Hormuz Tensions Weigh on Aussie, Boost Safe-Haven Demand

Australia's currency has retreated from its two-month highs as tensions over the Strait of Hormuz have lifted demand for safe-haven assets like the US Dollar. The AUD/USD pair, which tracks the exchange rate between the Australian and US Dollars, traded lower on Tuesday after opening with a firmer tone.

The move is largely driven by geopolitics rather than economic indicators. Iran's top negotiator, Mohammad Bagher Qalibaf, stated that the Strait of Hormuz will remain closed until the US meets its conditions for an interim deal signed in June.

This development has weighed on risk-sensitive currencies like the Aussie and supported the US Dollar. The UK Maritime Trade Operations agency reported that a vessel was struck by an unknown projectile while transiting the Strait, further escalating tensions.