Aussie Eyes 1st Weekly Loss in a Month

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.

The Australian dollar rose above $0.71, moving back toward four-year highs as markets weighed the collapse of plans for a second round of US–Iran peace talks. Reports indicated that Vice President JD Vance canceled a planned trip to Islamabad for negotiations after Iran said that it would not participate in the meeting. Tehran also indicated it would keep the Strait of Hormuz closed as long as US naval interceptions persist, while President Trump extended the current ceasefire. Domestically, focus remained on policy after RBA Deputy Governor Andrew Hauser reiterated the central bank’s commitment to anchoring inflation expectations. This reinforced bets of further tightening, with markets now pricing a 77% chance of a rate hike next month and another move likely by September. Investors now look to upcoming PMI data for clearer signals on economic momentum. Meanwhile, a survey showed Australian firms expect the Aussie near $0.72 by year-end, while super funds see it around $0.71.