Is the Aussie Dollar Signaling a Hidden Shift? Decoding China’s Mixed PMI Data That Could Change Everything!

Isn’t it fascinating how the AUD/USD pair seems to be stuck in a bit of a holding pattern—hovering around 0.6550 for the third session running? It’s like watching a high-stakes poker game where everyone’s waiting for China’s economic signs to either fold or raise the stakes. After all, with Australia’s economy so tightly intertwined with China’s, any tweak in Beijing’s numbers can send ripples through the Aussie dollar quicker than you can say “trade war.” The recent dip in China’s manufacturing PMI, alongside a slight uptick in non-manufacturing, just adds to the suspense. Throw in the mixed messages from the latest Trump-Xi meeting—where tariffs were trimmed but not totally resolved—and you start to see why traders might be parked on the sidelines, wary of making bold moves. Meanwhile, the US Dollar stands its ground, buoyed by hints that the Fed isn’t rushing into more rate cuts just yet, making the whole currency tussle an intriguing game of cat and mouse. So, what’s next for this currency showdown? Will the Aussie find its footing, or is it destined for more choppy waters? Let’s dig in and break down the pulse of the markets. LEARN MORE

AUD/USD remains subdued for the third successive session, trading around 0.6550 during the Asian hours on Friday. The pair moves little following the release of China’s NBS Purchasing Managers’ Index (PMI) data. It is important to note that any shift in China’s economic conditions could also affect the Australian dollar (AUD), given the close trade ties between China and Australia.

China’s NBS Manufacturing Purchasing Managers’ Index dropped sharply to 49.0 in October, following 49.8 recorded in September. The reading came in above the expected 49.6 figure in the reported month. Meanwhile, the NBS Non-Manufacturing PMI unexpectedly rose slightly to 50.1 against the previous and the market consensus of 50.0 readings.

The AUD/USD pair faced challenges as the Australian Dollar (AUD) struggled amid market sentiment that remained subdued following the meeting between Presidents Donald Trump and Xi Jinping, which offered few positive surprises. President Trump announced that tariffs on China would be reduced to 47% from the current 57% and confirmed that the rare earth dispute had been resolved, removing restrictions on China’s rare earth exports. However, Trump acknowledged that not all matters were addressed during the talks.

US Dollar maintains position due to diminished likelihood of Fed rate cuts

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is remaining steady and trading around 99.50 at the time of writing. The Greenback received support after Federal Reserve (Fed) Chair Jerome Powell’s comments lowered expectations for further interest rate cuts.
The US Fed delivered a 25-basis-point rate cut on Wednesday, lowering its benchmark rate to a range of 3.75%–4.0% in a 10–2 vote. The decision was not unanimous, as Fed Governor Stephen Miran supported a larger 50-basis-point cut, while Kansas City Fed President Jeffrey Schmid voted to keep rates unchanged.
Fed Chair Jerome Powell noted that the central bank is struggling to balance its dual mandate of controlling inflation and supporting employment due to limited data availability amid the ongoing US government shutdown. Powell cautioned that policymakers may have to adopt a wait-and-see approach until official data reporting resumes. He also added that another rate cut in December is far from certain, emphasizing that the outlook remains uncertain.
The US Dollar also gained ground after the Fed acknowledged it would continue to ease back on Quantitative Easing (QE) practices, with the process of drawing down the Fed’s mortgage-backed asset balance sheet into long-term Treasuries by December 1.
The RBA Trimmed Mean CPI for Q3 rose 1.0% and 3.0% on a quarterly and annual basis, respectively. Markets estimated an increase of 0.8% QoQ and 2.7% YoY in the quarter to September. The monthly Consumer Price Index jumped by 3.5% YoY in August, compared to the previous reading of a 3.0% increase. This figure came in hotter than the expectation of 3.1%.
Australia’s hotter-than-expected Q3 inflation and August CPI data reduced expectations for near-term rate cuts by the Reserve Bank of Australia (RBA). RBA Governor Bullock noted that the labor market remains somewhat tight, despite the unexpected rise in the unemployment rate.

Australian Dollar hovers around 0.6550 near nine-day EMA support

The AUD/USD pair is trading around 0.6550 on Friday. Technical analysis of a daily chart suggests a neutral bias as the pair moves within a rectangle pattern. The pair is positioned above the nine-day Exponential Moving Average (EMA), indicating that both short-term price momentum is stronger.

On the upside, the initial barrier lies at the psychological level of 0.6600, followed by the rectangle’s upper boundary around 0.6630. Further advances above the rectangle would cause the emergence of the bullish bias and support the AUD/USD pair to explore the region around the 12-month high of 0.6707, which was recorded on September 17.

The primary support lies at the nine-day EMA of 0.6544. A break below this level would weaken the short- and medium-term price momentum and prompt the AUD/USD pair to navigate the region around the lower boundary of the rectangle around 0.6450, followed by the four-month low of 0.6414.

AUD/USD: Daily Chart

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.06%	-0.02%	-0.09%	0.02%	0.10%	0.18%	-0.02%
EUR	0.06%		0.03%	-0.04%	0.07%	0.15%	0.24%	0.04%
GBP	0.02%	-0.03%		-0.10%	0.05%	0.13%	0.21%	-0.01%
JPY	0.09%	0.04%	0.10%		0.11%	0.20%	0.27%	0.07%
CAD	-0.02%	-0.07%	-0.05%	-0.11%		0.07%	0.17%	-0.04%
AUD	-0.10%	-0.15%	-0.13%	-0.20%	-0.07%		0.08%	-0.12%
NZD	-0.18%	-0.24%	-0.21%	-0.27%	-0.17%	-0.08%		-0.22%
CHF	0.02%	-0.04%	0.01%	-0.07%	0.04%	0.12%	0.22%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

RBA FAQs

The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.

While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.

Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.

Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.