During Wednesday’s early Asian session, AUD/USD gains momentum to about 0.7010. Increasing oil prices may solidify a fourth rate increase by the RBA this year, contingent upon the resolution of US-Iran conflicts in the coming weeks. The US has initiated the 11th night of strikes against Iran as diplomatic efforts continue to falter. The AUD/USD pair strengthens, approaching 0.7010 during the early Asian trading hours on Wednesday. The Australian Dollar strengthens against the US Dollar as the likelihood of the Reserve Bank of Australia interest rate hike rises. Australia’s Employment report for June will be the focal point later on Thursday.
Following three successive increases of 25 basis points earlier this year, the Australian central bank opted to maintain the Official Cash Rate at 4.35% during its June policy meeting. Nonetheless, the ongoing conflict between the US and Iran has sparked concerns regarding inflation driven by energy prices. This has fuelled speculation that the RBA will tighten policy further, thereby supporting the Aussie. Traders have increased their expectations regarding a potential rate hike by the RBA following the resumption of airstrikes last week. Current pricing indicates nearly a 23% likelihood of a hike in August, with probabilities exceeding 50% by December, as reported by the Guardian.
Traders are poised for the upcoming release of the Australian June employment data scheduled for Thursday. Markets anticipate an increase in employment by 15,000 jobs, with the Unemployment Rate projected to remain unchanged at 4.4% for the second month in a row. If the report indicates outcomes that surpass expectations, this could bolster the Australian dollar against the US dollar. The US military has initiated an 11th consecutive night of strikes targeting Iran, with reports of explosions emerging from the Tabriz region in northwestern Iran.
Late Tuesday, Iran’s top joint military command announced that Tehran will broaden its strikes and aim at the interests of the US and its allies throughout the region should the US launch attacks on Iran’s nuclear sites, according to source. Increasing tensions in the Middle East may enhance safe-haven flows, providing a short-term advantage to the Greenback.