Australian Dollar Under Pressure, Investors Avoid Risk
The Australian dollar weakened against the US dollar at the start of the week, as market participants grew cautious. AUD/USD fell around 0.32% to 0.6930 in early European trading, making the Australian dollar one of the major currencies lagging behind its peers.
Pressure on the Australian dollar arose as market sentiment shifted to risk-off. The escalating conflict between the United States and Iran prompted investors to seek safe assets like the US dollar. This was also evident in the weakening of S&P 500 futures, which fell around 0.65%, reflecting market concerns about geopolitical risks.
The US Dollar Index (DXY) rose 0.15% to around 101.15. The dollar strengthened as markets assessed that escalating conflict in the Middle East could push oil prices higher. If energy prices rise, global costs will also increase and potentially depress economic growth.
In addition to geopolitical factors, investors are also awaiting the release of US consumer inflation data for June and testimony from Fed Chair Kevin Warsh on Tuesday. This data is important because it could provide new clues regarding the future direction of the Fed's interest rate policy.
The market expects US core CPI to rise steadily by 2.9% year-on-year in June. On a monthly basis, core inflation is expected to rise 0.3%, faster than the 0.2% increase in May. If inflation is higher than expected, expectations of prolonged high interest rates could strengthen and put additional pressure on the Australian dollar. (asd)
Source: Newsmaker.id
