AUD Steadies Amid US-Iran Diplomacy
The Australian Dollar has steadied against its US counterpart as diplomatic tensions between the United States and Iran take center stage. The USD/AUD pair trimmed part of its earlier losses on Tuesday, trading around 0.7107 after touching an intraday low of 0.7092. This development weighed on the US Dollar while pushing Oil prices lower.
A senior Iranian official cited by Kyodo News revealed that Iran has offered to reopen the Strait of Hormuz within seven days if the US lifts its blockade of Iranian ports and eases military pressure. The UN General Assembly in New York is also being closely watched, with US President Donald Trump and Iranian President Masoud Pezeshkian both attending.
Despite this, the US Dollar remains cushioned by expectations of additional Federal Reserve rate hikes. Fed Chairman Kevin Warsh stated that he would be 'hard-pressed to describe broad financial conditions as restrictive.' The latest ADP NER Pulse showed private employers added an average of 20,000 jobs per week over the four weeks ending September 5.
The Australian Dollar continues to draw support from a hawkish Reserve Bank of Australia outlook. RBA Governor Michele Bullock noted that 'upside inflation risks may be materialising,' but stressed that she was 'not indicating any policy shift.' Markets are pricing in around a 95% chance of another 25-basis-point rate hike to 4.60% at the September 29 meeting.