Insights 
VT 
Improved Risk Sentiment
The Australian Dollar (AUD) is leading the G10 currencies due to improved risk sentiment. This follows President Trump’s recent positive stance on US-China trade relations. The upcoming week will provide more clues about the AUD’s direction, with developments in trade discussions and expectations surrounding the Reserve Bank of Australia’s (RBA) policy decision in November being anticipated.
The market’s interest will be focused on the minutes from the September RBA policy meeting and Australia’s September labour data. Currently, the AUD/USD is around the 0.65 area due to short-covering in favour of the USD. Predictions suggest a possible rise in the AUD/USD into the new year despite choppy ranges in the 1-to-3-month view.
With no new US data, it’s challenging to predict Federal Reserve (Fed) policy changes. However, US-China trade progress could impact US inflation and growth. The potential questioning of Fed independence and upcoming leadership changes could lead to a US Dollar dip. Analysts foresee the AUD/USD possibly reaching 0.68 within 12 months.
The Aussie dollar is outperforming other major currencies as worries about the global economy ease for now. We’re seeing this optimism because of a softer tone in US-China trade discussions lately, which reminds us of similar market reactions during the Trump administration back in the late 2010s. This has helped push the AUD/USD pair to trade around the 0.6650 mark, making it a key currency to watch.
All eyes are now on the upcoming minutes from the RBA’s last meeting and the September jobs report due this week. With inflation still stubbornly high at 3.8% last quarter, well above the target, these data points will be critical for what the RBA does with its 4.35% cash rate on November 4th. Any sign of continued economic strength could force the RBA to maintain its tough stance, supporting the Aussie dollar.
For the next one to three months, we expect a choppy but contained range, likely holding between 0.6500 and 0.6750. This environment is ideal for traders considering option strategies like selling strangles or straddles to collect premium from the lack of a clear directional breakout. Pay close attention to the 0.6500 level, as a break below could signal that the recent USD strength is returning more forcefully than anticipated.
US Dollar Dynamics
On the US side, the dollar’s recent pullback seems to be more of a temporary breather after a long period of strength. With recent US inflation holding at 3.5% and job growth remaining solid, the Federal Reserve has little reason to signal rate cuts anytime soon. This persistent strength in the US economy could cap any major rallies in the AUD/USD pair.
Looking further out into 2026, there is potential for the AUD/USD to climb towards the 0.6800 level. This long-term bullish view could be played by buying longer-dated call options, which offer upside exposure while limiting risk. Any renewed discussions about the Federal Reserve’s independence, a theme that caused dollar weakness in the past, could accelerate this upward move.
