AUD Defies Oil Rally as Commodity-Linked Currencies Fall Short

The Australian Dollar has held steady despite the recent rally in oil prices, which would normally be expected to boost commodity-linked currencies. However, this is not the case with the AUD/USD, which is currently trading at 0.7031 and down 0.36% for the day.

The unusual part of this story is that the oil price has risen by over 3% to $77.67 after reports emerged that vessels linked to countries hostile to Iran would be barred from the Strait of Hormuz under a proposed deal. This development would normally be expected to boost commodity-linked currencies, but instead the AUD/USD has given back its gains from Wednesday.

The Australian Dollar trades on global growth, and a threat to a fifth of the world's oil flows is a significant risk to that growth. The Chinese exports data for July showed a slowdown in growth, with imports slowing to 27.9% from 36% and the trade surplus narrowing to $107 billion from $125.62 billion.

This has left the AUD/USD trading on fragile ground ahead of Friday's US Nonfarm Payrolls report, which is expected to land a firm print that would extend the Greenback's recovery and leave the Aussie squeezed from both sides.