**AUD/USD Outlook: Analysis and Forecast for Friday, October 31, 2025**
*Based on article by Matt Weller, FOREX.com, with additional relevant analysis*
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The AUD/USD currency pair is a widely traded instrument in the global forex market, closely reflecting the shifting tides of economic sentiment, risk appetite, and monetary policy divergences between Australia and the United States. Heading into Friday, October 31, 2025, traders face an uncertain environment shaped by evolving global economic trends, shifting commodity prices, and central bank signals. This article synthesizes the latest analysis on AUD/USD, drawing from Matt Weller’s original piece for FOREX.com and including supplementary research from reputable financial sources.
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**Recent Performance of AUD/USD**
Over recent months, the AUD/USD pair has navigated a range between 0.6250 and 0.6550, with volatility driven by divergent economic datasets, changing risk appetite, and momentum in global commodity markets. The Australian dollar has traditionally responded to several key factors:
– Commodity prices, especially iron ore and coal
– Chinese economic data and demand factors
– Risk sentiment, particularly movements in US equities and global indices
– Differentials in monetary policy and interest rates between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed)
– Broad trends in the US dollar, usually tracked via the US Dollar Index (DXY)
As October draws to a close, the pair sits near the middle of its recent range, reflecting subdued volatility and the market’s wait for a clearer policy signal from major central banks.
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**Key Drivers Impacting AUD/USD**
*1. Central Bank Policy and Rate Expectations*
Both the RBA and the Fed have found themselves at critical junctures. Over the past year, the Fed has shifted toward a more data-dependent stance, pausing its rate hike cycle as inflation moderates but retaining some hawkish bias due to persistent strength in wages and employment numbers.
In contrast, the RBA has maintained a comparatively dovish tone. Despite some stickiness in Australian inflation, the central bank’s leadership has expressed concern about the risks posed by higher rates to heavily indebted households and the real estate market. The RBA’s forward guidance suggests it may lag behind the Fed in both hiking rates and, eventually, in moving to easier monetary settings.
The market currently prices in:
– A 30 percent probability of another rate hike by the RBA within the next three months
– A roughly even chance of a Fed rate cut in the first quarter of 2026, conditional on inflation figures
This interest rate differential has tended to support the US dollar, keeping AUD/USD capped below major resistance levels.
*2. Commodity Prices and China Exposure*
Australia’s heavy reliance on commodity exports, especially to China, means the Aussie dollar is regularly buffeted by shifts in demand for iron ore, coal, and LNG. In 2025, China’s recovery from earlier sluggishness has proven uneven
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