AUD/USD Strengthens, Reaches Highest Level Since 2022
The Australian dollar held above US$0.71, near its highest level since May 2022 and heading for a third consecutive weekly gain. This strengthening was supported by improving global risk appetite, driven by hopes for a de-escalation of the conflict in the Middle East, although details of the progress of the agreement remain unconfirmed, and disruptions in the Strait of Hormuz continue to maintain energy price volatility.
The Aussie was previously pressured by escalating geopolitical tensions, but gains in recent weeks reflect a recovery in sentiment. The currency has risen more than 5% from its late-March low, driven by escalating geopolitical risks and market conditions responding to optimism stemming from easing uncertainty.
Domestically, the resilience of the Australian labor market in March reinforced expectations that the Reserve Bank of Australia (RBA) could continue its prudent policy stance. The market currently rates around a 70% chance of a third consecutive interest rate hike in May, while the release of first-quarter inflation is seen as crucial for testing the direction of future policy.
Additional support came from China, with solid first-quarter growth driven by exports and policy support. This improved the demand outlook for Australian commodities, helping maintain a bullish bias for the AUD within a context of improving risk sentiment.
Going forward, AUD/USD movements are likely to be sensitive to three factors: developments in the Middle East and their impact on energy volatility, the release of Australian first-quarter inflation as a determinant of RBA expectations, and signals of continued Chinese growth momentum, which influence commodity sentiment. (asd)
Source: Newsmaker.id
