Insights 
VT 
The Australian Dollar has stabilised against the US Dollar, with the AUD/USD pair climbing back above 0.6500 after recently declining to its lowest since August 27. This recovery is attributed to an improved risk sentiment following a shift in US rhetoric, easing concerns of heightened US-China trade tensions.
Currently, the AUD/USD is trading near 0.6516, marking a 0.65% increase, as Australia’s ties with China make it sensitive to developments in US-China relations. Over the weekend, US President Trump softened his stance on trade tensions following a previous announcement of 100% tariffs on Chinese imports.
Proposed Tariffs And Market Sentiment
US Treasury Secretary Scott Bessent indicated the proposed tariffs may not be implemented if Beijing takes steps to ease tensions, calming markets temporarily. However, sentiment remains fragile due to Trump’s unpredictability in trade policy as a negotiation tactic.
Traders will shift their attention to the Reserve Bank of Australia’s meeting minutes for insights into monetary policy. Concurrently, the US government shutdown continues without resolution, affecting the economic calendar, including the postponement of the CPI report to October 24. Market focus is also on Federal Reserve Chair Jerome Powell’s upcoming remarks.
The Reserve Bank of Australia’s minutes provide a detailed account of policy discussions, member votes, and views on economic conditions influencing interest rate decisions, which hold substantial impact on the AUD.
As of October 14, 2025, we are seeing the Australian Dollar hold near 0.6650 against the US Dollar, a level that brings back memories of the sharp volatility from the early 2020s. We remember how sensitive the AUD was to US-China trade rhetoric, where a single social media post could trigger a significant swing. That core sensitivity remains a key factor in our current market analysis.
RBA Policy And Economic Influences
The primary tension for the Aussie right now is the hawkish Reserve Bank of Australia versus slowing growth in China. With Australia’s latest quarterly inflation data coming in at a stubborn 4.5%, well above the RBA’s target range, we anticipate the central bank will maintain its restrictive stance at the current 4.10% cash rate. However, China’s latest Caixin Manufacturing PMI slipped to 49.8, signaling a contraction that directly threatens Australian export demand.
On the other side of the pair, the US Federal Reserve remains committed to its “higher for longer” policy, keeping the Fed Funds Rate at 5.50%. This creates a significant interest rate advantage for the US Dollar, placing a natural ceiling on any AUD/USD rallies. The wide gap between the two central banks’ rates will likely suppress major upward moves in the pair for the foreseeable future.
For derivative traders, this environment of conflicting signals is pushing up expected price swings. One-month implied volatility for AUD/USD has risen to 9.5%, near a three-month high, making options strategies like straddles attractive to play a potential breakout after the next RBA minutes are released. Those with a bearish view on China’s economy could consider buying AUD/USD put options to position for a slide below the 0.6600 support level.
Given the upcoming economic data releases, we see this as a critical time to manage risk for any existing currency exposure. Traders holding long AUD positions should consider purchasing puts to hedge against a downturn driven by negative news out of China. This strategy provides a safety net while allowing for participation in any upside surprise from a more aggressive RBA tone.
