Insights 
VT 
China’s Premier Li Qiang emphasised the importance of balancing development with security and implementing risk-prevention mechanisms for sustained growth through policy readiness and systemic stability.
Li advocated for applying high-quality development across economic and social domains. He urged meeting people’s needs, focusing on domestic growth, and aligning the strategy of increasing domestic demand with deepening supply-side reforms. Li recommended offsetting international uncertainties through internal stability and strengthening long-term risk prevention mechanisms. He also advised making response plans and maintaining policy reserves to avoid systemic risks.
Market Movements
In market movements, the AUD/USD pair maintained modest gains but remained below 0.6600. Traders awaited a meeting between US President Donald Trump and Chinese President Xi Jinping scheduled for later in the week.
China’s leadership is signaling a clear focus on stability and risk prevention over aggressive growth. We should interpret this as a move to protect their economy from global uncertainty, meaning we can expect more predictable, state-guided policy. This suggests that wild swings driven by Chinese policy might become less frequent, but also caps the potential for major unexpected stimulus.
This cautious stance is already visible in the most recent economic data we’ve seen. China’s Q3 2025 GDP growth was reported at 4.8%, just shy of the 5% target, and the latest manufacturing PMI of 50.2 indicates only slight expansion. These figures support the idea that Beijing is prioritizing a steady landing, not a high-risk rebound.
Outlook and Strategy
For us, this reinforces a view that assets linked to Chinese growth, like the Australian dollar, may see limited upside. Iron ore prices have been stable in a narrow range around $115 per tonne for weeks, reflecting steady but not booming demand. This environment makes large, speculative bets on a surging AUD less attractive.
The upcoming meeting between the US and Chinese presidents this week is the immediate wild card. We remember how similar high-stakes meetings during the 2018-2019 trade tensions caused significant market gaps over a single weekend. Therefore, a spike in short-term implied volatility in pairs like AUD/USD and major indexes is highly probable.
Given this, we should consider buying volatility ahead of the meeting. Options strategies like straddles or strangles on China-related ETFs could profit from a sharp move in either direction, without betting on the outcome. This allows us to trade the event itself rather than guessing its result.
Beyond this week, if China’s stated goal of stability holds true, volatility will likely fall back. This would suggest a shift in strategy towards selling premium through positions like iron condors on key indices. The primary goal is to hedge against the short-term political risk while respecting the longer-term signal of a more controlled, less volatile Chinese economy.
