China’s retail sales in November rose by 1.3% compared to the same month last year. This was lower than the expected 2.9% and matched October’s growth. At the same time, industrial production increased by 4.8% year-over-year, just shy of the 5.0% forecast and slightly below October’s 4.9%. Fixed asset investment showed a year-to-date drop of 2.6% by November, missing the expected decline of 2.3%, following a -1.7% in October. China’s National Bureau of Statistics released these figures, highlighting the country’s economic activity.

Australian Dollar Movement

The Australian Dollar barely changed after the Chinese economic data came out, trading at 0.6653 against the US dollar, up 0.03% for the day. This small increase happened as the market anticipates interest rate cuts by the US Federal Reserve next year. Several factors influence the Australian Dollar’s value, such as the Reserve Bank of Australia’s interest rate decisions aimed at keeping inflation stable. The health of China’s economy, a key trading partner, and iron ore prices, a major Australian export, also play important roles. Additionally, the trade balance—showing the difference between exports and imports—affects the currency’s strength. The recent economic news from China for November 2025 raises concerns. Retail sales and industrial production were both weaker than expected, and fixed asset investment has declined. This suggests that the recovery of our largest trading partner’s economy is not as strong as we thought. Despite the disappointing news from China, the Australian dollar remained stable, largely because market attention is on the United States. There is an increasing belief that the US Federal Reserve will start cutting interest rates next year. Futures markets indicate over a 70% chance of a rate cut by the Federal Reserve’s meeting in March 2026, which keeps the US dollar weaker and supports the AUD.

Trading Opportunities

For derivative traders, the lack of movement in AUD/USD offers a chance to trade on volatility. The pressure from a weak China combined with a potentially weaker US dollar creates uncertainty, making options strategies like straddles on the AUD/USD pair appealing. These strategies can profit from significant price changes in either direction in the coming weeks. It’s also crucial to keep a close eye on commodity prices, especially iron ore. The slowdown in China’s industrial production and investment directly affects demand for Australia’s key export. Recently, iron ore prices have dropped below $110 per tonne, a marked decrease from the $140 levels seen earlier in 2025. Further declines could weaken the Australian dollar. The difference in interest rates between Australia and the US will also be a key factor. The Reserve Bank of Australia has kept its interest rate steady at 4.35% for several months, a policy established in late 2023 to tackle persistent inflation. This contrasts with the anticipated easing by the Fed, which should provide some support for the Australian dollar through carry trades. Create your live VT Markets account and start trading now.

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