The Australian Dollar (AUD) resumes its downtrend against the US Dollar (USD) on Tuesday, and is trading a few pips above one-month lows in the 0.7100 area at the time of writing.
Wanning hopes of a negotiated end to the Iran war and high Oil prices have dampened investors’ appetite for risk and are crushing the Aussie
News about explosions in Iran’s Qeshm island reported by Iranian media is souring an already frail market sentiment. US President Donald Trump affirmed on Monday that serious negotiations with Tehran are going on, but the market is sceptical, as the parties are far apart in key issues, namely Iran’s uranium enrichment activities. Beyond that, a spokesperson of Qatar’s Foreign Ministry said that there are no arrangements for the export of energy products and confirmed that the traffic through the Strait of Hormuz has reduced to a trickle, compared to the average volumes seen before the war.
This is boosting Oil prices well above the key $100 level, and clouding the outlook of Australia’s Crude-importing economy. Earlier on Tuesday, the minutes of May’s Reserve Bank of Australia (RBA) monetary policy meeting hint at a pause, after three consecutive rate hikes to the current 4.35% level. Committee members agreed that the decision will give the board space to observe developments in the Middle East war, which suggests that the bank will stand pat in the next meeting.