The AUD/USD pair starts the week close to 0.6640, near its highest point since mid-September. The market is watching for China’s Trade Balance data and key central bank events that could shift currency values. The Reserve Bank of Australia (RBA) is expected to keep its interest rate steady on Tuesday. Strong growth and a robust job market in Australia hint at potential rate hikes next year. In contrast, the US Federal Reserve is likely to lower rates, putting pressure on the USD. Recent US data shows a slow economic decline, leading traders to predict a 25-basis-point rate cut in December, with a 90% likelihood according to the CME Group’s FedWatch Tool. Traders are treading carefully, waiting for news on the Fed’s rate policies, which keeps the AUD/USD pair stable. China’s Trade Balance release could impact the AUD, given the country’s close economic ties with Australia. There’s a belief that AUD/USD could rise, and if there’s a significant drop, it might offer a chance to buy. China’s trade numbers affect global forex markets, particularly currencies like the CNY and related economies. With the AUD/USD stable around multi-month highs, we should consider taking positions for further gains because of the big differences in policies between the RBA and the Fed. The Australian dollar is gaining from expectations that its central bank will remain firm, while the US dollar is weakening due to anticipated rate cuts. This divergence offers clear opportunities for trading in the coming weeks. New data today reveals that China’s trade surplus grew to $68.4 billion last month, exceeding expectations due to a surprising rise in exports. This is good news for Australia, its biggest trading partner, and strengthens the case for the Aussie dollar. It serves as an early sign of the strength supporting this currency pair. Tomorrow, the Reserve Bank of Australia is likely to keep rates unchanged, but inflation remains a concern, currently around 4.9% annually. Australia’s economy and job market are holding strong, leading to talks about a possible rate hike in 2026. This is in stark contrast to the US situation, where weak economic data has led to expectations of rate cuts by the Fed. The highlight of this week is the Federal Reserve meeting, where a 25-basis-point rate cut is almost fully expected. The market’s response will hinge on Chair Jerome Powell’s press conference and the Fed’s new economic forecasts. Any indication of a slower pace for future cuts could trigger a brief pullback, offering a better entry point for bullish traders. With major events on the horizon, we expect higher volatility, which makes long calls pricier. Instead, we should consider bull call spreads on the AUD/USD to take advantage of expected upward movement affordably. This strategy helps define risk while allowing for profit if the pair moves toward 0.6700 and beyond. We saw a similar pattern in late 2023, where anticipation of a Fed pivot against a still-hawkish RBA led to a significant rise in the AUD/USD. Traders who acted early during that period were rewarded. The current economic conditions resemble that time, suggesting that any dips will likely be limited and attract buying interest.

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