The Australian dollar (AUD) held steady against the US dollar (USD) on Wednesday, trading near 0.6480 at the time of writing, little changed on the day. Market sentiment toward the Aussie improved after China’s Ministry of Finance announced a temporary suspension of certain tariffs on US agricultural imports — a move seen as a positive step toward easing trade tensions between the two largest economies.
Beijing’s tariff suspension boosts trade optimism
Effective November 10, Beijing will lift 24% tariffs on several US agricultural products for one year, while maintaining a 10% tariff on other goods. The announcement fueled optimism over renewed trade cooperation and offered support to the Australian dollar, which is closely tied to China’s economic outlook due to strong commodity trade links.
However, recent data from China’s services sector pointed to a mild slowdown. The RatingDog Services PMI fell to 52.6 in October from 52.9 in September, in line with expectations, suggesting steady but cooling growth in the world’s second-largest economy.
Australian data show steady expansion, RBA remains cautious
Domestically, Australia’s latest S&P Global Services PMI inched up to 52.5, marking its 21st consecutive month of expansion, while the Composite PMI edged down to 52.1. These figures highlight ongoing economic resilience despite subdued global demand.
The Reserve Bank of Australia (RBA) maintained its Official Cash Rate (OCR) at 3.6% during Tuesday’s policy meeting. Governor Michele Bullock emphasized that inflation remains above target at over 3%, signaling that the central bank will stay “patient and watchful” before considering further policy adjustments.
US shutdown and strong labor data keep markets cautious
In the United States, investor attention remains fixed on the prolonged government shutdown, now entering its sixth week. The Senate’s repeated failure to pass a temporary funding bill has raised the likelihood of the longest federal shutdown in history, dampening market confidence and weighing on the greenback’s momentum.
The US Dollar Index (DXY) hovered around 100.20, as traders trimmed expectations for a December Federal Reserve (Fed) rate cut to 69%, down from 90% a week earlier, according to the CME FedWatch Tool.
Meanwhile, labor market data surprised to the upside. The ADP Employment Change report showed private-sector jobs rising by 42,000 in October, well above forecasts of 25,000, following a revised 29,000 decline in September. ADP Chief Economist Nela Richardson noted that hiring resumed modestly while pay growth has remained stable for over a year — reinforcing the view that the US labor market remains resilient despite fiscal and policy headwinds.
