Geopolitical risks and Fed rate hike bets support the USD, capping gains in the AUD/USD pair ahead of key US employment figures.
The AUD/USD pair trades around 0.7030-0.7025 in early Asian trading, as investors await US nonfarm payrolls data before making fresh moves. The pair remains subdued after retracing from its highest level since June 17, ending the week on a muted note amid mixed signals.
Rising tensions in the Middle East have bolstered the safe-haven USD. Reports indicate Iran is considering a ban on US and Israeli vessels in the Strait of Hormuz, while Houthi attacks on a Saudi tanker in the Red Sea have stoked energy supply concerns. These developments have lifted crude oil prices, reigniting inflation fears and reinforcing expectations of a Fed rate hike.
Higher US Treasury yields, driven by the prospect of tighter monetary policy, further support the USD. However, traders remain cautious ahead of the US jobs report, limiting directional bets on the AUD/USD pair.