- AUD/USD advances despite the fact that markets are ruling out any interest rate action on Tuesday.
- US Dollar declines as a US-Iran peace deal faded safe-haven demand, easing fears of inflation and higher interest rates.
- The CME FedWatch tool shows December Fed rate hike odds falling to nearly 27% after the peace deal.
AUD/USD gains around 0.5% after registering minor losses in the previous day, trading around 0.7080 during the Asian hours on Monday. However, the Australian Dollar (AUD) could struggle against the US Dollar (USD) as markets are ruling out a Reserve Bank of Australia (RBA) rate move at Tuesday’s June meeting and have lowered bets for an August hike. All eyes now turn to the May CPI data on June 24, which will be critical for policymakers looking for signs of persistent inflation to justify future policy tightening.
The AUD/USD pair appreciates as the US Dollar (USD) declines on fading safe-haven demand following reports that the United States (US) and Iran reached a deal to end their conflict, easing concerns about inflation and higher interest rates.
Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.
The United Kingdom (UK), France, Germany and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war.
The CME FedWatch tool indicates that the markets are pricing in nearly a 27% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 40% a week ago.
