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AUD/USD slips amid safe-haven demand for the US dollar
The pair was around 0.6970, down 0.36% on the day, as Middle East escalation revived inflation fears tied to potential energy supply disruptions.
Australian Dollar weakness pushed AUD/USD to around 0.6970 on Friday, down 0.36% on the day, according to FXStreet. Even with the pullback, the pair was still on track for a third straight weekly gain.
FXStreet cited renewed US dollar demand driven by a sharp deterioration in market sentiment after escalation of the conflict between the US and Iran. Safe-haven flows were supported by reports that strikes continued against Iranian infrastructure, while Iran’s IRGC claimed it targeted several US military facilities, and both sides threatened broader regional impacts.
Concerns about disruptions to global energy supplies were also a factor, FXStreet said. Reports that the Strait of Hormuz and the Red Sea oil route could face closures were keeping energy markets on edge, reviving inflation worries.
FXStreet added that the US data and Fed commentary helped underpin the dollar. Weekly Initial Jobless Claims fell more than expected and the Philadelphia Fed Manufacturing Index rose sharply, while Fed officials including Lorie Logan and Philip Jefferson maintained a hawkish tone, leaving room for another rate hike if inflation does not improve enough. Meanwhile, FXStreet said the Australian dollar still had support from the Reserve Bank of Australia’s relatively hawkish stance, and China data indicating resilient activity provided an additional tailwind for the Aussie.