The USD/CAD pair is trading at about 1.3700 as 2025’s last trading day starts, with low activity during the Asian session. This movement matches expectations of US interest rate cuts if inflation falls. The US Dollar Index has increased to 98.26, reaching a weekly high, while the US Dollar made strong gains on Tuesday. Minutes from the Federal Open Market Committee (FOMC) showed broad support for rate cuts if inflation declines further.

Inflation Trends

Consumer Price Index (CPI) data showed that headline inflation slowed to 2.7% in November, down from 3% in September. The Canadian Dollar remains steady as the Bank of Canada is likely to keep interest rates unchanged, with recent inflation stable at 2%. The Federal Reserve adjusts interest rates to manage inflation and employment. They hold eight meetings each year to assess economic conditions. They use quantitative easing (QE) and quantitative tightening (QT) as tools during economic extremes. QE usually weakens the US Dollar, while QT tends to strengthen it. With the USD/CAD pair sitting quietly around 1.3700 during low holiday trading, the key point is the growing difference in central bank policies. The US Federal Reserve is signaling more rate cuts could happen in 2026 if inflation continues to decrease. This is in contrast to the Bank of Canada, which is expected to maintain steady rates for now. As we head into January, the case for a weaker US dollar strengthens. The latest report from the US Bureau of Labor Statistics in December 2025 showed headline inflation easing to 2.7%, nearing the Fed’s target. Accordingly, the CME FedWatch Tool now indicates a greater than 70% chance of another rate cut by the March 2026 meeting.

Canadian Dollar Stability

On the other hand, the Canadian dollar has a more stable outlook. Data from Statistics Canada shows core inflation consistently around the 2% target for the last quarter of 2025. This gives the Bank of Canada little reason to cut rates, supporting the loonie. For derivative traders, this policy divergence hints at a possible drop in USD/CAD. In this quiet market, buying Canadian dollar call options or US dollar put options expiring in February or March 2026 seems appealing. This strategy allows for potential downside with limited risk as trading volumes return to normal. We also see a similar trend emerging in the futures market. The latest Commitment of Traders report from the CFTC, released just before Christmas 2025, showed that speculative net-long positions in the Canadian dollar have been increasing for several weeks. This indicates that larger traders are positioning for Canadian dollar strength against the US dollar. This situation resembles past periods, such as in 2015-2016, when differing monetary policies created lasting trends in currency pairs. As we move beyond the New Year holiday, we expect this theme to drive the pair. Anticipate increased volatility as full market participation resumes in the first full week of January 2026. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The Australian Dollar has slightly increased against the US Dollar and has held steady for a second consecutive day. This stability comes amid low trading volumes because of the New Year holiday in Australia. In December, China’s Manufacturing Purchasing Managers’ Index (PMI) climbed to 50.1, exceeding forecasts, while the Non-Manufacturing PMI rose to 50.2, also above expectations. The Australian Dollar is gaining traction due to potential interest rate hikes from the Reserve Bank of Australia (RBA). Discussions are underway about possible changes in 2026. The RBA has indicated it is ready to tighten policy if inflation does not fall as expected. The Q4 Consumer Price Index (CPI) report is scheduled for January 28 and could trigger a rate increase meeting on February 3 if core inflation appears strong.

The US Dollar Holds Steady

At the same time, the US Dollar Index remains stable after recent gains. The Federal Open Market Committee (FOMC) is likely to keep rates steady if inflation eases. The FedWatch tool shows an 85.1% chance that rates will stay the same at the next Fed meeting. Recent statistics in the US job market show mixed trends, with initial jobless claims down and continuing claims up. The AUD/USD pair is trading around 0.6690 and is following a rising channel pattern. Technical analysis suggests a bullish outlook, with the pair testing resistance at 0.6700 and potentially moving towards 0.6850. Support is found at the nine-day Exponential Moving Average (EMA) of 0.6684, with possible downside to 0.6414. The Australian Dollar is performing variably against major currencies, particularly strong against the New Zealand Dollar. The NBS Manufacturing PMI, a key economic indicator for China, increased to 50.1 in December, signaling growth in the manufacturing sector. China’s NBS Manufacturing PMI significantly influences global financial markets due to China’s economic importance. Released monthly, this data offers early insights into the health of China’s manufacturing sector, making it vital for traders.

End Of Year Insights

As we end 2025, the Australian Dollar shows strength, bolstered by unexpectedly positive manufacturing data from China. This suggests rising demand for Australian goods as we enter the new year. The AUD/USD pair remains sturdy despite holiday-thinned trading volumes. The main driver is the different approaches of the central banks. The Reserve Bank of Australia (RBA) is exploring rate hikes for 2026, while the US Federal Reserve has paused its rate-cutting cycle after cutting rates three times in 2025. This policy gap creates a favorable environment for the Australian Dollar relative to the US Dollar. This situation brings to mind late 2023, when a rebound in Chinese industrial output pushed iron ore prices above $130 per tonne, boosting the Australian Dollar. We are seeing early signs of a similar trend, with February 2026 iron ore futures on the Singapore Exchange rising 2.1% last week, indicating renewed demand from China. A key event on the horizon is the Australian Q4 inflation report set for January 28. Markets are already anticipating a high chance of an RBA rate hike at the February 3 meeting, making this data crucial. We should prepare for increased volatility around that date. Given the positive technical signals and the RBA’s hawkish stance, buying call options on the AUD/USD is a smart strategy. We’re focusing on February expiry dates with strike prices around 0.6750, just above recent highs. This positions us to benefit from a strong inflation report that could push the pair toward the 0.6850 resistance level. The main risk lies in a weaker-than-expected inflation figure, which could quickly diminish expectations for an RBA rate hike. Such a surprise might lead the AUD/USD to break below its support level around 0.6680. Therefore, defining risk strategies or implementing stop-losses is crucial to manage any potential sharp reversal. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

WTI Oil is down nearly 3% for December and has dropped close to 20% over the year. The current price is about $57.70 per barrel, falling after some brief gains earlier this week. This decline continues as expectations rise for an oil surplus. Higher production from OPEC+ and non-OPEC sources, combined with slow demand growth, contribute to this trend. Key factors influencing WTI prices include supply and demand, political instability, and global economic conditions.

Impact Of Political Events On Oil Prices

Political issues, such as recent attacks on Russian President Putin’s home and Saudi air strikes in Yemen, create uncertainty in the market. Russia claims Ukraine is provoking them, while decisions from OPEC about production also play a significant role. The American Petroleum Institute and the Energy Information Agency release weekly reports on oil inventories, affecting WTI prices based on supply and demand changes. A drop in inventories can signal higher demand, raising prices, while an increase suggests more supply, which can lower prices. OPEC, along with its larger group OPEC+, impacts WTI prices through production quotas. Adjustments to these quotas can either tighten or ease supply, influencing oil prices. OPEC typically meets twice a year to make these decisions, affecting global oil markets. WTI crude oil is projected to end 2025 down nearly 20% and trading below $58. The market is currently over-saturated. Recent data from the U.S. Energy Information Administration (EIA) shows domestic production near a record 13.3 million barrels per day in the fourth quarter. Strong non-OPEC output, along with steady OPEC+ production, suggests prices will likely remain low as we enter the new year.

Demand Projections And Geopolitical Risks

Demand projections do little to help prices recover. The International Energy Agency (IEA) earlier in 2025 predicted a significant slowdown in global demand for 2026, dropping to under 1 million barrels per day. This reflects ongoing economic struggles and a move towards energy efficiency, indicating the oil surplus might grow in the coming months. However, geopolitical risks could lead to sharp and unpredictable price changes. Renewed tensions between Russia and Ukraine, plus instability in the Middle East, add significant risk that could impact short positions. Looking back to the price shock from the 2022 conflict shows how quickly market sentiment can shift due to a single news story. With weak fundamentals and high event risk, traders should consider strategies that profit from further price drops or sideways movement while limiting potential losses. Buying put options offers a clear bet on falling prices with a set risk, providing a way to position for a drop to the low $50s. For those who think prices will remain steady or decline slightly, selling out-of-the-money call spreads can be a smart way to earn premium. Going forward, keeping an eye on weekly inventory reports is essential for signs of market balance. A surprising drop in EIA stockpiles could briefly support prices, while another large increase, like the 3.6 million barrel rise reported earlier this month, would strengthen the negative outlook. These numbers will be crucial for short-term trading choices in early 2026. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Federal Reserve’s Rate Cut

In December, the US Federal Reserve cut interest rates by 25 basis points, lowering the range to 3.50%-3.75%. While opinions vary, most officials support more rate cuts as inflation goes down. The New Zealand dollar (NZD) is influenced by several factors, including the health of New Zealand’s economy, central bank policies, and the performance of China, its largest trading partner. Dairy prices also impact export income, and the Reserve Bank of New Zealand (RBNZ) aims to maintain inflation between 1% and 3% through its interest rate decisions. Economic data releases can affect the NZD by showing how strong the economy is, potentially leading to changes in interest rates. The NZD usually performs better during stable market conditions, as overall market sentiment also influences its value. Currently, the Kiwi struggles around 0.5785, despite China’s manufacturing PMI for December unexpectedly rising to 50.1. This disconnect occurs during the New Year holiday week, known for low trading volumes. With such little liquidity, we should be careful not to over-interpret small market movements.

US Federal Reserve’s Minutes

The recent minutes from the US Federal Reserve reveal differing opinions on future actions, even after reducing rates to 3.75% in December 2025. With core US inflation remaining steady at about 2.8% over the past quarter, the market sees only a 15% chance of another rate cut in January 2026. This uncertainty helps keep the US Dollar strong. While the improvements in Chinese data bode well for New Zealand’s exports in the long run, they aren’t boosting the current market. Our more immediate concern is the recent drop in dairy prices, which have fallen for three straight Global Dairy Trade auctions. The latest auction on December 16th showed another 1.5% decrease, weakening a vital support for the Kiwi. Given this mixed situation, entering January 2026 with large, unhedged positions carries risks. Using options, such as buying puts, could help manage risk, especially to protect against falling below key support levels like 0.5750. This strategy allows for potential gains while limiting losses if there’s a sudden market shift. We expect liquidity to return in the second week of January, which should help reveal the market’s true direction. Remember how thin markets in early January 2019 led to a flash crash; it’s wise to stay hedged until a clear trend emerges. Look out for upcoming US employment data and New Zealand’s inflation report, as they will likely be the first major market movers of the new year. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The Influence of the Reserve Bank of Australia

The Reserve Bank of Australia (RBA) affects the Australian dollar (AUD) by setting interest rates for loans. These rates influence the overall economy. The RBA’s goal is to keep inflation stable at 2-3% by adjusting interest rates. When rates go up, the AUD usually gets stronger. The RBA may also use methods like quantitative easing or tightening, which change credit availability and impact the AUD. Australia’s trade with China plays a significant role in the value of the AUD. When China buys more Australian goods, the AUD rises. The price of iron ore, a major export to China, directly influences the AUD’s worth; higher prices lead to a stronger dollar. Australia’s Trade Balance, which shows the difference between exports and imports, also affects the AUD. A positive balance strengthens the currency. China’s manufacturing PMI recently nudged above 50.1, offering a fragile but slightly positive outlook for the Australian dollar. This suggests that China’s economy may be stabilizing after a tough year in 2025, but it isn’t a clear sign of strong recovery. Traders should view this as a cautious positive instead of a reason to aggressively buy the AUD.

Outlook for Iron Ore Prices

Weak data from China has a direct effect on the outlook for iron ore, Australia’s main export. Throughout the fourth quarter of 2025, iron ore prices have remained around $125 per tonne, significantly lower than earlier in the year. Until we see stronger signs of recovery in Chinese construction and manufacturing, a jump in iron ore prices—and consequently the Aussie dollar—seems unlikely. Back home, the Reserve Bank of Australia faces challenges. Recent inflation data from December shows core inflation stubbornly high at 3.5%. As a result, the RBA has kept the cash rate at 4.35% for several quarters. Meanwhile, the U.S. Federal Reserve has kept its rate steady at 5.25%. This rate difference supports the U.S. dollar and limits any gains for AUD/USD. Given this mixed situation, the AUD/USD pair, currently around 0.6700, may see low volatility as we approach January 2026. This environment can benefit derivative traders who sell volatility, like using short strangle options, by betting that the pair will stay within a certain range. The next important factor will be Australia’s quarterly inflation report in late January, which will influence the RBA’s next steps. Overall market sentiment remains cautious, which limits the appeal of risk-sensitive currencies like the AUD. While the global economy avoided the deep recession many feared in 2024, growth is still sluggish, and investors are wary. We believe this situation will keep the Aussie from experiencing a significant rally, despite some slightly better news from China. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Stable PMI and Its Economic Implications

China’s RatingDog Manufacturing PMI rose to 50.1 in December, up from 49.9. This small increase indicates a slight growth in the manufacturing sector, a positive sign for the Chinese economy as we look towards 2026. This rise in PMI aligns with other encouraging economic indicators, suggesting a potential recovery in manufacturing despite ongoing economic changes. Analysts will monitor these trends to evaluate the manufacturing sector’s path and the economy’s overall health. At the same time, the USD/CAD stayed around 1.3700 before the New Year, and the Australian dollar remained stable, even with positive PMI data from China. WTI crude oil faced a nearly 20% yearly drop, and despite the upbeat Chinese PMI, NZD/USD remained below 0.5800. Gold tried to reach $4,400 again in Asian trading, recovering from Monday’s decline. The improved Chinese NBS and RatingDog PMI data for December seemed to support this rebound. In the cryptocurrency world, Canton, Four, and Plasma saw double-digit gains within 24 hours. This growth came from an ongoing recovery in Canton and movements above the 200-period Exponential Moving Average for Four and Plasma on the 4-hour chart. The Economic Outlook for 2026-2027 appears promising, with supportive factors from 2025 expected to continue.

Market Reactions and Opportunities

China’s manufacturing sector has returned to expansion, with a PMI of 50.1—a slightly positive sign as we approach 2026. However, this increase is modest, indicating that any recovery remains fragile. Therefore, we should remain cautiously optimistic rather than adopting a strong buying stance. The Australian and New Zealand dollars, which often rise with good news from China, showed little response. This suggests that the market is skeptical and wants more proof of a sustained recovery before taking action. We can use options to prepare for a potential breakout in AUD/USD in the coming weeks while protecting against losses if this signal proves incorrect. Industrial metal prices, like copper, have dropped sharply throughout 2025, with a 12% decline year-to-date due to weak global demand. Although this PMI data might create a price floor, we need to see it result in an actual increase in new orders. We plan to look at short-dated call options on commodity ETFs as a cost-effective way to gain exposure to a potential rebound. The oil market supports this cautious view, as WTI crude is closing the year near $58 a barrel, down nearly 20% since January 2025. This indicates a broader global slowdown that a single data point from China cannot change overnight. Any rise in oil futures following this news could offer a chance to take bearish positions, such as buying puts. These mixed signals—a slightly positive PMI against weak commodity prices—are likely to increase market volatility. We’ve seen the Hang Seng Index trade within a narrow range for the last three months, which may soon change. This suggests that using options strategies like straddles on China-related ETFs might be a smart way to navigate the uncertainty heading into January. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

In December, China’s official Manufacturing Purchasing Managers’ Index (PMI) rose to 50.1 from 49.2, exceeding market expectations of 49.2 for the month. The NBS Non-Manufacturing PMI also improved, reaching 50.2 in December, up from 49.5 in November, while forecasts had predicted a 49.8 reading. At that time, the AUD/USD pair was trading at about 0.6696, which is a 0.05% increase for the day.

Factors Affecting the Australian Dollar

The Australian Dollar (AUD) is shaped by various elements, including the interest rates set by the Reserve Bank of Australia. It is also affected by the price of Iron Ore, Australia’s biggest export, and the performance of the Chinese economy, which is Australia’s main trading partner. When China’s economy thrives, it boosts the demand for Australian exports, raising the AUD’s value. On the other hand, a downturn in the Chinese economy can negatively impact the AUD. Iron Ore prices have a significant effect on the AUD; when prices rise, the currency tends to strengthen. Moreover, Australia’s Trade Balance, which measures the difference between exports and imports, supports the AUD when positive and weakens it when negative.

Economic Outlook for the End of the Year

As we approach the end of 2025, new data from China shows its manufacturing sector is expanding for the first time in three months, with the PMI up to 50.1. This unexpected growth hints at potential stabilization in our largest trading partner’s economy. This positive news, along with a stronger non-manufacturing PMI, signals that we should prepare for trends as we enter the new year. The Australian dollar, often seen as a reflection of Chinese economic health, is responding well and trading close to 0.6700. This data supports the idea that the AUD/USD pair may strengthen in the coming weeks, encouraging us to position ourselves for gains as the market absorbs this shift in momentum from China. This development also supports commodity prices like iron ore, which recently increased to $115 per tonne after a tough year. A prolonged PMI above 50 may indicate rising demand, boosting Australia’s export values and strengthening the currency. In terms of trading strategies, implied volatility in AUD options has been low during the holiday season, creating a chance to purchase call options or set up bullish call spreads on AUD/USD at a manageable cost. These strategies would enable us to benefit from a potential rally in early 2026 while clearly defining our risk. This economic boost also impacts the Reserve Bank of Australia, which has kept interest rates at 4.35% for over a year. A stronger Aussie economy, driven by Chinese demand, would lessen the likelihood of interest rate cuts in the first half of 2026. This supports the case for a stronger Australian dollar, as favorable interest rate differentials would remain intact. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Market Movements and Asset Class Dynamics

China’s Non-Manufacturing Purchasing Managers’ Index (PMI) hit 50.2 in December, exceeding expectations of 49.8. This indicates a shift from contraction to slight growth in the non-manufacturing sector. At the same time, the Manufacturing PMI also increased to 50.1 in December. Despite this positive news, the New Zealand Dollar fell against the US Dollar, remaining below 0.5800. Responses from other currencies varied. The Australian Dollar remained steady after the PMI news, while the People’s Bank of China set the USD/CNY reference rate at 7.0288, down from 7.0348. In a broader market view, we saw significant changes in various asset classes. West Texas Intermediate (WTI) crude oil stayed below $58.00, nearing a 20% decline for the year. Additionally, the EUR/USD pair dropped below 1.1750 following the release of the Federal Reserve’s meeting minutes. In commodities, gold tried again to rise toward $4,400. This situation illustrates the complex dynamics across global markets, affecting currencies, commodities, and economic indicators. Overall, recent data shows China’s economy is only slightly growing, with a Non-Manufacturing PMI of 50.2. While this is better than expected, it does not signal a strong recovery. It suggests a minor stabilization following the significant troubles in the property sector since the crisis of 2023-2024.

Trading Strategies and Market Sentiment

The lack of movement in commodity currencies like the Australian and New Zealand dollars is revealing. Usually, positive news from China would lead to gains in these currencies, but their stability indicates a lack of market confidence. After Australia’s trade surplus with China became volatile in mid-2023, it’s clear the market needs more than a single positive PMI report. This weak sentiment is further illustrated in the oil market, where WTI crude is close to a 20% drop for 2025. Such a sharp decline in a vital industrial commodity points to declining global demand, a concern that a PMI of 50.2 cannot fix. This trend aligns with the slowdown in factory orders in industrial economies like Germany, noted throughout the latter half of 2024. For the upcoming weeks, these mixed signals suggest that volatility is a reliable trading approach. The CBOE Volatility Index (VIX), averaging around 17 in late 2024, has shown signs of activity, and options pricing for major indices reflects this uncertainty. We should consider buying straddles or strangles on indices like the S&P 500 to prepare for a significant market move in either direction. Given the weak global outlook, we should be cautious about becoming too positive on risk assets. Selling rallies in the Australian dollar against the US dollar with defined-risk option strategies, such as bear call spreads, might be wise. This strategy allows us to position for continued sluggishness without taking on unlimited risk. Gold’s consistent strength, now approaching $4,400 an ounce, highlights the underlying fear in the market. This trend shows that capital continues to flow into safe havens, confirming that the broader market sentiment remains risk-averse, despite some minor good news. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

China’s Manufacturing PMI rose to 50.1 in December, surpassing expectations of 49.2. The Non-Manufacturing PMI also increased to 50.2, indicating modest growth in those sectors. Despite the positive Chinese data, the NZD/USD exchange rate remained below 0.5800. Similarly, the Australian Dollar held steady after the NBS report.

Changes In USD CNY Rates

Meanwhile, the People’s Bank of China set the USD/CNY reference rate at 7.0288, down slightly from 7.0348. The GBP/USD stayed stable above 1.3450, even with low trading volumes. In wider markets, the EUR/USD fell below 1.1750 after the Federal Reserve released its meeting minutes. Trading volumes are light due to the upcoming New Year holidays. In commodities, gold aimed for another rise toward $4,400 during Asian trading, supported by the positive Chinese PMI data. Trading was mostly flat, and indexes like the S&P 500 showed little movement. Looking ahead to 2026, we expect solid economic performance, thanks to ongoing supportive factors from 2025. The crypto market outlook remains volatile, affected by regulatory changes and technology adoption.

Impact Of Chinese Manufacturing PMI

The unexpected rise in China’s manufacturing PMI to 50.1 signals important trends as we move into January. Although barely in the expansion zone, this breaks a trend of weaker data from the third quarter of 2025. Since China consumes over 50% of the world’s refined copper, this news could spark interest in industrial metals that have remained dormant. The Australian Dollar, often seen as a reflection of the Chinese economy, has faced pressure for weeks. This positive data provides a reason to consider call options on the AUD/USD, anticipating a turnaround in early 2026. This is even more relevant given the slow holiday markets where new trends can quickly develop. Gold’s movement toward $4,400 appears partly influenced by the positive news from China, highlighting a focus on industrial demand. However, if this data suggests a broader ‘risk-on’ sentiment for 2026, the demand for gold as a safe haven might lessen. This could present an opportunity to buy puts, betting that gold is overpriced compared to its historical link with real interest rates. Trading volumes are low, meaning unexpected news could cause significant market movements. Implied volatility for China-related assets, like options on the FXI ETF, may be underestimated as we approach the first full week of trading. Reflecting on early January 2023, we saw how quickly market sentiment could change post-New Year, leading to sharp price shifts. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The People’s Bank of China (PBoC) has set the USD/CNY central rate at 7.0288 for the next trading session. This is lower than the previous day’s rate of 7.0348 and higher than the Reuters estimate of 6.9945. The PBoC aims to keep prices and exchange rates stable while also promoting economic growth. The bank works on financial reforms, with significant influence from the Chinese Communist Party.

Monetary Policy Tools

The PBoC uses several monetary policy tools that differ from those in Western countries. These tools include the Reverse Repo Rate, Medium-term Lending Facility, currency interventions, and the Reserve Requirement Ratio. The Loan Prime Rate is used as the benchmark interest rate. Currently, China has 19 private banks, with WeBank and MYbank being the largest. These banks are supported by technology giants Tencent and Ant Group. Since 2014, China has allowed privately funded banks to operate within its mostly state-controlled financial system. Economic activity remains stable in different regions, with markets reacting to recent data and preparing for upcoming reports. Thin trading volumes are due to the New Year holiday. Today, the People’s Bank of China has set a stronger yuan against the dollar at 7.0288, signaling stability as the new year approaches. However, this rate is slightly weaker than what the market expected. Traders should view this decision not as a sign of significant yuan strength but as a signal that authorities will continue to manage the currency’s value closely.

Market Stability and Economic Indicators

This action aligns with the central bank’s recent strategy, which included keeping the one-year Medium-term Lending Facility (MLF) rate steady at 2.45% in December 2025. This indicates a neutral policy, making sudden currency changes unlikely in the near future. Derivative traders might consider selling volatility or using range-bound strategies on USD/CNH for the first few weeks of January 2026. Back in 2019, markets were nervous when the yuan weakened past the 7.0 per dollar mark. However, the current situation is more controlled. Even though the rate is above this key level, the PBoC shows it has the tools and willingness to prevent a sudden drop. This controlled situation lessens the risk of unexpected market movements that traders had concerns about in the past. Positive economic data supports a stable or stronger currency. For example, China’s manufacturing PMI for December 2025 rose to 50.1. Additionally, government reports show industrial production grew by 4.9% year-over-year in November 2025. The slight rise in one-month implied volatility on USD/CNH options to 4.8% likely reflects holiday-thinned markets rather than a major outlook change. The managed stability of the yuan is also a good sign for commodity-linked currencies, especially the Australian Dollar (AUD). We’ve seen that the AUD’s connection with Chinese economic data has increased to over 0.75 in the latter half of 2025. Thus, traders might consider long AUD positions as a way to benefit from ongoing stability and strength in China’s economy as we enter 2026. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now