China’s Commerce Ministry has recently shared plans to tackle development issues and stabilize global supply chains. Currently, the value of AUD/USD is down by 0.05% at 0.6490, reflecting global economic trends. The Australian Dollar (AUD) is strongly affected by the Reserve Bank of Australia’s (RBA) interest rates, which are key in managing inflation. Since iron ore is Australia’s main export, its price has a big impact on the AUD, particularly because China buys a large portion of this export. Market sentiment also affects the AUD, with its value changing based on how risk is perceived globally.

The Role Of The Reserve Bank Of Australia

The RBA controls interest rates, which influences the economy as a whole, targeting an inflation rate of 2-3%. Higher interest rates compared to other central banks support the AUD, while quantitative measures can either boost or weaken it. The state of China’s economy significantly impacts how much AUD is in demand, with changes in Chinese growth data affecting Australia’s exports. Iron ore exports, valued at $118 billion in 2021, are essential; fluctuations in their prices can change Australia’s Trade Balance. A positive Trade Balance strengthens the AUD. This balance, influenced by differences between exports and imports, ultimately dictates the currency’s value as global trade dynamics evolve. Recently, China has responded to rising concerns about its economic strength. This is evident in the latest NBS Manufacturing PMI, which fell to 49.8 for September 2025, indicating slight contraction and reduced demand for Australian resources. The slowdown in China has pushed down iron ore prices, crucial for the Australian dollar. Prices, which were above $130 per tonne in early 2024, now sit around $108. This drop creates a challenge for the AUD, as lower commodity revenue narrows Australia’s trade balance, which we’ve seen decrease over the last quarter.

Potential Shift In RBA Stance

In Australia, the RBA may be changing its position. The latest inflation data for Q3 2025 came in cooler than expected at 3.2%, leading to discussions about possible interest rate cuts in the first half of 2026. This is quite different from 2023 when the central bank was steadily increasing rates. Given these developments, traders are gearing up for potential further weakness in the AUD/USD pair, currently around 0.6490. One strategy could be to buy put options to profit if the currency’s value drops. For instance, December 2025 puts with a strike price near 0.6350 might be a way to take advantage of this negative sentiment. However, the Chinese government’s promise to “safeguard global supply chain stability” adds a layer of uncertainty. If a major stimulus is announced, it could lead to a sudden turnaround, surprising those holding bearish positions. Therefore, using defined-risk strategies like bear put spreads, which can minimize losses if the AUD unexpectedly rises, should be considered. Create your live VT Markets account and start trading now.

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