Insights 
VT 
The AUD/USD pair remains steady near 0.6550 after China’s trade balance data for September was released. China’s trade surplus was $90.45 billion, less than the anticipated $98.96 billion, affecting market dynamics.
AUD/USD posted a slight increase following a 1.25% decline in the previous session, trading around 0.6530 during the Asian session. The trade surplus in Chinese Yuan was CNY645.47 billion, down from CNY732.7 billion, as exports and imports both rose year-over-year in September.
Us Government Shutdown
The ongoing US government shutdown, set to continue until at least Tuesday due to the Columbus Day holiday, contributes to a subdued US Dollar. The AUD/USD pair faces pressure due to trade tensions, highlighted by US President Trump’s tariff threats on Chinese imports.
Australia considers a strategic reserve for critical minerals, estimated at A$1.2 billion, potentially impacting AUD. The discussions involve setting minimum prices and funding rare earth projects.
The Reserve Bank of Australia’s interest rate decisions significantly impact the AUD. Economic health in China and the price of iron ore are influential, with changes in these areas affecting the value of the Australian Dollar.
Given the conflicting signals on October 13, 2025, we see the AUD/USD pair caught between opposing forces. China’s September trade surplus came in lower than expected at $90.45 billion, which typically weighs on the Aussie dollar. This suggests a cautious approach, as weakness in Australia’s largest trading partner could cap any significant rallies for the currency.
Impact Of Trade Tensions
The ongoing US government shutdown is the main factor weakening the US Dollar, providing a floor for the AUD/USD around the 0.6530 level. We have seen similar events in the past, such as the 2018-2019 shutdown, which led to a notable dip in consumer confidence and a softer dollar. Fitch Ratings has already estimated that a prolonged shutdown could trim 0.2% from US Q4 2025 GDP growth for every week it continues, giving us a reason to be bearish on the dollar in the short term.
However, the renewed trade tensions between the US and China are creating a strong risk-off sentiment in the broader market. This is evident from Gold hitting a record high of $4,060 and the recent sharp decline in the crypto market. This environment typically hurts risk-sensitive currencies like the Australian Dollar, counteracting the weakness seen in the USD.
For derivative traders, this suggests a period of high volatility rather than a clear directional trend. We are seeing iron ore futures, a key Australian export, reflect this uncertainty, having slipped below $110 per tonne on the Dalian exchange in the past week on concerns over Chinese demand. This drop from late September 2025 highs adds further pressure on the AUD.
Considering these factors, we believe strategies that profit from price swings will be most effective. Buying volatility through options, such as a long straddle on the AUD/USD, could be a prudent way to trade the expected choppiness in the coming weeks. Implied volatility for one-month AUD/USD options has already climbed to a three-month high of 12.5%, showing the market is pricing in significant potential moves.
Looking further ahead, we are also monitoring discussions around Australia’s new A$1.2 billion critical minerals strategic reserve. While this is a longer-term positive for the AUD, it will not shield the currency from the immediate turbulence caused by US political infighting and trade rhetoric. It does, however, suggest a fundamental strength that might prevent a dramatic collapse in the currency pair.
