AUD/USD Stalled Near 0.7100 as US Dollar Begins to Recover
The AUD/USD pair weakened after a brief rise during the Asian session on Tuesday (August 18). The pair remains stuck near the 0.7100 level, having previously pulled back from its highest point since June 5.
Pressure on the Australian dollar stems from a US dollar recovery as it rebounds from two-month lows. Rising oil prices have reignited inflation concerns, leading markets to factor in the possibility of at least one Federal Reserve interest rate hike.
Safe-haven sentiment is also bolstering the US dollar, as US-Iran tensions remain unresolved. President Donald Trump stated that the US would not extend the memorandum of understanding with Iran—which expired on Monday—while reiterating plans to designate the Strait of Hormuz as US territory.
Tensions have escalated further following expanded attacks on Saudi Arabia by the Iran-backed Houthi group in Yemen. This situation has pushed oil prices to a two-week high and heightened fears that energy-related pressures could once again fuel global inflation.
Regarding market impact, AUD/USD trading may remain cautious ahead of the release of the FOMC minutes on Wednesday. If the Fed minutes strike a hawkish tone, the US dollar could strengthen and weigh on the Aussie. However, the Reserve Bank of Australia's generally hawkish stance could limit AUD weakness, particularly after Governor Michele Bullock affirmed that further rate hikes remain a distinct possibility. (asd)
Source: Newsmaker.id