Insights 
VT 
Economic Indicators and Market Movement
AUD/USD stabilised above 0.6500 following China’s trade surplus data, which was below expectations. The pair initially rebounded by 0.80% to 0.6520 after losses, showing little movement post the release of China’s September Trade Balance data. In USD terms, China’s trade surplus was $90.45 billion, under the anticipated $98.96 billion.
China’s exports rose by 8.4% YoY, and imports grew by 7.5%, suggesting a recovery that potentially supports the Australian Dollar due to Australia’s significant export ties with China. Trade tensions persist as US President Trump threatened tariffs, though later softened his stance, easing market fears slightly. China warned of retaliation if tariffs were imposed.
The unresolved US government shutdown contributes to pressures on the US Dollar, benefiting risk-sensitive currencies like the AUD. The Reserve Bank of Australia’s hawkish stance, anticipating higher inflation, further supports the AUD. The RBA indicated the need for more time to assess rate cuts.
The market’s focus shifts to the upcoming RBA policy meeting minutes for insights into monetary policy direction. The Australian Dollar showed varied performance against major currencies, strongest against the Japanese Yen. The heat map provided detailed percentage changes among the currencies.
We are seeing the Australian dollar find support from the Reserve Bank of Australia’s firm stance, as they seem wary of Q3 inflation running too hot. This contrasts sharply with the US dollar, which remains under pressure from the ongoing government shutdown now entering its third week. Historically, prolonged shutdowns like the 35-day event we saw back in 2018-2019 have tended to weigh on the greenback.
Trade Dynamics and Policy Outlook
China’s demand for Australian resources is a key factor supporting our view, with September 2025 import data showing a notable 7.5% year-over-year increase. Recent statistics from China’s customs agency show that iron ore shipments from Australia reached a new high for the year last month. This underlying demand provides a solid floor for the Aussie, even if headline trade surplus numbers miss expectations.
The main risk remains the unpredictable nature of US-China trade rhetoric, as any escalation could quickly reverse the Aussie’s gains. Given these conflicting signals—strong fundamentals versus geopolitical risk—implied volatility in AUD/USD options has been climbing toward 9.8%, up from an average of 8.5% last month. Traders might consider using options strategies to position for a significant move in either direction, especially with the November 1 tariff deadline approaching.
The immediate focus for us is Tuesday’s release of the RBA’s latest meeting minutes for more clarity on their policy outlook. We will be looking for any specific language regarding their inflation forecasts, particularly after the Q2 2025 CPI print came in above their target band at an annualized 3.8%. Any confirmation of this hawkish bias could provide the next catalyst for a move higher in AUD/USD.
