AUD/USD remains firmly below 0.6300 as Trump prepares to announce reciprocal tariffs

AUD/USD was trading flat around 0.6275 during early Asian trading hours on Wednesday. Markets turned cautious ahead of U.S. President Trump's announcement of reciprocal tariffs. In addition, the US ADP employment change data for March will also be released.

Trump plans to implement tariffs on U.S. trading partners on Wednesday, with the possibility of additional duties on Chinese goods. Trump has imposed a 20 percent tariff on all Chinese imports since taking office in January, accusing Beijing of failing to do enough to curb the flow of chemicals used to make the deadly drug fentanyl into the United States. A potential trade war between the United States and China could put some selling pressure on the Australian dollar, as China is Australia's main trading partner.

The Reserve Bank of Australia (RBA) left the official cash rate (OCR) unchanged at 4.10% following its April policy meeting on Tuesday. The RBA's monetary policy statement showed the board was concerned and cautious about whether inflation would continue to ease.

RBA Governor Michelle Bullock told a news conference that policymakers had to be careful not to move too fast on policy. Bullock added that the board did not discuss a rate cut and had not made a decision on action in May.

Meanwhile, encouraging Chinese economic data provided some support to the Australian dollar, a proxy for China. China's Caixin Manufacturing PMI rose to 51.2 in March from 50.8 in February, beating expectations for 51.1.