Insights 
VT 
China’s trade balance for September, measured in Chinese Yuan (CNY), stood at CNY645.47 billion, a decrease from the previous CNY732.7 billion. The country’s exports increased by 8.4% year-on-year, while imports grew by 7.5% during the same period.
In US Dollar (USD) terms, China’s trade surplus for September was smaller than predicted. The balance reached +90.45 billion USD, against an expected +98.96 billion USD and a previous +102.33 billion USD.
Australian Dollar Reaction
The Australian Dollar (AUD) gained in response to the trade data, with AUD/USD rising above 0.6525, increasing by 0.84% on the day. The AUD showed strength, particularly against the Japanese Yen, among major currencies.
China will release the August trade balance figures shortly, which is expected to impact global markets, including the forex market. The Australian Dollar is influenced by interest rates set by the Reserve Bank of Australia, iron ore prices, and the performance of the Chinese economy.
These factors, along with the trade balance, significantly affect the Australian Dollar’s value. Positive trade balances and higher iron ore prices often bolster the AUD, as they indicate strong demand for Australian exports.
Based on the data from this morning, we see China’s domestic demand is surprisingly strong, even more so than its export growth. While the overall trade surplus narrowed, the massive beat on import figures, which jumped 7.4% year-over-year against a 1.5% expectation, is the key takeaway for us. This suggests the Chinese economy may have more momentum than previously thought, which has immediate implications for its main trading partners.
Impact on Australian Dollar
The Australian dollar’s immediate jump above 0.6525 is a direct reaction to this stronger Chinese import data. As China is Australia’s largest trade partner, strong domestic demand there translates directly into higher demand for Australian raw materials. We’ve seen this playbook before, where positive surprises in Chinese growth data fuel rallies in the AUD.
To reinforce this view, we can see that iron ore futures have been climbing, with recent trades on the Singapore Exchange for delivery in November 2025 hovering around $118 per tonne. This is a significant uptick from the lows we saw earlier in the year and provides a fundamental tailwind for the Australian dollar. This external price strength supports the currency’s value, as higher commodity prices improve Australia’s terms of trade.
Domestically, the Reserve Bank of Australia has maintained a relatively hawkish stance compared to other central banks, holding its cash rate at 4.85% in its October 2025 meeting to ensure inflation stays suppressed. This interest rate differential, particularly against currencies like the Japanese Yen, makes holding the AUD attractive. Looking back, this policy divergence has consistently supported AUD/JPY throughout 2024 and 2025.
In the coming weeks, traders should consider strategies that benefit from a rising Australian dollar. This could involve buying AUD call options to speculate on further upside against the US dollar, with an eye on the 0.6620 level as a potential target. For those with a more neutral to bullish outlook, selling out-of-the-money AUD put options could be a way to collect premium while expressing a view that the currency will not fall significantly.
We should keep a close watch on upcoming Chinese industrial production figures and Australia’s next quarterly CPI inflation report. These data points will be crucial in confirming if the current strength is a short-term reaction or the start of a more sustained trend. Any sign of weakness in this upcoming data could quickly unwind the AUD’s recent gains.
