Australian Dollar remains subdued as China’s Trade Surplus eases in October

• AUD holds losses as China’s Trade Surplus declined to $105.28 billion in October, from the previous $133.53 billion.
• China's October Trade Surplus shrank to CNY 712.78 billion, down significantly from the previous month's CNY 905.97 billion.
• Rising Fed rate hike expectations to 84% continue to bolster the US Dollar against major currencies.

AUD/USD depreciates after registering nearly 1% gains in the previous day, trading around 0.6920 during Asian hours on Tuesday. The pair remains subdued as the Australian Dollar (AUD) holds losses following the release of Trade Balance data from China, Australia’s close trading partner.

National Bureau of Statistics of China reported that the Trade Surplus eased to $105.28 billion in October, from the previous $133.53 billion. Market expectations were $125.8 billion in the reported month. Export eased to 35.2% year-over-year (YoY) from 36.3%, against the expected 33.5%. Meanwhile, import rose to 41.6% YoY from 31.0%, against the expected 32.0%.

China's Trade Balance for October, in Chinese Yuan (CNY) terms, arrived at CNY712.78 billion, shrinking from the previous figure of CNY905.97 billion. The market forecast was for CNY859 billion. Exports rose 28.7% YoY, slower than 29.6% in September. However, the country’s imports remained significantly higher at 34.7% YoY vs. 24.6% recorded previously.

However, the AUD/USD pair may regain its ground as the US Dollar (USD) could face challenges on easing safe-haven demand amid rising speculation about a potential diplomatic breakthrough between Washington and Tehran. Also, Lower crude oil prices, now hitting their lowest point since August, ease inflationary pressure.

US President Donald Trump stated that further military strikes against Iran seem unnecessary, describing the war as "militarily, effectively over" while maintaining that the US remains "locked and loaded" to protect regional stability at the request of neighboring nations.

Traders’ attention now shifts to upcoming US economic indicators, headed by the October Consumer Price Index (CPI) report scheduled for Tuesday. Market forecasts anticipate headline CPI rising to 3.9% year-over-year (from 3.7%), while core CPI is expected to edge up from 2.6% to 2.8%. Building on last week's robust Nonfarm Payrolls report, hawkish remarks from Federal Reserve officials—including Richmond Fed President Thomas Barkin and Chicago Fed President Austan Goolsbee—have fueled expectations of higher rates. According to the CME FedWatch Tool, the odds of a Fed rate hike at the December meeting have surged to 84%, up from 76% a day prior.