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AUD/USD holds near two-month high as Fed Minutes loom
The pair was last around 0.7115, supported by a hawkish Reserve Bank of Australia tone while US rate outlooks hinge on Wednesday’s FOMC Minutes.
AUD/USD edged higher on Tuesday, trading around 0.7115, near Monday’s peak of 0.7129, its highest level in more than two months, according to FXStreet.
The Australian dollar’s gains were kept in check as the US dollar looked to rebound after touching a two-month low. FXStreet pointed to rising oil prices as a factor that could raise concerns about renewed US inflation, potentially keeping the Federal Reserve in a restrictive stance longer and limiting downside for the greenback.
Geopolitical tensions between the US and Iran also weighed on sentiment, with FXStreet citing renewed focus on the Strait of Hormuz and noting that escalating Middle East tensions pushed oil to a two-week high. A sustained rise in energy costs could reinforce inflation risks and complicate the Fed’s path toward monetary easing, the outlet added.
Ahead of Wednesday’s release of the Federal Open Market Committee Minutes, investors appeared cautious. FXStreet also noted that Australia remains supported by the Reserve Bank of Australia’s hawkish messaging, including remarks by RBA Governor Michele Bullock, and investors will watch Australian employment data for July on Thursday.