Geopolitical risks and mixed US economic data drive demand for the dollar, pressuring the Australian currency ahead of key Fed releases.
The Australian dollar retreated against the US dollar on Tuesday, trading at 0.7080 after peaking at 0.7119 earlier in the session. Rising tensions in the Middle East, particularly US-Iran conflict risks, lifted the greenback as investors sought safety amid uncertainty over energy prices and monetary policy implications.
US economic data disappointed, with Housing Starts plunging 12.4% month-over-month to 1.239 million in July from 1.415 million in June. Industrial Production also slowed to 0.2% growth, below the expected 0.3%. Meanwhile, Australia’s Wage Price Index for Q2 is forecast to remain steady at 0.8% quarterly, with annual growth easing to 3.2% from 3.3%.
Moody’s affirmed Australia’s Aaa credit rating with a stable outlook, projecting GDP growth of 1.9% this year and 1.6% in 2027. The agency cited weak productivity and housing affordability as key challenges.