The Australian dollar (AUD) strengthened against the US dollar (USD) on Monday, extending gains for the second consecutive session. The AUD/USD pair advanced as the currency found support from hawkish comments by Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser, who emphasized the importance of maintaining restrictive monetary policy to control inflation.
RBA’s Hauser highlights limited room for policy easing
Deputy Governor Hauser noted that Australia’s monetary policy faces “unusual challenges,” as the nation’s post-pandemic recovery began with demand already exceeding potential output.
He added that the economy’s growth phase has been the tightest since the early 1980s, leaving little scope for expansion without reigniting inflationary pressures. Hauser’s remarks reinforced expectations that the RBA will keep rates elevated for an extended period, supporting the Aussie.
Improved Chinese data and trade sentiment lift AUD
The Australian dollar also gained traction from easing US-China trade tensions and upbeat Chinese economic data. China’s Ministry of Commerce announced a temporary suspension of export restrictions on certain “dual-use items” such as gallium, germanium, antimony, and super-hard materials to the US, effective until November 27, 2026.
The development signaled improving diplomatic and trade relations between Beijing and Washington an encouraging sign for Australia, given its close trade ties with China.
China’s October inflation data further bolstered sentiment, showing a 0.2% year-over-year rise in the Consumer Price Index (CPI) after a 0.3% decline in September, surpassing expectations for no change. Meanwhile, the Producer Price Index (PPI) fell 2.1% YoY, improving slightly from September’s 2.3% drop. The data suggested modest stabilization in China’s economic momentum, offering additional support for the AUD.
USD steadies as US shutdown deal progresses
The US dollar index (DXY) held steady around 99.60 as investors digested reports of progress toward ending the federal government shutdown. According to Bloomberg, centrist Senate Democrats agreed to support a deal to reopen the government and fund several departments through next year. The agreement would ensure federal employees receive back pay and allow states to resume delayed transfers, with partial funding in place until January 30.
Meanwhile, US Treasury Secretary Scott Bessent said Monday that the shutdown’s impact on the economy continues to worsen but expressed optimism that inflation will ease over the coming months. Economic data released late last week painted a mixed picture: the University of Michigan’s Consumer Sentiment Index dropped to 50.3 in November its lowest since June 2022—while job cuts surged to the highest October level in over two decades. However, the ADP Employment report showed a 42,000 job gain in October, and ISM Services PMI rose to 52.4, indicating resilience in the service sector.
China and Australia trade updates
China’s October trade balance came in at CNY 640.4 billion, slightly below September’s CNY 645.47 billion, with exports down 0.8% YoY and imports rising 1.4%. In USD terms, the surplus reached $90.07 billion, below expectations of $95.6 billion.
In Australia, the trade surplus widened to AUD 3.94 billion in September, surpassing forecasts of AUD 3.85 billion. Exports surged 7.9% month-over-month, while imports rose 1.1%, reflecting improved external demand conditions that continue to support the local currency.
Technical outlook: australian dollar targets 50-day EMA near 0.6550
AUD/USD traded around 0.6520 on Monday, consolidating within a rectangle pattern on the daily chart. The pair remains positioned slightly above the nine-day Exponential Moving Average (EMA), indicating improving short-term momentum.
The immediate resistance is seen at the 50-day EMA near 0.6535. A break above this level could strengthen the bullish outlook, opening the path toward the rectangle’s upper boundary around 0.6630 and potentially the 13-month high of 0.6707 recorded on September 17.
On the downside, key support levels are located at 0.6500, followed by 0.6470 and the August 21 low of 0.6414. A sustained break below these levels could expose the six-month low near 0.6372.
