## The AUD/USD and Global Market Conditions In November, China’s trade surplus in Chinese Yuan reached CNY792.57 billion, up from CNY640.40 billion. Exports rose by 5.7% year-on-year (YoY), a contrast to the 0.8% decline in October. Imports grew by 1.7% YoY, compared to a previous increase of 1.4%. In US Dollar terms, China’s trade surplus was $111.68 billion, higher than the expected $100.2 billion and the previous $90.07 billion. Exports increased by 5.7% YoY, exceeding the forecast of 3.8% and last month’s 1.1%. Imports also grew, by 1.9% YoY, which was below the expected 2.8% but better than the 1.0% rise seen earlier. The AUD/USD pair climbed by 0.12% to 0.6647 after the trade data was released. The Australian Dollar outperformed other major currencies due to favorable global market conditions. Both the Reserve Bank of Australia and the US Federal Reserve were expected to announce interest rate decisions, which could impact currency movements. ## Factors Affecting the Australian Dollar The Australian Dollar is influenced by several factors, including the Reserve Bank of Australia’s interest rates, iron ore prices, and China’s economic health. A positive trade balance strengthens the AUD as it indicates higher export demand. The combination of these factors dictates the AUD’s worth in the foreign exchange market. Based on the latest data from December 8, 2025, we see a strong performance in China’s trade numbers, guiding our strategy. The trade surplus grew to $111.68 billion, significantly exceeding expectations due to a robust 5.7% YoY increase in exports. This suggests that global demand for Chinese goods is rising faster than expected as we approach 2026. This unexpectedly good export performance supports a positive outlook for currencies and commodities linked to Chinese industrial activity. We should consider short-term call options on the Australian Dollar, as the AUD/USD has already reacted positively, nearing 0.6650. This data offers a strong fundamental reason for the Aussie to continue its recent strength against other currencies. The rally gains further support from robust commodity markets, especially iron ore, which is Australia’s largest export. Recent reports indicate that iron ore prices have reached a 14-month high of $135 per tonne due to restocking by Chinese steel mills. This trend reinforces the case for holding long positions in AUD or investments related to mining sector stocks. However, we should also be mindful of the weaker import growth of only 1.9%, which fell short of forecasts. This signals sluggish domestic consumption in China, a trend we noticed during the uneven recovery phase in late 2023. This shows that the trade situation is more influenced by global demand than a complete recovery of the Chinese economy. The biggest risk to this outlook in the near term arises from the upcoming central bank meetings later this week. The US Federal Reserve is balancing recent strong job data against its interest rate plans, while the Reserve Bank of Australia faces a domestic inflation rate that has risen to 3.8%. These situations will likely create significant market volatility. Given the mixed signals from strong external data and the risks from central banks, making a straightforward directional bet is risky. A more cautious approach in the coming weeks would be to buy AUD/USD volatility. For example, purchasing an options straddle would allow us to profit from substantial price movements, regardless of whether the RBA or Fed surprises us with hawkish or dovish news. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now