AUD Loses Ground as US Dollar Rebound Continues

The Australian dollar has been pressured by the resurgence of the U.S. dollar, which is being bolstered by strong economic data and easing geopolitical tensions in the Middle East.

The AUD/USD pair is currently hovering around the 0.7000 level after briefly probing as high as 0.7050 on Tuesday, August 4.

The U.S. dollar's gains are attributed to a July ISM Manufacturing PMI reading of 55.6, up from 53.3 and marking its highest level since 2022, as well as persistently high input costs.

Despite the sharp drop in oil prices, which has eased expectations of interest-rate hikes, the U.S. dollar remains favored.

New York Fed President Williams stated that the current monetary policy stance is conducive to bringing inflation back to the 2% target, and if economic conditions indicate that inflation is unlikely to decline, the Federal Reserve will not hesitate to raise interest rates further.