- AUD/USD gains ground to around 0.7010 in Tuesday’s Asian session.
- The US launches further strikes on Iran.
- The RBA is in a “wait-and-see” mode as it monitors key economic data ahead of its next policy meeting.
The AUD/USD pair drifts higher to near 0.7010 during the Asian trading hours on Tuesday. However, the potential upside for the pair might be limited amid the escalation of the US-Iran conflict. The Australian employment report will take center stage later on Thursday.
The US Central Command (CENTCOM) said on Monday that it completed more strikes against Iran, hours after US President Donald Trump warned that Tehran would pay for the deaths of three American soldiers over the past few days, per CNN.
Iranian state media reported explosions across southern Iran, including on Qeshm Island and in Bandar Abbas, Sirik, Chabahar, Isfahan and Konarak. Kuwait also said that its air defences were activated against Iranian missile and drone attacks. Ongoing tensions in the Middle East could weigh on riskier assets such as the Australian Dollar (AUD) against the US Dollar (USD) in the near term.
After delivering three consecutive 25 basis points (bps) hikes earlier this year, the Reserve Bank of Australia (RBA) decided to leave the Official Cash Rate (OCR) unchanged at 4.35% at its June policy meeting. The Australian central bank is currently in a “wait-and-see” mode to evaluate how its tightening cycle is impacting sticky core inflation and a cooling domestic economy.
The ASX 30-Day Interbank Cash Rate Futures implied a 16% chance of an RBA rate hike in August, with a roughly 50% to 60% possibility of one more hike by December 2026.
