AUD/USD has declined to 0.7060, yet it is poised for a 2.6% increase over the week. On Friday, risk appetite has diminished as optimism surrounding a peace agreement in Iran diminishes. Later on Friday, US CPI data is anticipated to indicate elevated inflationary pressures in March. The Australian Dollar experiences a reduction in its gains on Friday as the US-Iran peace truce falters. Cautious markets are witnessing a modest resurgence in the safety of the US Dollar, following a risk-on week, which has led to a decline in the AUD/USD from three-week highs near 0.7090 to session lows around 0.7060 thus far. The pair, however, continues to exhibit an increase of over 2.5% for the week.
On Friday, risk appetite diminished as investors’ optimism regarding the anticipated peace talks set for this weekend in Islamabad, Pakistan, began to dissipate. Iranian authorities have stated that they will refrain from participating in any peace negotiations until Israel ceases its assaults on Lebanon. Meanwhile, US President Donald Trump has expressed dissatisfaction with Tehran’s management of the Strait of Hormuz, which is crucial for the global gas and oil supply due to its de facto blockade.
Recent data from Australia indicated that an inflation measure from the Melbourne Institute recorded its highest monthly increase on record, underscoring the inflationary effects stemming from the Oil shock caused by the conflict in Iran. The data presented bolsters the argument for a forthcoming increase in interest rates by the Reserve Bank of Australia.
In the United States, the Consumer Price Index figures for March, scheduled for release later on Friday, are expected to divert attention from the ongoing developments in the Middle East. Consumer inflation is anticipated to have surged to a 3.3% annual rate, marking its highest point in almost two years, thereby offering additional justification for Federal Reserve hawks to advocate for monetary tightening.