AUD/USD remains steady above 0.6650, approaching the highest levels since mid-September, with Chinese trade data in focus.

Market Waits for Signals from China’s Trade Balance Data Release

The AUD/USD currency pair has been consolidating in the new week’s trading, with the spot price around 0.6640, gradually approaching the high levels seen since September 16. Traders are currently focusing on China’s trade data, hoping to find short-term trading opportunities ahead of this week’s key central bank events.

Central Bank Policy Divergence Supports the Australian Dollar

The Reserve Bank of Australia (RBA) will announce its policy decision on Tuesday. The market widely expects interest rates to remain unchanged, while continuing to monitor inflation control efforts. RBA Governor Michelle Bullock recently acknowledged that current inflation has yet to stabilize and fall back into the RBA’s 2% to 3% annual target range. Meanwhile, the Australian economy has recorded its strongest annual growth in nearly two years, coupled with a resilient labor market, fueling speculation about a possible rate hike by the RBA next year.

In contrast, the U.S. Federal Reserve (Fed) has taken a more dovish stance. Recent U.S. macroeconomic data indicate a slowdown in economic momentum, and comments from several Fed officials suggest that a December rate cut is almost certain. According to CME Group’s FedWatch tool, market participants estimate a nearly 90% probability that the Fed will implement a 25 bps rate cut this Wednesday. This stark policy expectation divergence has created conditions for dollar weakness, thereby supporting the upward momentum of the AUD/USD pair.

Technical and Policy Factors Create a Confluence

Currently, traders are adopting a wait-and-see approach, preferring to await comments from Fed Chair Jerome Powell during the post-meeting press conference for clearer signals on the future path of rate cuts. This cautious stance has led to a lack of clear direction in the Asian session, with relatively flat performance.

Nevertheless, the fundamental landscape appears to support the bullish case for the Australian dollar, with the minimal resistance path for AUD/USD still pointing upward. From a technical perspective, any meaningful pullback could attract buyers, especially if it finds support at existing levels, reinforcing the resilience of the upward trend. Therefore, the release of China’s trade balance data will be a key early-week catalyst for the market, potentially providing new trading momentum for the Australian dollar and the currency pair.