AUD/USD has declined to approximately 0.7035 during the early Asian session on Monday. Iran has launched missiles towards Israel for the first time since the ceasefire in April, heightening concerns about a potential escalation in the Middle East conflict. The RBA’s hawkish stance could limit the potential decline of the Australian Dollar. The AUD/USD pair continues to experience selling pressure around 0.7035 in the early Asian session on Monday. The Australian Dollar continues to weaken against the US Dollar as tensions in the Middle East rise and US economic data surpasses expectations.
Iran launched several waves of missiles targeting northern Israel over the weekend. Iranian officials stated that any aggression from Israel towards Lebanon or Iran would elicit a “crushing and comprehensive response.” Meanwhile, US President Donald Trump indicated that he would reach out to Israeli Prime Minister Benjamin Netanyahu, urging him to refrain from retaliation due to concerns that the attacks could jeopardise a deal involving the three parties. Increasing tensions in the Middle East, coupled with a delicate peace agreement between the US and Iran, may strengthen a safe-haven currency like the Greenback, potentially serving as a headwind for the pair.
Furthermore, the US economy recorded robust job gains for the third consecutive month in May, as reported by the Bureau of Labour Statistics on Friday. US Nonfarm Payrolls saw an increase of 172,000 jobs in May, a slight decline from the previous figure of 179,000, which was revised up from 115,000. The Unemployment Rate remained steady at 4.3% during this timeframe. The positive jobs report supports the upward movement of the USD.
Conversely, a hawkish stance from the Reserve Bank of Australia could potentially mitigate the Australian dollar’s declines. RBA Governor Michele Bullock highlighted the central bank’s unwavering commitment to controlling inflation, after implementing three interest rate increases this year that raised the cash rate to 4.35%. Bullock emphasised that inflation remains elevated, and the board will take the necessary actions to fulfil its mandate of ensuring price stability and full employment.