Key Moments
- AUD/USD trades near 0.6970 in Asian hours, extending its advance for a second straight session.
- China’s Q3 GDP grew 4.5% year-over-year, beating the 4.4% consensus and accelerating from 4.3% in Q2.
- CME FedWatch Tool shows traders assigning about an 83.9% probability that the Fed will leave rates unchanged this month.
Risk-Sensitive AUD/USD Benefits From Chinese Data
AUD/USD continued to move higher for a second consecutive day, trading around 0.6970 during Asian dealings on Monday. The pair remained supported as the Australian Dollar held firm following a batch of stronger-than-expected economic indicators out of China, one of Australia’s key trading partners.
China’s Growth Outpaces Expectations in Q3
China’s economy expanded more quickly than anticipated in the third quarter. Gross Domestic Product increased 4.5% year-over-year, surpassing the market projection of 4.4% and marking a pickup from 4.3% growth in the second quarter.
On a quarter-over-quarter basis, China’s GDP rose 1.2% in Q3, up from 0.9% in Q2 and ahead of expectations for a 1.1% gain. The data pointed to improving momentum in overall economic activity.
| China GDP (Q3) | Actual | Consensus | Previous |
|---|---|---|---|
| Year-over-year | 4.5% | 4.4% | 4.3% |
| Quarter-over-quarter | 1.2% | 1.1% | 0.9% |
September Activity Data Underscore Improving Momentum
September readings for Chinese domestic demand and factory output also exceeded forecasts. Retail Sales rose 1.1% year-over-year, well above the 0.5% increase expected by analysts and up from 0.4% in August.
Industrial Production posted a 5.5% year-over-year gain in September, outpacing the 5.4% projection and improving from 5.2% in the prior month. These figures added to the positive tone surrounding China’s growth outlook.
| China September Data | Actual | Consensus | Previous |
|---|---|---|---|
| Retail Sales (YoY) | 1.1% | 0.5% | 0.4% |
| Industrial Production (YoY) | 5.5% | 5.4% | 5.2% |
Fed Rate Expectations Weigh on the US Dollar
The Australian Dollar’s advance against the US Dollar was also underpinned by shifting expectations for Federal Reserve policy. The greenback softened as markets reassessed the likelihood of another rate hike in October.
Sentiment turned after Fed Chairman Kevin Warsh addressed an International Monetary Fund event on Friday, where he said that he does not prejudge interest-rate decisions and refrained from signaling whether the Fed would raise or hold short-term rates at its October 27-28 meeting.
Positioning in interest-rate futures has adjusted markedly. Data from the CME FedWatch Tool indicated that traders are now pricing in roughly an 83.9% probability that the Fed will leave its policy rate unchanged later this month, compared with a 49% implied probability just one month earlier.
Details on China’s GDP Release
The following table summarizes the latest quarterly GDP release from China, as provided by the National Bureau of Statistics of China:
| Indicator | Timing | Frequency | Actual | Consensus | Previous | Source |
|---|---|---|---|---|---|---|
| Gross Domestic Product (YoY) | Last release: Mon Oct 19, 2026 02:00 | Quarterly | 4.5% | 4.4% | 4.3% | National Bureau of Statistics of China |
The Gross Domestic Product (GDP), released by the National Bureau of Statistics of China on a monthly basis, is a measure of the total value of all goods and services produced in China during a given period. The GDP is considered as the main measure of China’s economic activity. The YoY reading compares economic activity in the reference quarter compared with the same quarter a year earlier. Generally speaking, a rise in this indicator is bullish for the Renminbi (CNY), while a low reading is seen as bearish.
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