AUD/USD trades around 0.7245 on Monday at the time of writing, virtually unchanged on the day after opening the week with a bearish gap.
The pair recovers its initial daily losses, but the Australian Dollar (AUD) remains weighed down by renewed risk aversion supporting the US Dollar (USD)
Market sentiment remains fragile after United States (US) President Donald Trump and Iran rejected each other’s latest proposals aimed at ending the war in the Middle East. According to Bloomberg, Trump described Iran’s latest proposal as “totally unacceptable,” while Iranian officials insisted on a broader settlement including the security of shipping routes through the Strait of Hormuz. This geopolitical backdrop continues to fuel safe-haven demand and support the Greenback.
The US Dollar Index (DXY) therefore holds onto its daily gains, while US Treasury yields also rise following stronger-than-expected US labor market data. The Bureau of Labor Statistics reported on Friday that Nonfarm Payrolls (NFP) increased by 115K in April, above the market consensus of 62K, although the figure slowed from the 185K increase recorded in March. The Unemployment Rate remained steady at 4.3%, in line with expectations.