3 November 2025,06:09
Daily Market Analysis New
3 November 2025, 06:09
Key Takeaways:
*The RBA is widely expected to hold rates at 4.35% at its Nov. 5 meeting, with markets watching for any hawkish nuance in the statement.
*Despite slowing activity, progress on inflation has been slower than desired keeping the RBA cautious about signaling rate cuts too soon.
*Rising iron ore and metal prices and stronger Chinese PMI data have improved sentiment toward the Aussie.
Market Summary:
The Australian Dollar finds itself balancing multiple macro forces: global commodity flows, China-linked growth sentiment, and the trajectory of the U.S. dollar. With Australia’s economy deeply intertwined with resource exports and Chinese demand, the currency often mirrors shifts in global risk appetite and metal prices. Any surprise in Chinese PMI, trade, or stimulus data tends to ripple through the AUD, amplifying both its upside potential in “risk-on” conditions and vulnerability in global growth slowdowns.
In recent months, the Aussie has struggled under modest risk-off pressure and expectations of eventual monetary policy easing from the Reserve Bank of Australia (RBA). Softer retail sales, uneven domestic demand, and rising household debt burdens have tempered growth optimism. Institutions such as UBS have forecast potential rate cuts in 2025, highlighting how sensitive the currency remains to domestic macro trends. Still, the RBA has so far resisted dovish market pricing opting instead for patience as inflation progress proves slower than expected.
Tomorrow’s RBA policy meeting is expected to reaffirm that stance. The central bank is widely anticipated to hold its cash rate steady at 4.35%, maintaining a data-dependent tone amid signs of inflation stickiness and resilient labor conditions. Should the RBA signal continued concern over elevated service inflation or emphasize the need to keep policy restrictive for longer, markets could interpret that as a mildly hawkish hold, potentially supporting the AUD in the short term. Conversely, any dovish guidance hinting at policy easing could quickly trigger renewed downside pressure.
Externally, firmer commodity prices and improving Chinese data have lent the Aussie some resilience. Iron ore rebounded above $110 per tonne after reports of increased Chinese steel output targets, while better-than-expected PMI readings bolstered hopes of stabilizing demand. Yet the broader backdrop characterized by a firm U.S. dollar and cautious global sentiment continues to cap AUD/USD gains. Going forward, the currency’s path will hinge on the interplay between the Fed’s tone, China’s stimulus momentum, and whether tomorrow’s RBA statement reinforces Australia’s relatively hawkish standing within the G10.
The AUD/USD chart is forming a rising channel pattern, where price has been making higher highs and higher lows since mid-October. However, the latest candle shows the pair pulling back from the upper boundary near 0.6620, signaling a potential short-term correction within the channel.
The recent retracement is testing the midline support area around 0.6500, which also coincides with a trendline drawn from the late-October swing low. If this structure holds, the pair could continue to oscillate upward within the channel. A clear break below 0.6500, though, would invalidate the pattern and open the way toward 0.6470 which is the lower channel support.
Overall, the pattern suggests a healthy consolidation phase inside an ongoing uptrend, with buyers likely watching how price reacts around the trendline for the next directional cue.
Resistance Levels:0.6550, 0.6590
Support Levels: 0.6500, 0.6470
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