Australia’s S&P Global Manufacturing PMI dropped to 49.7 in October from 51.4 in September. This indicates a decline in the manufacturing sector since any score below 50 signals a contraction. The Australian Dollar stayed stable after the PMI report. Meanwhile, the USD/CNY reference rate was adjusted to 7.0928, down from 7.1235.

US Dollar And Currency Trends

The US Dollar Index experienced slight losses, remaining below 99.00, as everyone prepares for upcoming US CPI inflation data. The NZD/USD pair stayed about the same, trading around 0.5750, ahead of US-China trade discussions. In currency news, EUR/USD was solid during the North American session, trading near 1.1617. However, GBP/USD dropped for the fifth day in a row, finding support just above 1.3300. Gold traded in a stable range around $4,100, affected by rising US Dollar and Treasury yields. Ethereum continued to see growth as large investors increased their holdings, particularly wallets holding between 10,000 and 100,000 ETH. The Japanese Yen stabilized after Sanae Takaichi became Prime Minister. The price of Aster increased thanks to a booming cryptocurrency market as Bitcoin surpassed $109,000 and Ethereum rose past $3,800.

Australia’s Economic Outlook

New data indicates that Australia’s manufacturing sector is contracting, with the PMI at 49.7. This marks a shift from growth to decline, suggesting a broader economic slowdown. We believe this could weaken the Australian dollar in the near future. This contraction places pressure on the Reserve Bank of Australia (RBA) to ease its monetary policy. With the official cash rate at 3.5% and unemployment rising to 4.5%, more rate hikes seem improbable. This situation mirrors what we saw in 2023 when low demand from China prompted the RBA to take a softer approach. For derivative traders, this offers a chance to bet on a lower AUD/USD. Purchasing put options on the Australian dollar can provide a clear path to profit from this decline while maintaining defined risk. The outlook is further complicated by external factors, as iron ore prices—a crucial export—dropped over 8% in October to below $100 per tonne. This decline in national income only adds to the domestic manufacturing challenges. It reinforces our belief that the AUD is likely to trend lower. While we focus on Australia, we are also keeping an eye on the upcoming US inflation report. If the US CPI comes in higher than expected, it could boost the US dollar, putting additional downward pressure on the AUD/USD pair and increasing the potential rewards from bearish options strategies. Create your live VT Markets account and start trading now.

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