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Australian dollar slips below 0.7000 amid US-Iran tensions
AUD/USD was around 0.6975, with escalating US-Iran hostilities and softer US inflation data influencing USD and Fed rate expectations.
FXStreet reported that AUD/USD edged lower to around 0.6975 in early Asian trade on Monday, extending losses below the 0.7000 psychological level.
The move was linked to escalating US-Iran tensions in the Middle East, after the outlet said US Central Command announced another death of a service member during airstrikes at Iran, with both sides trading accusations about strikes on critical infrastructure.
FXStreet also pointed to market pricing for US monetary policy: after softer-than-expected US consumer and producer inflation data, the probability for a Fed rate hike in July fell to 14% from 25% the week prior, according to CME FedWatch, and traders were pricing in 30 basis points of hikes by December.
The report added that the Australian dollar remains sensitive to Reserve Bank of Australia settings and broader risk sentiment, and cited iron ore prices and China economic conditions as additional drivers given Australia’s export mix and reliance on Chinese demand.