Australian Dollar Trades Sideways

2026-03-05 02:29 By Joshua Ferrer 1 min. read

The Australian dollar hovered around $0.706, trading in a narrow range near three-year peaks, as investors weighed the impact and duration of the ongoing Middle East conflict.

Possible talks between the US and Iran raised hopes of easing tensions and resuming oil shipments through the Strait of Hormuz, although uncertainty remained.

A Wednesday report said Iran’s Ministry of Intelligence signaled openness to discussions with Washington on ending the war, but a source from the ministry later denied the claims.

In Australia, latest data showed household spending rebounded slightly in January after falling in December, indicating softer consumer demand.

This could ease RBA concerns that demand is outpacing the economy’s supply and reduce pressure for further rate hikes.

However, the widening Middle East conflict alongside stronger domestic Q4 GDP data raised concerns about inflation.

Markets see only a small chance of a rate hike in March, though a move higher in May remains fully priced.



News Stream
Australian Dollar Trades Sideways
The Australian dollar hovered around $0.706, trading in a narrow range near three-year peaks, as investors weighed the impact and duration of the ongoing Middle East conflict. Possible talks between the US and Iran raised hopes of easing tensions and resuming oil shipments through the Strait of Hormuz, although uncertainty remained. A Wednesday report said Iran’s Ministry of Intelligence signaled openness to discussions with Washington on ending the war, but a source from the ministry later denied the claims. In Australia, latest data showed household spending rebounded slightly in January after falling in December, indicating softer consumer demand. This could ease RBA concerns that demand is outpacing the economy’s supply and reduce pressure for further rate hikes. However, the widening Middle East conflict alongside stronger domestic Q4 GDP data raised concerns about inflation. Markets see only a small chance of a rate hike in March, though a move higher in May remains fully priced.
2026-03-05
Australian Dollar Hits 1-Month Low
The Australian dollar weakened to around $0.700 on Wednesday, hitting a four-week low, as escalating geopolitical risks outweighed better-than-expected domestic GDP figures. Data showed the economy expanded 0.8% in Q4 2025, while annual growth hit 2.6%, topping estimates and marking the fastest pace in almost three years. While the report confirms solid economic momentum, it failed to firmly justify a follow up rate hike later this month. Market pricing currently implies just around a 30% chance of a March hike, while a quarter-point increase to 4.10% remains fully priced for May. The expanding conflict in the Middle East, which has rattled markets globally, overshadowed the strong GDP numbers and weighed on the risk-sensitive Aussie. Markets are closely monitoring the potential impact of these tensions on growth and inflation. On Tuesday, Governor Michele Bullock said the central bank remains “very alert” to such risks and ready to respond with tighter monetary policy if needed.
2026-03-04
Australian Dollar Gains on Bullock’s Remarks
The Australian dollar rose to around $0.71 on Tuesday, trimming some losses from the previous session as markets increasingly priced in a potential Reserve Bank of Australia cash rate hike. RBA Governor Michele Bullock signaled that the central bank’s March policy meeting would be “live” for a possible rate increase, marking a shift from her recent emphasis on patience. She also warned that an oil price shock stemming from tensions involving Iran could reignite domestic inflationary pressures, noting that recent clashes between Iran and the US underscore how quickly global conditions can change. Market pricing now suggests around a 28% chance of a 25 bps rate hike, while fully pricing in tightening through May. Markets also see roughly a 75% chance of another increase to 4.35% by the end of the year. The Aussie also drew support from an atypical haven demand, with its energy wealth helping to counter rising oil costs.
2026-03-03