Insights 
VT 
The Australian Dollar benefited from anticipation that the Reserve Bank of Australia (RBA) would maintain its current policy stance. At the same time, the US Dollar gained strength as expectations for a Federal Reserve rate cut in December diminished. China’s Manufacturing PMI fell to 50.6 in October, potentially impacting the Australian Dollar due to the countries’ trade ties.
Australia’s Building Permits rose 12.0% month-on-month, beating expectations, while job advertisements dropped by 2.2%. Traders approached the RBA’s upcoming policy meeting with caution, expecting rates to remain stable after multiple decreases. The RBA’s decision is influenced by inflation figures, including a 3.1% annual rise in the Inflation Gauge, and a Q3 CPI increase of 3.0% YoY.
The Us Dollar Index And Federal Reserve
The US Dollar Index was around 99.80 as the likelihood of a Fed rate cut decreased, showcased by a drop from a 93% to a 69% chance. The ongoing US government shutdown and differing opinions among Fed members about rate changes added uncertainty. China’s NBS PMI declined to 49.0, affecting market expectations.
The AUD/USD pair holds at around 0.6550, displaying a consolidation phase. If the pair exceeds 0.6600, it may signal a bullish trend, with support near 0.6544. Economic data from the US and China continue to influence the Australian Dollar amidst RBA policy speculations.
With the Reserve Bank of Australia’s policy decision coming tomorrow, we see the market pricing in over a 90% probability that the RBA will hold the cash rate steady. This follows the latest official data from the Australian Bureau of Statistics, which showed Q3 2025 inflation came in at 3.2% year-on-year, still stubbornly above the RBA’s target band. The central bank is unlikely to consider easing policy until inflation shows a clearer path back towards 2-3%.
At the same time, the US Dollar continues to find strength as hopes for a Federal Reserve rate cut in December have almost evaporated. Looking at the CME FedWatch Tool today, the probability of a December 2025 cut has fallen to below 25%, a significant drop from the 69% chance priced in just over a week ago. This shift is a direct result of another strong US jobs report for October, which added 210,000 payrolls, and core inflation that remains sticky around 3.5%.
The Wildcard For The Australian Dollar
The wildcard for the Australian dollar remains China, as its recent economic data continues to be a concern. The latest Caixin Manufacturing PMI for October 2025 registered at 50.4, narrowly avoiding contraction but still showing a slowdown in factory activity. This ongoing sluggishness in our largest trading partner could cap any significant rally in the Aussie, even if the RBA maintains a hawkish tone.
Given these conflicting forces, we believe selling volatility is the most prudent strategy for the coming weeks. Using options, establishing an iron condor or a short strangle on the AUD/USD with strike prices centered around the 0.6450 to 0.6650 range could be profitable. This strategy benefits from the pair remaining range-bound, which seems likely as the hawkish Fed and weak Chinese data counteract the RBA’s firm stance.
From our perspective in late 2025, this situation feels similar to the dynamic we saw back in 2023, when divergent central bank policies created clear currency trends. Back then, the Fed’s aggressive hiking cycle propelled the US dollar higher against currencies whose central banks were more hesitant. We are seeing an echo of that now, where relative interest rate expectations are the primary driver for currency pairs.
For those trading futures or CFDs, the technical levels mentioned remain critical. We should watch for a decisive break of the 0.6630 resistance level as a signal to initiate long positions, targeting the 0.6700 area. Conversely, a sustained move below the nine-day EMA around 0.6540 would suggest momentum is fading, opening the door for a test of the 0.6460 support level.
