Aussie Strengthens Amid Growing Demand for Chinese Products. Forecast as of 29.09.2025
Positive news from China, the gradual recovery of US stock indices, and the divergence in monetary policy between the Reserve Bank of Australia and the Fed are boosting the AUDUSD pair. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- Demand for Chinese products is growing.
- The RBA will not lower the cash rate in September.
- The Australian dollar is sensitive to the S&P 500 index.
- Long trades on the AUDUSD pair can be opened at the market price or on a breakout of 0.66.
Weekly Fundamental Forecast for Australian Dollar
US tariffs have forced China to follow Russia’s path — to reroute its exports from the West to the East. As a result, China’s exports to India have reached a record high, to Africa — an annual maximum, and to Southeast Asia — a post-pandemic peak. Demand is growing rapidly, which buoys the yuan and its proxy currency, the Australian dollar.
Global Demand for Chinese Goods
Source: Bloomberg.
However, the AUDUSD pair faced strong headwinds in the second half of September. First, the Federal Reserve’s decision to cut the federal funds rate led to the closure of long positions in the market, which triggered a correction due to the pullback in US stock indices. However, as soon as the S&P 500 index recovered, the Australian dollar, which is sensitive to changes in global risk appetite, showed signs of strength.
In fact, the key factors driving the upward trend in the AUDUSD remain robust. China has taken measures to prepare for a trade war and is reorienting its supply chains. The S&P 500 index is supported by several factors, including AI, robust corporate reporting, the continued strength of the US economy, and the Federal Reserve’s expectations of ongoing monetary expansion. The divergence in monetary policy has a positive impact on the Australian dollar.
Following the unexpected rise in inflation to 3% in Australia in August, the likelihood of a key rate cut from 3.6% at the RBA meeting on September 30 decreased significantly. According to the consensus forecast of Bloomberg analysts, only one act of monetary expansion is projected in November 2025, followed by a prolonged pause until the third quarter of 2026. The futures market indicates a 50% likelihood of a significant cash rate reduction by the end of autumn, with full confidence that the RBA’s monetary policy will only be eased by March of next year.
Australia’s CPI and Unemployment
Source: Bloomberg.
Westpac and Bloomberg Economics have the most dovish forecast, predicting that the key rate will fall below 3% in 2026. In contrast, NAB believes that it will remain at the current level of 3.6% until May 2026.
It seems that, at least until November, the Reserve Bank of Australia will not make any sudden shifts in its monetary policy. By that time, the Fed will most likely cut the federal funds rate again. The divergence in monetary policy is a strong buy signal for the AUDUSD pair.
Meanwhile, October historically brings increased volatility to the US stock market. Instead of a rally, the S&P 500 is likely to face consolidation, which will also affect the Australian dollar.
Weekly Trading Plan for AUDUSD
Against this backdrop, the AUDUSD pair can be bought at the market price. However, its immediate prospects will depend on the US employment report and the ability of bulls to push the price back above 0.66. If they succeed, the uptrend will likely resume. If not, a short-term consolidation phase may start.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of AUDUSD in real time mode
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