The AUD/USD pair steadied near 0.6530 during Monday’s Asian session, recovering modestly after posting around 1.25% losses in the previous session. The Australian Dollar (AUD) moved little following China’s latest trade balance data, which showed a smaller-than-expected surplus and mixed trade momentum in September.
China’s trade data signals uneven recovery
China’s Trade Balance for September recorded a surplus of CNY 645.47 billion, narrowing from August’s CNY 732.7 billion. In USD terms, the surplus reached $90.45 billion, falling short of market expectations of $98.96 billion and down from $102.33 billion previously.
Exports rose by 8.4% year-over-year (YoY), outpacing the 4.8% increase seen in July, while imports grew by 7.5% YoY compared to the previous 1.7%. The data points to continued external demand recovery but signals softer trade dynamics overall, limiting support for China-proxy currencies such as the Aussie.
Trade tensions linger despite Trump’s softer remarks
AUD/USD had come under pressure on Friday as renewed trade tensions between China and the United States (US) weighed on risk sentiment. Former US President Donald Trump said there was no reason to meet with China’s President Xi Jinping at the upcoming South Korea summit and reiterated plans to impose 100% tariffs on Chinese imports. In response, China warned it would retaliate if the US followed through on the threat.
However, Trump moderated his tone on Sunday, saying on Truth Social that China’s economy “will be fine” and that the US wants to “help China, not hurt it.” His comments offered a modest lift to risk-sensitive assets, including the Australian Dollar.
Domestic policy developments and US shutdown influence sentiment
According to Reuters and The Age, a leaked brief from Prime Minister Anthony Albanese’s department revealed that Australian officials are in talks with miners about contributing to a A$1.2 billion ($776 million) “critical minerals strategic reserve.”
The government is reportedly considering setting minimum prices for rare earths and co-funding new projects under a strategic partnership with the US, potentially supporting Australia’s export outlook.
Meanwhile, the ongoing US government shutdown continues to weigh on the Greenback. Federal employees missed their first October paychecks on Friday, and the stalemate is expected to persist at least until Tuesday due to the Columbus Day holiday. The extended disruption, combined with political uncertainty, keeps the USD subdued, offering some near-term support to the AUD/USD pair.
