China’s trade balance for September was CNY645.47 billion, down from CNY732.7 billion last month. Exports rose by 8.4% compared to last year, and imports increased by 7.5% in the same timeframe. In US Dollar (USD) terms, China’s trade surplus for September was less than expected. It reached +90.45 billion USD, compared to an expected +98.96 billion USD and a previous +102.33 billion USD.

Australian Dollar Reaction

The Australian Dollar (AUD) strengthened after the trade data release, rising over 0.6525, a 0.84% increase for the day. It also did well against the Japanese Yen and other major currencies. China will soon release August’s trade balance figures, likely affecting global markets, including forex. The AUD is influenced by interest rates from the Reserve Bank of Australia, iron ore prices, and China’s economic performance. These elements, along with the trade balance, play a big role in the Australian Dollar’s value. When trade balances are positive and iron ore prices are high, the AUD usually strengthens, suggesting strong demand for Australian exports. Recent data shows China’s domestic demand is surprisingly strong, even outpacing export growth. Although the overall trade surplus decreased, the notable import increase of 7.4% year-over-year, compared to a 1.5% expectation, is noteworthy. This indicates that the Chinese economy may have more momentum than previously assumed, impacting its main trading partners.

Impact on Australian Dollar

The AUD’s quick rise above 0.6525 directly relates to the stronger Chinese import data. Since China is Australia’s biggest trade partner, strong demand there boosts the need for Australian raw materials. We’ve seen this pattern before, where positive surprises in Chinese growth spur AUD rallies. Iron ore futures are also on the rise, with recent trades on the Singapore Exchange for November 2025 delivery around $118 per tonne. This is a significant increase from earlier lows this year, providing a boost for the Australian dollar. Higher commodity prices improve Australia’s trade conditions, supporting the currency’s value. Domestically, the Reserve Bank of Australia has a more hawkish approach than many other central banks, keeping the cash rate at 4.85% in its October 2025 meeting to control inflation. This interest rate gap, especially against currencies like the Japanese Yen, makes holding AUD more attractive. This policy difference has consistently backed AUD/JPY throughout 2024 and 2025. In the next few weeks, traders could benefit from a rising AUD. This might mean buying AUD call options to bet on further gains against the US dollar, targeting the 0.6620 level. For those who are neutral to bullish, selling out-of-the-money AUD put options could allow them to collect premium while betting that the currency won’t drop significantly. Keep an eye on upcoming Chinese industrial production figures and Australia’s next quarterly CPI inflation report. These statistics will be crucial in determining if the current strength is just a short-term reaction or the beginning of a longer-lasting trend. Any signs of weakness in this data could quickly reverse the AUD’s recent gains. Create your live VT Markets account and start trading now.

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