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Australian dollar jumps to fresh one-month highs above 0.7020
AUD/USD rose for a second straight day, with hopes of an Iran ceasefire supporting risk sentiment and RBA rate hike expectations adding backing.
The Australian dollar extended its rally against the US dollar, reaching fresh one-month highs above 0.7020 on Tuesday, according to FXStreet. The AUD/USD pair moved higher for a second consecutive day, a move attributed to improving risk appetite among investors. FXStreet linked the currency strength to renewed hopes for a ceasefire in Iran, after Axios reported the US administration is reviewing a peace proposal and that the US president urged Israel to avoid actions that could derail negotiations. The report also said the US military is preparing for an all-out war if diplomacy fails, which helped limit how far the US dollar could fall. With major economic calendars described as thin this week, FXStreet pointed instead to changing interest-rate expectations. Bets that the Reserve Bank of Australia might hike rates before year-end were cited as support after the RBA held rates in June and is expected to stay on hold in August, while a rally in oil prices has lifted expectations for another move. In the United States, FXStreet said soft inflation data released last week reduced hopes for a July rate hike and left investors split about whether a move could come in September, which tempered the dollar’s upside. The report also reiterated how “risk-on” conditions typically strengthen higher-beta currencies like the Aussie when investors shift toward growth-sensitive assets.