Insights 
VT 
The Australian Dollar (AUD) continued to decline against the US Dollar (USD) as the latter gained strength from efforts to reopen the US government. Despite Reserve Bank of Australia (RBA) policymakers discussing monetary policy, the AUD remained weak due to geopolitical risks and global economic factors.
The US Dollar Index halted a five-day losing streak, trading around 99.50 as the US government shutdown neared its end. The US Senate passed a bill to end the shutdown, with a House vote pending, and President Trump likely to sign it soon after. Amidst these events, inflation and economic impacts from the shutdown were noted by US Treasury Secretary Scott Bessent, with markets expecting a possible rate cut in December.
China Lifts Export Bans
China’s Ministry of Commerce temporarily lifted export bans on specific materials, while its Consumer Price Index noted a rise. Australia’s Westpac Consumer Confidence rose by 12.8% in November. The AUD/USD pair traded around 0.6520, with potential support and resistance levels outlined, indicating short-term momentum trends.
Various factors influence the AUD, including RBA interest rates, China’s economic health, and iron ore prices. Australia’s Trade Balance also impacts the AUD’s value, with a positive balance generally strengthening it. Iron Ore, as Australia’s largest export, directly affects its currency due to demand fluctuations.
We are seeing the US Dollar strengthen as the end of the government shutdown comes into view. This is putting immediate pressure on the Australian Dollar, pushing the AUD/USD pair toward the key 0.6500 psychological level. For now, the path of least resistance appears to be lower for the Aussie.
Market Expectations Shift
The market’s focus will quickly shift from the shutdown to the Federal Reserve’s next move, which is critical for our strategy. With the CME FedWatch Tool showing a 68% probability of a rate cut in December, and recent Core PCE inflation data for October 2025 coming in at 2.9%, the case for policy easing is building. This expectation is reinforced by President Trump’s recent prediction that inflation would fall to 1.5%, a level we have not seen since early 2021.
On the Australian side, we see a conflict between a cautious Reserve Bank of Australia and very strong domestic data. The RBA is debating whether its policy is still restrictive, which could limit AUD strength. However, the recent Westpac Consumer Confidence report showed a massive 12.8% jump for November, suggesting the Australian consumer is feeling optimistic about the economy.
China’s influence, a key driver for the AUD, appears to be neutral to slightly positive. The recent lift on export bans to the US reduces trade friction, and October’s slightly positive CPI data removes immediate deflationary fears. With iron ore prices holding firm around $128 per tonne, a major Australian export remains well-supported.
This situation suggests a potential opportunity for traders in the coming weeks. We may see the AUD/USD pair dip below 0.6520 as the market digests the end of the US shutdown. This could be a moment to consider positioning for a rebound, as the narrative will likely shift to the impending US rate cut.
Therefore, any weakness in the Australian dollar over the next few days could be temporary. A strategy could involve using options to position for a move back toward the 0.6630 resistance level by year-end. This would capitalize on the expected US Dollar weakness following a potential Fed rate cut in December.
