Chinese officials emphasise the need to accelerate the adoption of a new development model. Despite uncertainties and instabilities in the external environment, they assert that the economy maintains a solid foundation and the fundamentals for long-term growth remain unchanged.

At publication, the AUD/USD pair showed a slight decrease of 0.04%, trading at 0.6510. Key factors driving the Australian Dollar (AUD) include interest rates set by the Reserve Bank of Australia (RBA), the price of Iron Ore, and the health of the Chinese economy. Australia’s inflation rate, growth rate, and Trade Balance also play a part.

The Impact Of Rba On Aud

The RBA impacts the AUD by setting lending rates, aiming to keep inflation at 2-3%. High interest rates can support the AUD, while low rates can weaken it. The RBA’s quantitative easing may negatively impact the AUD, while tightening tends to be positive.

As China is Australia’s largest trading partner, its economic health influences the AUD’s value. Positive Chinese growth increases AUD demand. Iron Ore forms Australia’s largest export at $118 billion annually. Changes in its price can affect the AUD. A positive Trade Balance, where export earnings exceed import payments, strengthens the AUD.

Chinese officials are signaling a push to change their economic model, creating uncertainty for their trading partners. Since China is Australia’s biggest customer, we are seeing this immediately reflected in the AUD/USD pair, which is currently trading around 0.6510. This focus on a “new development paradigm” suggests a potential long-term shift away from the type of growth that has historically boosted Australian exports.

We’ve just seen China’s Q3 GDP for 2025 come in at 4.8%, slightly below consensus, and recent manufacturing PMI data is hovering just over the 50-point mark that separates expansion from contraction. This reinforces the official message that the old model of heavy industry and property development is under pressure. For traders, this means that the strong, positive data surprises out of China that we relied on in the past may become much rarer.

Implications For Aud Strategy

This directly impacts iron ore, Australia’s most critical export, which has slipped to around $95 per tonne after failing to hold above the key $100 level. We remember the price spikes above $150 we saw back in 2023, but Beijing’s new focus on domestic consumption over massive new construction projects makes a return to those levels seem unlikely. This creates a structural headwind for the Australian dollar.

Given this outlook, we should consider using options to position for potential downside in the AUD over the next few weeks. Buying AUD/USD put options with expiries in late November or December 2025 offers a defined-risk way to profit if concerns about Chinese demand intensify. The current uncertainty also makes volatility a key factor to watch.

We must also watch the Reserve Bank of Australia, which has been holding its cash rate at 3.85% as it waits for inflation to cool further from the last reading of 3.2%. A significant slowdown in China could force the RBA to shift from a hawkish stance to considering rate cuts sooner than the market currently expects. Any dovish language from the RBA in its upcoming meetings will likely accelerate any AUD weakness.

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