AUD Surges Past 0.7000 on Iran Deal Hopes and Hawkish RBA

The Australian Dollar (AUD) has climbed above 0.7000 against the US Dollar (USD), reaching 0.7035 on Tuesday, a 0.50% gain from the previous day.

The improvement in risk sentiment is behind this move, driven by US Treasury Secretary Scott Bessent's comments that an agreement with Iran to reopen the Strait of Hormuz could be reached as soon as Tuesday or Wednesday.

This has led to a sharp decline in oil prices, which markets have priced in as a gradual normalization of global energy supplies. The AUD typically performs well during periods of stronger investor confidence and is also drawing support from encouraging domestic data.

The TD-MI Inflation Gauge rebounded by 1% MoM, marking its first increase since April, reinforcing concerns that inflationary pressures are re-emerging. Reserve Bank of Australia (RBA) Governor Michele Bullock reiterated that underlying inflation remains too high and warned that price pressures could accelerate further.

The RBA's hawkish stance is supporting expectations for a restrictive monetary policy, with markets still fully pricing in one additional rate hike this year. The AUD/USD technical analysis suggests a bullish near-term bias, with the pair holding above key moving averages and trend-line supports.