Australian Dollar Moves Away from Peak
Newsmaker.id - The Australian dollar weakened against the US dollar for the second consecutive day in Asian trading on Friday, July 17, 2026. The AUD/USD pair fell to around 0.6980, moving away from the nearly three-week high touched on Wednesday. Despite the correction, the pair still has the potential to record a third consecutive weekly gain.
Pressure on the Australian dollar emerged as the greenback regained demand as a safe-haven asset following escalating tensions between the United States and Iran. The US launched airstrikes against Iran for the sixth consecutive night, while Tehran's retaliatory strikes raised fears of a wider conflict and disrupted global energy supply lines.
Threats to oil shipping routes have kept energy prices high and reignited inflation concerns. Markets believe that price pressures from the energy sector could prompt the Federal Reserve to maintain tight policy or raise interest rates again this year, making the US dollar more attractive compared to riskier currencies like the Australian dollar.
Strong US labor market and manufacturing data also supported the dollar. However, the Australian dollar's weakness remains potentially limited as the Reserve Bank of Australia maintains a relatively hawkish stance and Chinese economic data remains stable. China's condition is important for Australia as the country is a major destination for Australian commodity exports.
Market Impact:
The weakening of the AUD/USD reflects waning investor appetite for riskier assets. If the US-Iran conflict escalates and oil prices remain high, the US dollar could potentially strengthen, allowing AUD/USD to retest the area below 0.6980.
However, the RBA's hawkish stance and a stable Chinese economy could stem further pressure on the Australian dollar. An easing of the conflict or a reduction in expectations for a Fed rate hike could open the door for AUD/USD to return to 0.7000 and its three-week high. (CP)
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