AUD under Pressure as USD Steadies Amid Labour-Market Data and Strait of Hormuz Developments

The Australian Dollar (AUD) has come under pressure as the US Dollar (USD) steadied after two consecutive days of losses. The AUD/USD pair is currently trading around 0.7036, down about 0.32% on the day.

The US labour-market data released on Thursday provided some support to the Greenback, with Initial Jobless Claims rising only slightly to 199K from 198K and coming in below expectations of 202K.

Meanwhile, attention is focused on developments surrounding the Strait of Hormuz, where Iran and Oman are close to finalizing an agreement that would establish a temporary shipping route through the waterway. The prospect of an agreement has improved near-term market sentiment, but the broader backdrop remains fragile, keeping some defensive demand for the US Dollar alive.

Oil prices have traded modestly higher on Thursday, easing energy-driven inflation concerns and reducing pressure on major central banks to raise interest rates. According to the CME FedWatch Tool, markets now see around a 56% chance of a September Federal Reserve (Fed) rate hike, down from 63% a week earlier.

Friday's US Nonfarm Payrolls (NFP) report will be closely watched as it could influence Fed rate expectations. On the Australian side, China's Trade Balance data is also in focus, with the AUD sensitive to developments in the Chinese economy due to their close trading relationship.