Why does the Australian dollar continue to stay under pressure? Is there still a chance for the AUD to RMB exchange rate in 2025?

The Australian dollar is the fifth-largest trading currency globally. The AUD/USD trading pair boasts high liquidity and low spreads, attracting many investors for short-term trading and long-term positioning. However, in recent years, the performance of the AUD has been quite disappointing—its weakness has left many investors sighing.

Why is the Australian dollar so underwhelming?

Australia's economy is highly dependent on exports of raw materials such as iron ore, coal, and copper, making it a typical commodity currency. It would seem that the AUD should rise and fall with commodity prices. But the reality is different.

From the 1.05 level in early 2013 to now, the AUD/USD has depreciated over 35% in the past decade, while the US dollar index has risen 28.35%. This is not unique to the AUD—EUR, JPY, and CAD against the USD have also depreciated, indicating a global strong dollar cycle at play.

In Q4 2024, the AUD experienced a sharp decline, with an annual drop of about 9.2%. Entering 2025, amid rising global trade tensions and recession fears, the AUD/USD briefly fell to 0.5933, hitting a five-year low. Analysts point out that US tariffs have hurt global trade, cooled raw material exports, and directly weakened the appeal of the commodity currency. Coupled with the difficulty in reversing the interest rate differential between Australia and the US, and a sluggish domestic economy leading to continued capital outflows.

Is there still hope for a rebound in the AUD?

In the second half of 2025, the situation started to turn around. Iron ore and gold prices surged, the Fed's rate cut expectations increased, and risk assets regained attention, prompting the AUD to rebound. On September 10, the AUD/USD rose to 0.6636, reaching a new high since November 2024. Although it pulled back afterward, it remained above 0.64.

Whether the AUD can continue to rise depends on three key factors:

The stance of the Reserve Bank of Australia (RBA): In Q3 2025, Australia's CPI rose 1.3% month-over-month, higher than the previous quarter's 0.7% and exceeding market expectations. The RBA explicitly stated that it would only consider easing policy after confirming inflation is on a sustainable downward trajectory. This means the probability of a rate cut in the short term is reduced, which could support the AUD—making it more attractive compared to currencies that are cutting rates.

The strength or weakness of the US dollar: Although the Fed cut the benchmark rate by 25 basis points in October, Chairman Powell's comments cast doubt on further rate cuts in December. The US dollar index has rebounded about 3% from its summer lows near 96, with a growing likelihood of breaking the 100 psychological barrier. A stronger dollar generally weakens the AUD, reflecting an inverse correlation.

The recovery of China's economy: Australia's economic structure is heavily reliant on resource exports, with China being its largest buyer. The health of China's economy directly influences demand for Australian iron ore, coal, natural gas, and other commodities. When China's economy is strong, resource exports and prices tend to rise, providing solid support for the AUD. Conversely, economic weakness in China can undermine this support.

What do professional institutions say?

Major financial institutions have differing views on the AUD's outlook. Morgan Stanley expects the AUD/USD to rise to 0.72 by the end of 2025, citing the RBA's potential hawkish stance and strong commodity prices. UBS is more conservative, believing global trade uncertainties and Fed policy shifts will limit the AUD's gains, projecting a year-end level around 0.68. CBA economists are cautious, suggesting the AUD's recovery may be short-lived, expecting it to peak around March 2026 before declining again.

What is the outlook for the AUD/CNY exchange rate?

The AUD/CNY trend closely follows the AUD/USD, but due to relatively lower volatility in the RMB, the decline may be slightly smaller. Over the next 1-3 months, considering the RMB's relative stability, the AUD/CNY may fluctuate within the 4.6–4.75 range. If the RMB weakens due to domestic economic pressures, the AUD/CNY could briefly rise toward 4.8.

Stable Sino-Australian trade relations are positive for the AUD. However, weak Chinese economic data could directly suppress demand for Australian raw materials, which warrants close attention.

Short- to medium-term investment strategies

Short-term (1-3 days): Cautiously bullish, focusing on range trading. When AUD/USD fluctuates between 0.6370–0.6450, it’s suitable for quick trades. A breakout above 0.6450 could be a signal to go long with a small position, targeting the psychological level of 0.6500. A break below 0.6373 could be a short sell, targeting around 0.6300. Reduce positions before data releases to avoid being swept out by market volatility.

Medium-term (1-3 weeks): Follow the trend. In a bullish scenario, if US employment remains weak, inflation falls, and trade tensions ease, the AUD could rise to 0.6550–0.6600. In a bearish scenario, if the US economy surprises on the strong side or trade conflicts escalate, the AUD could dip toward 0.6250.

Long-term holding: Investors optimistic about the AUD can build positions gradually at current lows, smoothing out volatility over time, especially after confirming an uptrend.

Final thoughts

Currently, AUD/USD is at a stage of technical and fundamental tug-of-war. The exchange rate is volatile, presenting both risks and opportunities. The key is to closely monitor four major variables: Fed policy shifts, RBA stance, Chinese economic data, and global trade risks. If this week’s data reinforce expectations of Fed rate cuts, it could be a good time to go long; otherwise, beware of a rebound in the dollar.

Investing requires caution—exchange rate fluctuations carry both profit opportunities and risks of loss. Dynamic adjustment of strategies and flexible responses to market changes are essential.