Insights 
VT 
In related financial news, the Japanese Yen is under pressure amid BOJ uncertainty. The USD/JPY remains near its multi-month high, while gold prices have stabilised just below $4,000 due to rising safe-haven demand.
Rising Commodity Prices
Commodities show WTI crude oil rising above $61.00, with no immediate signals of increased OPEC+ output. The NZD/USD stayed near 0.5700 after the weaker PMI release from China impacted its value.
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The latest manufacturing data from China, showing a decline to a 50.6 PMI, is a bearish signal for the Australian dollar. This slowdown in our largest trading partner suggests weaker demand for commodities is on the horizon. Consequently, we see immediate pressure on the AUD/USD, which is already trading near 0.6542.
This AUD weakness is compounded by renewed US dollar strength, as the market is pricing out Federal Reserve rate cuts following the strong October 2025 jobs report that added 210,000 positions. Even with iron ore prices remaining surprisingly firm above $130 a tonne, a level reminiscent of the resilience seen in late 2023, the currency is failing to find a bid. The Aussie dollar has been the worst performer against the greenback over the last seven days, confirming this trend.
Trader Strategies
For traders, this environment favors strategies that profit from a further decline in the AUD/USD pair. We believe purchasing put options on the AUD/USD is an effective approach for the coming weeks. This allows for exposure to the downside while clearly defining risk to the premium paid, which is prudent as volatility could increase.
Looking back, this situation feels similar to the economic crosscurrents we navigated in early 2024, where a resilient US economy contrasted with a stalling Chinese recovery. That period saw the US dollar dominate commodity-linked currencies for an extended quarter. We anticipate a potential retest of the 0.6400 support level for AUD/USD before the end of the month if these macroeconomic trends continue.
