Australian Dollar Rebounds Ahead of RBA Minutes

The Australian dollar rose above $0.71, recovering from a roughly 0.3% loss in the previous week to stay near four-year highs, as surging energy prices strengthened expectations of rate hikes ahead of upcoming inflation data this week. Although a ceasefire has mostly been held since early April, efforts to resume peace talks between the US and Iran stalled, while energy flows through the Strait of Hormuz remain constrained. The resulting energy-supply shock continues to fuel inflation risks, reinforcing expectations that central banks will keep interest rates higher for longer or deliver further hikes. In Australia, investors await the upcoming March CPI report due on Wednesday, with headline inflation expected to rise 4.7% year-on-year, well above the Reserve Bank’s 2–3% target. Any upside surprise could solidify bets on a 25-basis-point rate hike at the central bank’s May 5 meeting. Markets are currently pricing in an 80% probability of a third rate hike this year to 4.35%.

The Australian dollar held its recent decline to around $0.71 and was on track for its first weekly loss in a month, as risk appetite worsened amid the prolonged Middle East conflict. The Aussie, often sold as a proxy for global risk, remained under pressure as Asian equities extended their retreat from record highs on fading hopes for sustained progress in US-Iran talks, while concerns over disruptions to energy flows through the Strait of Hormuz further weighed and boosted demand for the safe-haven US dollar. Still, losses were limited by expectations that the Reserve Bank of Australia could hike rates next month amid a strong labor market and oil-driven inflation. Markets now await upcoming key inflation numbers next week for further clues on the policy outlook. Elsewhere, Japan and Australia are set to seal an economic security deal in early May covering energy, rare earths, food, and other critical commodities, offering additional support for the commodity-linked currency.

The Australian dollar held around $0.71, moving in a tight range near four-year highs as investors monitored developments in the Middle East war, while a recovery in domestic PMI data provided support. Preliminary business surveys pointed to a modest rebound in activity, with manufacturing returning to expansion and services recovering after the sharp weakness seen in March, helping lift the composite gauge back above the growth threshold. The data suggested domestic demand remained resilient despite firms continuing to report disruptions tied to geopolitical tensions. Diplomatic efforts between the US and Iran showed limited progress and the Strait of Hormuz remained largely shut to international shipping. Reports of attacks on commercial vessels and the continuation of US pressure on Iranian ports kept supply concerns elevated. President Trump said the truce could remain in place while awaiting a revised Iranian proposal, though Tehran signaled no immediate intention to resume talks.