The Australian Dollar (AUD) fell against the US Dollar (USD) as the USD gained strength due to plans to reopen the US government. Despite discussions about monetary policy among Reserve Bank of Australia (RBA) officials, the AUD stayed weak because of global economic concerns and geopolitical risks. The US Dollar Index stopped a five-day drop, trading around 99.50, as the government shutdown was close to ending. The US Senate passed a bill to lift the shutdown, awaiting a House vote, with President Trump expected to sign it quickly. US Treasury Secretary Scott Bessent highlighted the inflation and economic effects of the shutdown, while markets anticipated a possible rate cut in December.

China Lifts Export Bans

China temporarily lifted certain export bans, and its Consumer Price Index showed an increase. Meanwhile, Australia’s Westpac Consumer Confidence surged by 12.8% in November. The AUD/USD pair is around 0.6520 and shows potential support and resistance levels, indicating short-term trends. Several factors impact the AUD, including RBA interest rates, China’s economic condition, and iron ore prices. Australia’s Trade Balance also plays a role; a positive balance usually strengthens the AUD. As Australia’s largest export, iron ore directly influences the currency based on demand changes. The US Dollar is getting stronger with the government shutdown likely ending, putting immediate pressure on the Australian Dollar and pushing the AUD/USD pair towards the key 0.6500 level. Currently, the outlook for the Aussie seems to be downward.

Market Expectations Shift

Market attention will soon shift from the shutdown to the Federal Reserve’s next decision, which is vital for our strategy. The CME FedWatch Tool shows a 68% chance of a rate cut in December. Recently, Core PCE inflation data for October 2025 was 2.9%, hinting at possible policy easing. This view is further backed by President Trump’s prediction of inflation dropping to 1.5%, a level not seen since early 2021. In Australia, there’s a tension between the cautious Reserve Bank of Australia and strong domestic data. The RBA is questioning if its policy is still restrictive, which may limit AUD strength. However, the recent Westpac Consumer Confidence report revealed a substantial 12.8% rise for November, indicating Australian consumers feel positive about the economy. China’s impact, a key factor for the AUD, seems neutral to slightly positive. Lifting export bans to the US has reduced trade tensions, and October’s CPI data alleviates immediate worries about deflation. With iron ore prices steady at around $128 per tonne, this vital Australian export is well-supported. This situation may create a trading opportunity in the coming weeks. We could see the AUD/USD pair dip below 0.6520 as the market processes the end of the US shutdown. This moment might be a good time to consider positioning for a rebound, as attention will likely shift to the anticipated US rate cut. Thus, any short-term weakness in the Australian dollar might be temporary. A strategy could involve using options to set up for a move back toward the 0.6630 resistance level by year-end, capitalizing on expected USD weakness after a potential Fed rate cut in December. Create your live VT Markets account and start trading now.

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