July data shows Australian consumer inflation expectations fell to 4.7%, down 0.8% from June, weighing on the currency pair.
AUD/USD retreated to around 0.7000 in Asian trading Thursday, erasing two days of gains. The decline follows a 0.8% drop in Australian consumer inflation expectations for July, which fell to 4.7% from 5.5% in June. This marks the third consecutive monthly decline after a spike in April.
Trimmed mean inflation expectations have moderated, while wage expectations remain unchanged over the past eight months. The softer inflation outlook contrasts with heightened geopolitical tensions, which have bolstered safe-haven demand for the USD.
US military actions in the Strait of Hormuz, including strikes on Iranian assets and a naval blockade, have further pressured risk-sensitive currencies. Markets remain on edge amid uncertainty over potential escalation, with US officials declining to rule out broader infrastructure targets.