Escalating geopolitical risks drive safe-haven flows into the USD, pressuring the risk-linked AUD near session lows.
AUD/USD fell to 0.6930 in early trading Monday, down from an opening level of 0.6950, as heightened US-Iran tensions boosted demand for the safe-haven USD. The decline follows US President Donald Trump’s announcement of a naval blockade on Iranian shipping and a 20% reimbursement rate on cargo transiting the Strait of Hormuz, a move Iran rejected as provocative.
Prior to the escalation, the pair had traded in a narrow range, with investors monitoring global risk sentiment. The confrontation has lifted oil prices, raising concerns over sustained inflationary pressures, which further supports the USD while dampening appetite for growth-linked currencies like the AUD.
Markets now await China’s second-quarter GDP data, due Tuesday, given Australia’s economic ties to Beijing. The report may influence near-term AUD direction amid broader geopolitical uncertainty.