Aussie Weakens Amid Middle East Tensions
The AUD/USD weakened in the latest Asian session, hovering around 0.7150, as the US dollar strengthened again amid rising global geopolitical tensions. Reuters reported that the dollar briefly touched a one-week high before correcting slightly, while risk-based currencies like the Australian dollar came under pressure.
This movement is quite consistent with the AUD's character as a risk currency. When Middle East tensions escalate, particularly after the US-Iran conflict re-escalated and the Strait of Hormuz was disrupted, market participants tend to reduce exposure to risky assets. This caused the AUD to weaken against the USD, which again attracted safe-haven flows, albeit less aggressively.
In addition to geopolitical factors, pressure on the AUD/USD also comes from monetary policy. The dollar's strengthening stems from expectations that inflation fueled by surging oil prices could force the Fed to hold interest rates longer. This situation strengthens the USD's appeal compared to other currencies, including the AUD.
In conclusion, the current AUD/USD weakness is not due to weakening Australian fundamentals, but rather due to a combination of dollar strength and rising global risks. As long as Middle East tensions persist and energy prices remain high, the AUD/USD pair has the potential to remain within a range with a bearish bias in the short term. (Zaf)
Source: Newsmaker.id
