Aussie Weakens, Risk-Off Sentiment Boosts US Dollar
The Australian dollar held around $0.71 and headed for its first weekly decline in a month, as risk appetite worsened amid the ongoing Middle East conflict. The Aussie was under pressure again, seen as a proxy for global risk sentiment, especially as markets reduced exposure to riskier assets.
Pressure stemmed from fading hopes for sustained progress in US-Iran talks, while concerns about energy disruptions in the Strait of Hormuz helped maintain risk premiums and boost demand for the US dollar as a safe haven. The decline in Asian equities from record highs also reinforced the defensive tone early in the session.
However, the Aussie's decline was said to be restrained by expectations that the Reserve Bank of Australia (RBA) could still raise interest rates next month, supported by a strong labor market and inflationary pressures driven by energy prices. The market now awaits the release of key inflation data next week to clarify policy direction.
Additional support came from structural factors, after Japan and Australia were reported to be finalizing an economic security agreement in early May covering energy, rare earths, food, and other critical commodities. This narrative is considered to be able to bolster sentiment toward commodity-based currencies, although short-term movements remain sensitive to the direction of the US dollar and geopolitical risk dynamics. (Asd)
Source: Newsmaker.id
