

Market participants now await key US inflation indicators, including CPI and PCE data, which could shape expectations for the Federal Reserve and determine the next move in AUD/USD.

Trade idea:

Buy on dips near 0.7090 targeting 0.7200; stop below 0.7040 as stronger US inflation data could revive Dollar demand and limit the pair’s upside momentum.