Aussie Dragged by Sentiment, US Dollar Strengthens
The Australian dollar weakened against the US dollar on Friday, with AUD/USD falling to around 0.7120. Markets moved cautiously amid the ongoing Middle East conflict, while investors' attention was focused on the release of US Nonfarm Payrolls (NFP), which could alter interest rate expectations.
From a geopolitical perspective, Iranian Foreign Minister Abbas Araghchi said there had been "no real progress" in negotiations, although communication channels with Washington remained open. He also warned that an Israeli attack on Beirut could trigger a broader escalation of the conflict. This uncertainty tends to boost demand for safe-haven assets like the US dollar and put pressure on riskier currencies, including the AUD.
Domestically, RBA Governor Michele Bullock maintained a hawkish tone and emphasized that inflation remains too high. After three rate hikes this year that brought the benchmark rate to 4.35%, Bullock said the board would do what was necessary to achieve its mandate of price stability and full employment. However, the RBA's support was not enough to counter pressure from the strengthening USD.
Going forward, the direction of the AUD/USD pair will be determined by a combination of US data and geopolitical headlines. A strong NFP figure has the potential to strengthen the USD and keep the AUD under pressure, while a weak NFP figure could provide room for recovery, although the AUD rally is likely to remain fragile if Middle East tensions trigger another risk-off. (asd)
Source: Newsmaker.id
