Australian Dollar Under Pressure, US-Iran Conflict Weighs on Risk Assets
The Australian dollar remains under pressure around US$0.698, after retreating from a three-week high. This weakening occurred as the escalating conflict between the United States and Iran dampened investor appetite for riskier assets.
The safe-haven US dollar strengthened, while oil prices rose after the conflict escalated from military targets to critical infrastructure. Shipping through the Strait of Hormuz also largely halted, as the United States imposed a naval blockade on Iranian ports and Iran targeted several ships.
These conditions fueled concerns that energy supply disruptions could reignite global inflation. For Australia, expectations of monetary policy tightening remain relatively limited, although rising fuel prices could test that view. The market is pricing in a roughly 70% chance of one interest rate hike by December, while some investors are beginning to see the possibility of an RBA rate cut next year.
In terms of market impact, the Australian dollar remains at risk of pressure as long as risk-off sentiment and a strengthening US dollar persist. Rising oil prices could add to inflationary pressures and bring the Reserve Bank of Australia's policy outlook back into focus. The market's next focus will be on Australian employment data and this week's flash PMI survey to gauge domestic economic conditions. (asd)
Source: Newsmaker.id
