Aussie Steady, Inflation Data and Iran Risks in Focus
The Australian dollar held steady around $0.701 at the start of the week, remaining near a 10-week low. This limited movement reflects market caution ahead of the release of key domestic economic data and the resurgence of Middle East tensions.
Investors' primary focus this week is on Australia's CPI and employment data for May. Both will be key variables for the Reserve Bank of Australia in determining its next policy direction, after the central bank held interest rates unchanged at its most recent meeting.
The RBA previously signaled that further decisions would depend heavily on new data, particularly in assessing the impact of previous interest rate hikes on the economy. While inflation remains a concern, the market increasingly believes the tightening cycle is likely over.
Expectations of additional interest rate hikes are now considered limited, unless second-quarter inflation is significantly stronger than expected. This leaves the Australian dollar without a strong catalyst to escape its pressure, especially as global risk sentiment remains fragile.
Externally, uncertainty surrounding US-Iran peace talks has again boosted oil prices and dampened risk appetite. President Donald Trump threatened new attacks if Hezbollah continued its attacks on Israel, while Tehran announced the re-closure of the Strait of Hormuz.
For the AUD, the primary transmission comes through risk sentiment and the outlook for China. As geopolitical tensions rise and energy prices strengthen, investors tend to reduce exposure to riskier currencies. The focus next turns to PMI surveys, CPI data, Australian employment data, and developments in US-Iran negotiations, which could determine the short-term direction of the AUD/USD. (asd)*
Source: Newsmaker.id
