AUD/USD trades around 0.6970 on Friday at the time of writing, down 0.36% on the day, as the Australian Dollar (AUD) comes under pressure for a second consecutive day amid renewed US Dollar (USD) strength.
Despite the latest pullback, the pair is still on track for a third consecutive weekly gain
The US Dollar is attracting renewed demand amid a sharp deterioration in market sentiment. The escalation of the conflict between the United States (US) and Iran is driving safe-haven flows, while concerns over disruptions to global energy supplies are reviving inflation fears. The latest developments indicate that the US continues its strikes against Iranian infrastructure, while Iran’s Islamic Revolutionary Guard Corps (IRGC) claims to have targeted several US military facilities and has threatened to expand attacks to regional energy routes.
Reports suggesting a possible closure of the Strait of Hormuz and the Red Sea Oil route by the Houthis are also keeping energy markets on edge. These renewed inflation concerns come alongside resilient US economic data. Weekly Initial Jobless Claims declined more than expected, while the Philadelphia Fed Manufacturing Index surged, highlighting the continued strength of the US economy.