The AUD/USD pair is holding steady near 0.6550 after China released its September trade balance data. China’s trade surplus was $90.45 billion, which was less than the expected $98.96 billion, affecting market activity. After a 1.25% drop in the previous session, AUD/USD saw a small increase and is trading around 0.6530 during the Asian session. China’s trade surplus in yuan was CNY645.47 billion, down from CNY732.7 billion, as both exports and imports grew year-over-year in September.

US Government Shutdown

The current US government shutdown, expected to last through at least Tuesday due to Columbus Day, is putting pressure on the US Dollar. This situation has made it harder for the AUD/USD pair, especially because of ongoing trade tensions tied to US President Trump’s tariff threats on Chinese imports. Australia is also looking into establishing a strategic reserve for critical minerals, valued at A$1.2 billion, which could affect the AUD. These talks involve setting minimum prices and funding rare earth projects. The Reserve Bank of Australia’s interest rate decisions can significantly influence the AUD. The economic conditions in China and iron ore prices are crucial, as any changes in these areas can impact the Australian Dollar’s value. As of October 13, 2025, the AUD/USD pair is facing mixed signals. China’s September trade surplus being lower than expected at $90.45 billion generally puts pressure on the Aussie dollar. This situation signals caution, as a slowdown in Australia’s biggest trading partner could limit any major gains for the currency.

Impact of Trade Tensions

The US government shutdown is weakening the US Dollar, providing some stability for the AUD/USD around the 0.6530 mark. Similar past shutdowns, like the one from 2018-2019, led to lower consumer confidence and a weaker dollar. Fitch Ratings noted that a lengthy shutdown could reduce US Q4 2025 GDP growth by 0.2% for every week it goes on, supporting a bearish outlook for the dollar in the short term. On the other hand, the renewed trade tensions between the US and China are creating a risk-averse mood in the broader market. This tension is reflected in Gold reaching a record high of $4,060 and a sharp decline in the crypto market. Such conditions generally put pressure on risk-sensitive currencies like the Australian Dollar, counteracting the US Dollar’s weakness. For derivative traders, this indicates a phase of high volatility rather than a clear trend. Recently, iron ore futures, a vital Australian export, have fallen below $110 per tonne on the Dalian exchange due to concerns over Chinese demand. This drop from late September 2025 highs adds to the pressure on the AUD. Given these factors, strategies that capitalize on price fluctuations seem most effective. Buying volatility through options—such as a long straddle on the AUD/USD—could be a smart approach to navigate the expected volatility in the coming weeks. One-month AUD/USD options’ implied volatility has already reached a three-month high of 12.5%, indicating that the market expects significant price movements. Looking ahead, we are also keeping an eye on discussions regarding Australia’s A$1.2 billion critical minerals strategic reserve. Although this initiative is a longer-term positive for the AUD, it won’t shield the currency from immediate challenges posed by US political conflicts and trade rhetoric. However, it does indicate a fundamental strength that could prevent a drastic decline in the currency pair. Create your live VT Markets account and start trading now.

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