AUD/USD continues to edge higher back towards 0.7600

• AUD/USD has traded broadly stronger on Wednesday, the currency pair boosted amid softer dollar conditions and favourable risk appetite.
• AUD might also have derived some reprieve from news that China will be lowering import tariffs on a range of imported goods.

It’s been a positive day for AUD/USD, the pair benefitting from soft US dollar conditions amid a relatively risk-friendly market mood. The main focus today was on Brexit; just before the start of the US session, news began to emerge that the UK and EU are on the cusp of a deal and announcement that a deal has been reached in principle could yet be finalised this Wednesday; the news has sent GBP to the top of the G10 FX performance table and USD to the bottom. The next best performers after sterling have been AUD and NZD.

AUD/USD has thus been on the front foot for most of the session, though the pair has failed to test the 0.7600 level, printing highs just above 0.7590. As the Wednesday FX close approaches, the pair is up 60 pips or about 0.8%.

China to lower import tariffs…

Some positive news regarding China and trade protectionism might also be giving the likes of AUD and NZD a boost on Wednesday; the Chinese Finance Ministry announced on Wednesday that it would be lowering tariffs on more products that are expected to be in high demand in 2021, including on medical equipment, high-tech equipment and some commodities. 883 products will be taxed at temporary rates that are more favourable that the usual most-favoured-nation rate.

It is understood that some Australian exports will be included in the tariff cut list, China does not appear to be specifically aiming to do the Aussies any favours. Rather, the Finance Ministry said the tariff changes had been made to satisfy domestic demand and boost the technology development of Chinese industries.

Indeed, diplomatic relations between the two trading partners remain sour. Though the news does seem to have contributed to a stronger AUD on Wednesday, most analysts would agree that it does not in anyway herald better days for Aussie/Sino relations.