Forex
Home›Forex›Major Pairs›AUD/USD holds near 0.7055 as RBA bias and Iran risks o…
AUD/USD holds near 0.7055 as RBA bias and Iran risks offset
The pair trades near 0.7055 after moving above 0.7090, supported by softer US Fed hike expectations but capped by oil and Strait of Hormuz uncertainty.
AUD/USD was little changed around 0.7055, after consolidating following a move above 0.7090 on Wednesday, according to FXStreet.
The currency is caught between a cautious, hawkish-leaning Reserve Bank of Australia and resilience in the US dollar amid persistent US-Iran tensions. The RBA left its key interest rate unchanged at 4.35% on Tuesday, while keeping its inflation risks tilted to the upside and signaling it is prepared to raise rates again if price pressures do not ease.
FXStreet also points to cooling expectations for additional Federal Reserve tightening, which can limit USD upside and support AUD/USD. Annual inflation slowed to 3.4% in July from 3.5%, while core inflation declined to 2.5% from 2.4%, both in line with expectations, and markets are assigning about a 60% chance the Fed keeps rates unchanged in September, based on the CME FedWatch Tool.
However, geopolitical uncertainty involving Washington and Tehran complicates the inflation outlook, FXStreet adds. Volatility in oil, tied to the risk of disruptions in the Strait of Hormuz, could renew energy price pressures and supports safe-haven demand for the US dollar, capping the Australian dollar’s recovery as traders look to upcoming US data and Fed remarks.