Risk sentiment improves after US cancels military action against Iran, lifting the Australian Dollar against the USD ahead of China PMI data.
The AUD/USD pair climbed to near 0.7040 in early Asian trading Monday, driven by a shift in risk appetite after President Trump called off planned strikes on Iran. The decision followed reports of potential progress in nuclear negotiations and the reopening of the Strait of Hormuz, though Iranian officials denied requesting a pause in strikes.
Traders are monitoring US-Iran developments closely, as any de-escalation could support risk assets like the Aussie. However, lingering tensions and Iran’s high-alert military stance may limit gains. The pair also awaits China’s Manufacturing PMI report, a key indicator for Australia’s commodity-linked currency.
The Reserve Bank of Australia’s hawkish stance has reinforced expectations for another rate hike this year, with markets pricing in a potential rise to 4.6%.