Australia’s trade surplus increased to 3,938 million AUD in September. This is higher than the expected 3,850 million AUD and a significant rise from the previous 1,111 million AUD. Exports grew by 7.9%, following a prior decline of 8.7%. Imports also went up by 1.1% after a 3.3% jump in August. As the trade balance widened, the AUD/USD pair dipped by 0.04% to 0.6502. The Australian Dollar was particularly strong against the New Zealand Dollar over the past week. Upcoming data is expected to influence the exchange rate further, indicating possible resistance and support levels.

The Australian Dollar and Influencing Factors

Several factors affect the Australian Dollar. Key among them are the Reserve Bank of Australia’s interest rates and the state of the Chinese economy. Iron ore prices greatly impact the Australian Dollar, as it is Australia’s top export. A trade surplus typically strengthens the AUD. The Reserve Bank of Australia sets interest rates to keep inflation stable, which directly influences the Australian Dollar’s value. The performance of the Chinese economy is also crucial since China is Australia’s largest trading partner. Australia’s trade surplus for September reached 3.94 billion AUD, exceeding expectations. This strong surplus was driven by a 7.9% rise in exports, outpacing the 1.1% increase in imports. This robust export performance is a positive sign for the Australian Dollar. However, the AUD/USD is currently trading at 0.6502, showing minimal reaction to the news. This suggests that the market is considering other global factors, particularly movements in the US dollar. We observed similar trends throughout 2024, where solid local news was often balanced by global risk sentiment or Federal Reserve policy changes.

Impact of Trade Data and Economic Indicators

This strong trade data supports the Reserve Bank of Australia (RBA) in keeping its current strict stance. The RBA has maintained a cash rate of 4.35% for much of 2025 to tackle persistent inflation, which remains just above the 2-3% target. A strong economy makes an early interest rate cut less likely, which is likely to support the AUD. We also need to pay attention to China, our largest trading partner. Its economic recovery has been uneven. Recent manufacturing PMI figures from China showed slight growth, but ongoing weakness in the property sector remains a concern. This uncertainty could cap major gains for the Australian Dollar, despite strong local figures. Commodity prices, particularly iron ore, are important too. Iron ore prices are stable around $120 per tonne, providing a solid base for our export earnings and boosting the trade balance. If prices stay above the $110 mark, they will support the AUD. In the coming weeks, we should look for strategies that take advantage of AUD strength against currencies with more dovish central banks, like the New Zealand Dollar. For AUD/USD, the mixed signals suggest range-bound trading might persist. Selling strangles could be a practical option if volatility decreases. Initial resistance is expected near the 0.6560 level, which may be a target for bearish positions. Create your live VT Markets account and start trading now.

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