AUD Strengthens Against USD Amid Softer US Data and Improved Risk Sentiment

The Australian Dollar (AUD) strengthened against the US Dollar (USD), reaching around 0.7060 on Wednesday. This increase is attributed to softer-than-expected US economic data and an improvement in risk sentiment driven by geopolitical developments.

According to TMGM, weaker labor market data from the ADP Employment Change report contributed to the decline of the USD. The report showed a 44K jobs increase in July, below the forecasted 70K, while the Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI) came in at 54.1 in July.

The US Dollar was also affected by reports that the United States has lifted selected Iran-related sanctions, removing restrictions on two aircraft and three airlines linked to the Islamic Revolutionary Guard Corps (IRGC). This move is seen as a potential de-escalatory step as negotiations involving the US, Oman, and Iran continue.

The Reserve Bank of Australia's policy meeting scheduled for August 11 remains a key driver for the Australian Dollar in the near term. Analysts at Commerzbank noted that AUD/USD continued to grind higher, with the pair having risen 50 pips to 0.7050.