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AUD/USD slides near 0.7980 as USD gets support from Fed hike bets
The dollar firmed as fresh Middle East tensions and stronger US economic data lifted expectations for at least one Fed rate hike by year-end.
The Australian dollar slipped for a second straight day against the US dollar, with AUD/USD edging down into the 0.7980 area during Friday's Asian session, according to FXStreet.
FXStreet linked the move to a stronger US Dollar as investors priced in renewed Fed tightening pressure. It pointed to further escalation of US-Iran tensions, including a sixth consecutive night of US air strikes on Iran, and reports that Iran asked Yemen’s Houthis to stand ready to close the Red Sea oil route. Those developments keep geopolitical and energy risk elevated, supporting safe-haven demand for the USD and reviving concerns about energy-driven inflation.
The report also cited US data and policymakers as additional support for the dollar. It noted upbeat Thursday US Initial Jobless Claims data and the Philly Fed Manufacturing Index, plus Dallas Fed President Lorie Logan calling for modestly higher rates, and Fed Vice Chair Philip Jefferson saying he would be open to raising rates if inflation does not improve in the near term.
FXStreet said the backdrop favors the USD, but cautioned that Australia could still find support from the Reserve Bank of Australia’s relatively hawkish stance and steady economic data from China, which can limit how far AUD/USD falls.