Risk-Off Pressures Aussie at Start of Week
AUD/USD weakened at the start of the week, dropping around 0.3% to 0.6850 during the Asian session, after breaking through the 0.6900 level. This weakening reflected the Australian dollar's underperformance amid risk-off sentiment driven by concerns about escalating conflict in the Middle East.
Pressure on risk assets was evident in the 0.4% decline in S&P 500 futures. A Wall Street Journal report that the US was considering deploying up to 10,000 troops for a ground operation against Iran, coupled with a stern warning from Tehran, exacerbated market caution and pressured pro-cyclical currencies like the AUD.
Domestically, Australian Prime Minister Anthony Albanese announced that the government would cut fuel excise taxes (gasoline and diesel) to 50% for three months to ease the burden on households amid rising energy costs due to war-related supply disruptions.
Meanwhile, the US dollar remained stable, with the DXY (DXY) holding above 100, supported by shifting interest rate expectations. According to CME FedWatch, the market has discarded the pre-war projection of two interest rate cuts, and now sees a 24.6% chance of at least one Fed rate hike this year, a factor keeping AUD/USD vulnerable. (asd)
Source: Newsmaker.id
