Insights 
VT 
The Australian Dollar (AUD) found support due to cautious sentiment surrounding the Reserve Bank of Australia’s (RBA) policy outlook. The AUD rose against the US Dollar (USD), closing a three-day losing streak. However, the AUD’s performance came amid expectations of no interest rate cut from the US Federal Reserve (Fed) in December. Australia’s Building Permits increased 12% month-on-month (MoM) in September, surpassing the expected 5.5% growth.
China’s Manufacturing Purchasing Managers’ Index (PMI) fell to 50.6, down from 51.2, affecting economic sentiment due to the close trade ties between China and Australia. Meanwhile, the US Dollar benefitted from a reduced likelihood of Fed rate cuts, with traders predicting a 69% chance of a December cut, down from 93% a week earlier. The Federal Reserve cut interest rates by 25 basis points, with mixed support for the decision among Fed members.
AUDUSD Pair Analysis
The AUD/USD pair trades around 0.6550, indicating a consolidation phase on the daily chart. Resistance lies at 0.6600, while downside support is at 0.6544, with potential to test lower levels if broken. The Australian Dollar showed relative strength against several major currencies, with the most substantial gains against the Japanese Yen.
Looking back, we can see the market was nervous about the Reserve Bank of Australia’s policy ahead of its decision in late 2023. Now, in November 2025, the situation has evolved as the RBA has since delivered several rate cuts to support a slowing economy. Australia’s latest Q3 2025 inflation data showed the annual rate at 2.9%, comfortably inside the RBA’s target band and justifying its more dovish stance.
The US Dollar’s strength at that time was based on fading expectations for a Federal Reserve rate cut, but that proved temporary. The Fed has since cut its benchmark rate to a range of 3.75%–4.0% in response to softening economic data throughout 2024 and 2025. The most recent US unemployment figures from October 2025 showed a rise to 4.1%, giving the Fed more reason to stay accommodative.
China’s Economic Influence
China remains a persistent headwind for the Australian Dollar, a theme we saw developing years ago. The latest Caixin Manufacturing PMI for October 2025 came in at 50.2, showing only marginal expansion and signaling continued weakness in Australia’s largest trading partner. This fragility in China is capping significant upside for the AUD, even with a weaker US Dollar.
For derivative traders, this environment of dovish central banks clashing with weak Chinese growth suggests that volatility in AUD/USD may increase. The pair, currently trading near 0.6850, is caught between supportive interest rate differentials and poor external demand for Australian commodities. This is an ideal setup for considering strategies like straddles or strangles to play a potential breakout from the current range.
Given these crosscurrents, selling out-of-the-money puts on the AUD/USD could be a viable strategy to collect premium, betting that the floor around 0.6700 will hold due to the Fed’s dovish policy. Alternatively, traders expecting a grind higher could look at buying call spreads to cheapen the cost of a bullish bet while defining their risk. The key will be monitoring incoming data from both the US and China for the next catalyst.
