AUD Surges Above 0.7000 Amid Easing Oil Prices and Iran Deal Hopes

The Australian Dollar (AUD) has surged above 0.7000 against its US counterpart as investors' risk sentiment improves following comments from US Treasury Secretary Scott Bessent on a potential deal with Iran to reopen the Strait of Hormuz.

Bessent's remarks sparked a sharp decline in oil prices, which markets had previously priced in as a major risk factor. This decrease in oil prices has contributed to an easing of expectations for monetary tightening in the US, leading to a reassessment of the outlook for interest rates.

The AUD is typically a beneficiary of stronger investor confidence, and its rally is also being supported by domestic data. The ANZ-Indeed Job Ads rose 2% in July, while the TD-MI Inflation Gauge rebounded 1% month-over-month, marking its first increase since April.

Reserve Bank of Australia Governor Michele Bullock has reiterated that underlying inflation remains too high and warned of potential acceleration due to previous energy market disruptions. This continued support for a restrictive monetary policy stance is reflected in markets fully pricing in one additional rate hike this year.