Australia’s imports dropped sharply from 2% to 0.2% in November, indicating a significant decline in month-to-month import activity. Other financial updates include the USD/CAD rising above 1.3850, amid ongoing worries about Canadian oil demand.

WTI Prices and the Reserve Bank of Australia’s Position

WTI prices climbed back above $56.00 after the EIA reported a large drop in inventory. A representative of the Reserve Bank of Australia mentioned that interest rate cuts are unlikely soon. The Australian dollar showed little change after the trade balance data was released. Meanwhile, the PBOC set the USD/CNY reference rate at 7.0197, slightly up from the previous 7.0187. Recent highlights include market trends where EUR/USD found support around 1.1670 and GBP/USD held steady above the mid-1.3400s. Gold prices fell near $4,450 due to reduced demand for safe-haven assets. XRP faces selling pressure, with important on-chain metrics resetting. Moreover, ETF inflows are weakening, affecting investor confidence.

2026 Economic Outlook

The 2026 economic outlook is cautiously optimistic, urging market participants to remain alert. Various brokers offer suggestions like low spreads, high leverage, and Islamic accounts. Australia’s import drop in November to 0.2% from 2% signals a significant slowdown in domestic demand. This trend, along with the Reserve Bank’s indication that rate cuts are not in the near future, suggests a bearish outlook for the Australian dollar. The market may not fully grasp how quickly the Australian economy is losing steam. This internal weakness comes as China’s economic challenges create additional pressure. With the USD/CNY reference rate now above 7.01, Australian exports are becoming pricier for China. This is concerning at a time when China’s industrial activity is sluggish, as shown by the most recent Caixin Manufacturing PMI at 50.8, indicating barely any growth. We’ve seen similar situations before. In 2025, the RBA kept rates steady for months even as leading indicators showed signs of weakness, eventually leading to a sharp decline in the AUD. The central bank may be repeating the same error by reacting slowly to obvious signs of economic downturn. For traders, this presents a strong opportunity to bet on a lower AUD/USD. Buying put options on the Australian dollar is a smart strategy, providing a limited-risk way to profit from expected declines. With the currency pair’s volatility being relatively low in late 2025, securing these options remains appealing. The main risk to this outlook is the upcoming Australian inflation report. If the Consumer Price Index is unexpectedly high, it could validate the RBA’s hawkish approach and trigger a sharp, albeit temporary, rally in the currency. Thus, it’s crucial to manage any short positions carefully around this data release. Create your live VT Markets account and start trading now.

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