AUD/USD revisited the 0.7240 area for the first time since mid-May, with 0.7200 acting as a near-term floor after Tuesday’s dip. The pair has risen since early July as the Reserve Bank of Australia (RBA) maintained a hawkish bias while domestic inflation stayed above its 2%–3% target band, with policymakers still guiding to a return to target in early 2028. August PMIs kept activity in expansion, with Manufacturing unchanged at 52.0 and Services easing to 53.2. External demand was supportive as the trade surplus measured A$1.923bn in July after A$2.341bn in June, even as GDP growth cooled to 0.4% QoQ in Q2 2026 from 0.3% and slowed to 2.1% YoY from 2.5%. Labour momentum softened, with unemployment at 4.5% and employment down 15.8K after a revised 80.3K rise; headline inflation eased to 3.5% from 3.8%, the Trimmed Mean held at 3.6%, and consumer inflation expectations rose to 4.9% from 4.7%. The RBA left the OCR unchanged on 11 August, discussed a 25bp rise, and markets price nearly 5bp of tightening by year-end alongside expectations of a 25bp move on 29 September.
China offered stability but limited impulse: GDP grew 4.3% YoY in April–June, retail sales rose 0.6% in the year to July, and industrial production growth slowed to 4.5%. The trade surplus widened to $119.1bn in July from $112.5bn in June, while the NBS Manufacturing PMI improved to 49.8 from 49.2 and Services stayed at 49.0; private RatingDog gauges showed Manufacturing at 51.5 from 50.9 and Services at 51.4 from 50.4. CPI rose 0.8% YoY in August from 0.5% and increased 0.4% m/m, while producer prices were up 3.8% YoY after 3.5%; the PBoC kept the one-year LPR at 3.00% and the five-year at 3.50%. Positioning data showed net shorts improved by over 5K to 39.4K, the four-week change moved to -6,216 from -4,491, and open interest rose by almost 57.8K to 391.7K; exposure improved to -10.1% from -13.3% with a percentile of 81.6, while the net-position percentile was 68.1. Spot was around 0.7221, with SMAs spanning 0.7043–0.7080 and RSI near 68 plus ADX around 25; resistance levels were 0.7278, 0.7283 and 0.7661, while support sat at 0.7079, 0.7080, 0.7043, then 0.6996, 0.6833 and 0.6660, 0.6593, 0.6414, with the 200-day SMA near 0.7000 a key medium-term marker.
Derivative Strategy Recommendations and Seasonal Caution
We recommend that derivative traders closely watch the 0.7200 level in the coming weeks, as it has shifted from a resistance barrier into a vital support zone. With the AUD/USD pair currently hovering around 0.7221, we believe utilizing bull-put spreads near 0.7200 is an effective way to capture the current upward momentum. Historical data over the last two decades shows that September is often the weakest seasonal month for the Aussie dollar, averaging a 1.5% decline, which warrants cautious premium buying.
Looking at positioning data, speculative net shorts have decreased to 39.4k contracts, but bearish sentiment remains historically high in the 81st percentile. We see this heavy short exposure as fuel for a potential short squeeze if upcoming US inflation figures surprise to the downside. Traders can position for this by using short-term, out-of-the-money call options targeting the 0.7280 level.
Policy, Yield Drivers, And Portfolio Risk Management
Furthermore, interest rate markets are pricing in a potential rate hike at the RBA’s September 29 meeting. We suggest using AUD futures to capitalize on this hawkish policy bias, which is backed by domestic inflation still holding above the target at 3.5%. This yields-driven support makes the currency’s downside limited as long as global sentiment remains steady.
We must also account for global trade risks, especially with China’s domestic demand remaining sluggish as retail sales grow at just 0.6%. The economic friction from the 60% US tariffs enacted in early 2025 continues to weigh on the global outlook and could trigger sudden risk-off moves. To protect portfolios against these external shocks, we recommend maintaining some defensive put options with a strike price near the 200-day moving average of 0.7000.
