AUD Stabilizes Ahead of Key US Jobs Data Amid Geopolitical Tensions

The Australian dollar (AUD) is trading steadily around the 0.7030-0.7025 band as markets await the release of US Nonfarm Payrolls data on Friday.

The pair has paused its pullback from the prior session's peak, which was the highest level since June 17, and is currently on course to close the week with little net change amid conflicting drivers.

The heightened geopolitical risk and firm Fed rate-hike expectations are supporting the US dollar and limiting gains in AUD/USD. According to Standard Chartered, the Reserve Bank of Australia (RBA) is expected to keep the cash rate at 4.35% at its August 11 meeting, with a neutral near-term policy stance.

The recent developments in the Middle East, including reports that Iran is considering a plan to bar US and Israeli vessels from the Strait of Hormuz, have prompted markets to reprice geopolitical risk, driving demand for the safe-haven US dollar and restricting upside in AUD/USD. The energy route risks are also reinforcing Fed hike expectations.