Australia’s National Australia Bank’s business confidence index rose from 4 to 7 in September. This increase shows that businesses are becoming more optimistic, even amidst tough economic times. In the currency markets, the British pound faced pressure due to strong demand for the Japanese yen, but it stayed above 202.50 before the release of UK employment data. Meanwhile, the Australian dollar dropped slightly as uncertainty grew about the Reserve Bank of Australia’s interest rate plans. The AUD/JPY currency pair fell close to 98.50, reflecting expectations of cautious rate policies from the RBA.

Gold Prices Increase

In commodities, gold prices rose in Pakistan, India, and Malaysia, according to FXStreet data. This increase is linked to broader market movements and geopolitical risks that are influencing investor interest in precious metals. Looking at the global market, the EUR/USD exchange rate showed little change, remaining above 1.1550 ahead of Germany’s ZEW Survey results. Preparations for upcoming speeches and economic reports are helping shape market expectations. In US stock markets, we are seeing recovery from recent declines, driven by easing trade tensions with China, which is restoring a sense of stability in financial markets. We’re noticing a significant rise in Australian business confidence, now at 7 in September, up from 4. This is the highest level of optimism we’ve seen since the second quarter of 2025, indicating that businesses are feeling more positive about future conditions.

Growing Confidence in the Australian Dollar

This boost in confidence is likely to support the Australian Dollar in both the spot and futures markets. Call options on the AUD/USD, especially with strike prices above the recent 0.6850 resistance, are becoming more appealing. This is based on the belief that the Reserve Bank of Australia may delay any planned rate cuts. This perspective is backed by recent inflation data, with the Q3 2025 CPI at 3.1%, slightly above the RBA’s target band. The official cash rate has remained at 4.35% for the past year, so this ongoing inflation reduces the chances of any easing soon. Thus, we should be careful about expecting any dovish shifts from the central bank. Additionally, the stabilization of iron ore prices around $115 per tonne provides strong support for the currency. A robust commodity market has historically driven the Australian economy and its currency. Traders might consider this as a reason to hedge against possible declines in the Aussie by selling out-of-the-money puts. Comparatively, the US Federal Reserve has taken a more neutral stance, indicating a ‘higher for longer’ policy without immediate hawkish signals. This difference makes long AUD/USD positions an attractive trading option in the coming weeks. The main risk remains any unexpected downturn in global growth, especially from China. Create your live VT Markets account and start trading now.

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