AUD/USD falls towards 0.6300 as US tariff concerns fuel risk aversion

AUD/USD was under pressure for a second day during Asian trading hours on Friday, hovering around 0.6300. The pair struggled with a stronger U.S. dollar (USD), with safe-haven demand supporting the greenback and risk aversion exacerbated by U.S. tariff policy. Meanwhile, U.S. bond yields are falling as investors flock to Treasuries due to economic and geopolitical uncertainty.

Federal Reserve Chairman Jerome Powell downplayed the inflationary impact of the tariffs, calling them temporary, but acknowledged the challenges of assessing the broader impact. Although recession risks have risen, Powell said they are still relatively low.

On the data front, US Initial Jobless Claims increased to 223K for the week ending March 15th, slightly below expectations for 224K and above the previous week's revised 221K (revised from 220K). In addition, the Philadelphia Fed's manufacturing survey fell to 12.5 in March on a monthly basis, down from 18.1 in February. This marked the second consecutive monthly decline, although the drop was smaller than the 8.5 expected.

The Australian dollar (AUD) also faced resistance as traders reassessed the Reserve Bank of Australia's (RBA) monetary policy stance following disappointing jobs data. Australia's unemployment rate remained unchanged at 4.1% in February, but an unexpected drop in employment raised concerns about a weakening labor market.

The disappointing jobs report fueled speculation that continued labor market weakness could provide the Reserve Bank with more flexibility to cut interest rates. However, RBA Assistant Governor Sarah Hunter noted earlier this week that while the board acknowledged there was room to reduce the policy envelope following the recent decision to ease policy, it remained more cautious than markets about further rate cuts.