The Australian Dollar (AUD) has gained strength against the US Dollar (USD) for the second consecutive session. This increase follows comments from Andrew Hauser, Deputy Governor of the Reserve Bank of Australia, highlighting the need for strict monetary policies to combat inflation. Hauser pointed out that demand in Australia is already higher than potential output, allowing little room for easing. At the same time, the AUD is benefiting from improved relations between the US and China. China has temporarily lifted its ban on exporting dual-use items to the US, which may positively influence the AUD due to Australia’s trade connections with China. Recent data shows that China’s Consumer Price Index rose by 0.2% year-over-year in October, while the Producer Price Index dropped by 2.1% in the same timeframe.

The US Dollar and Market Movements

The US Dollar remains stable as the Senate moves forward with a funding bill to prevent a government shutdown. However, the Consumer Sentiment Index has fallen to 50.3 in November, the lowest point since June 2022. In October, companies eliminated over 153,000 jobs, marking the largest cut in more than 20 years. On a brighter note, the ADP Employment Change increased by 42,000 in October. The Australian Dollar is gaining against major currencies, particularly the Japanese Yen. As of November 10, 2025, the Australian Dollar shows signs of continued strength. The Reserve Bank of Australia is keeping a firm approach, with Deputy Governor Hauser stressing the importance of strict policies to manage inflation. This is backed up by Australia’s latest quarterly CPI reading in late October 2025, which was 3.9%, higher than expected, indicating there will be no rate cuts soon. The temporary easing of trade tensions between the US and China is another positive factor for the AUD, considering that China is Australia’s main trade partner. China’s decision to lift its ban on some exports to the US indicates a slight improvement in relations, which is good for overall market sentiment. This has been reflected in commodity markets, with iron ore futures recently climbing back above $130 per tonne, a level not consistently maintained since early 2025. On the flip side, the outlook for the US Dollar is becoming uncertain. Although the immediate threat of a government shutdown seems to be diminishing, the underlying economic data is weak. This was evident in the disappointing results from the University of Michigan Consumer Sentiment Index. The latest US Non-Farm Payrolls report on November 7, 2025, showed only 95,000 jobs added, falling short of expectations and suggesting a cooling labor market that could lead the Federal Reserve to consider rate cuts next year.

Opportunities for Traders

For derivative traders, this situation presents a clear opportunity to bet on further AUD/USD strength in the coming weeks. Buying call options with strike prices above the 50-day EMA of 0.6535 could be a smart move to take advantage of a potential rise toward the 0.6630 resistance level. This strategy benefits from the differing policy outlooks between a steadfast RBA and a likely lenient Federal Reserve. To manage risk, it’s important to note that economic data from China is mixed, with the manufacturing PMI showing a decline. A hedge could be created by buying put options on the AUD/JPY cross. If global growth concerns return and risk sentiment becomes negative, the safe-haven Japanese Yen would likely strengthen against the risk-sensitive Australian Dollar. The conflicting economic signals from the US and China are expected to keep implied volatility high for the AUD/USD pair. This environment could be advantageous for traders anticipating a significant price movement but uncertain of the direction. Implementing straddles around key upcoming data releases, such as the next US inflation report or Federal Reserve meeting minutes, could yield profits. Create your live VT Markets account and start trading now.

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