Australia’s import price index declined by 0.4% quarter-on-quarter for the third quarter, below the forecasted drop of 0.1%. This decrease signals lower import costs than expected during the period.

In related market updates, WTI remained stable above $60.00 ahead of the US-China trade deal updates, while the Bank of Japan left its interest rate unchanged at 0.5%. EUR/JPY climbed above 177.50 following the BOJ decision, and the Japanese Yen weakened post-rate announcement.

The Forex Market

The forex market is seeing fluctuations, with EUR/USD receding below 1.1600 after a recent FOMC meeting, while GBP/USD regained ground above 1.3200 amid a weaker USD. Bitcoin slipped to the $110,000 mark following Fed’s cautious stance despite a rate cut.

Looking ahead, the European Central Bank is expected to maintain their current policy in the upcoming meeting. Meanwhile, Pi Network’s PI token remains stable, trading just above $0.2600, indicating potential further growth amidst rising Centralised Exchange inflows.

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Australia’s import prices fell by 0.4% in the third quarter, which was a bigger drop than the 0.1% decline we were expecting. This suggests that inflationary pressures from overseas are weakening faster than anticipated. This gives the Reserve Bank of Australia (RBA) more room to pause its interest rate policy, and possibly even consider cuts if this trend continues.

Reserve Bank Of Australia Monetary Policy

We need to remember this is a sharp reversal from the aggressive hiking cycle of 2023-2024, when the RBA raised the cash rate to 4.35% to tame rampant inflation. Today’s data, as of October 30, 2025, indicates that this previous policy tightening has successfully cooled price pressures. The focus has now shifted from fighting inflation to supporting a potentially slowing economy.

For traders, this reinforces a bearish outlook for the Australian dollar in the coming weeks. We believe buying put options on AUD/USD or establishing bear call spreads are viable strategies to position for a potential slide. These derivative plays offer defined risk while capturing downside movement if the RBA formally adopts a more dovish tone.

This disinflationary pressure is likely linked to softer global demand, particularly from China, whose economy has shown mixed signals. Looking back, China’s official manufacturing PMI has struggled to hold consistently above the 50-point expansion threshold for much of the last 18 months. As Australia’s largest trading partner, any slowdown there directly impacts demand for our key exports and weighs on the currency.

The policy divergence between the RBA and the Bank of Japan, which has held its rate steady at 0.5%, makes the AUD/JPY cross particularly compelling. The RBA’s potential dovish tilt contrasts with the BOJ’s steady hand, creating a fundamental reason to short this pair. We will be watching the RBA’s next meeting closely for any language that confirms this shift, which could push AUD/JPY below the 100.00 level.

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