Insights 
VT 
China’s economic growth reached 4.8% annually in the third quarter of 2025, compared to 5.2% in the previous quarter. On a quarterly comparison, GDP rose 1.1%, surpassing the expected 0.8%. Retail Sales in June increased by 3.0% annually, and Industrial Production rose 6.5%, both figures exceeding forecasts. Meanwhile, Fixed Asset Investment showed a 0.5% decline year-to-date in September.
The Australian Dollar (AUD) experienced a slight increase following the release of China’s GDP and activity data. At the time, AUD/USD was up 0.24% at 0.6511.
Projected GDP Growth For Q3
The National Bureau of Statistics of China indicates an estimated GDP growth of 0.8% for Q3, compared to 1.1% in Q2. Retail Sales and Industrial Production are projected to rise by 2.9% and 5.0% year-over-year, respectively.
AUD/USD demonstrated a slight decline due to anticipation of China’s GDP data and the ongoing US federal government shutdown. A higher-than-expected GDP result could bolster AUD, though potential downside risks remain.
GDP measures economic growth over time and influences currency strength and inflation. A higher GDP often indicates a strong currency and attracts foreign capital, impacting interest rates and gold prices.
The Chinese economic data released on October 20, 2025, presents a mixed but cautiously optimistic picture for us. While the annual GDP growth slowed to 4.8%, the quarterly figure and especially the industrial production number have beaten expectations significantly. This suggests the engine of China’s economy is running better than feared, which should support risk assets in the near term.
Implications For The Australian Dollar
We see the strength in industrial output, up 6.5%, as a key driver, likely fueled by exports in green energy and electric vehicles. This robust industrial activity supports commodity prices, with iron ore, a crucial Australian export, holding firm above $115 a tonne through October 2025. This backdrop is fundamentally supportive for the Australian dollar.
However, the 0.5% decline in fixed asset investment is a clear signal of ongoing weakness in the property sector. This continues a multi-year trend we’ve seen since the property investment downturn of 9.6% back in 2023. This persistent drag means any rally based on this data could be fragile and susceptible to negative headlines from the real estate market.
For derivative traders, this points toward a bullish stance on the Australian dollar, especially against a weakening US dollar. The AUD/USD pair, currently at 0.6511, is benefiting from both the positive surprises in Chinese activity and the ongoing US government shutdown, which has now entered its third week. We believe the path of least resistance is higher toward the 0.6560 level seen in September 2025.
Considering the underlying property risk, we should look at defined-risk strategies rather than outright long futures. Buying AUD/USD call options, or implementing bull call spreads, would allow us to profit from a potential upward move while capping our maximum loss. This strategy is prudent given that the pair has struggled to break out of the 0.6400-0.6600 range for much of the past two years.
The concurrent weakness in the US dollar from the government shutdown provides a significant tailwind. We recall the 35-day shutdown back in 2018-2019, which created sustained uncertainty and dollar weakness. If the current political stalemate in Washington continues, it will likely keep pressure on the dollar and amplify gains for currencies like the AUD.
