Aussie Heads for Flat Weekly Finish

The Australian dollar held around $0.70 and was on track to finish the week little changed, as markets await the Reserve Bank’s upcoming policy decision next week. Markets are increasingly pricing in the possibility that the central bank has already concluded its tightening cycle after three rate hikes this year began to filter through the economy. A run of softer economic releases, from GDP to housing prices, reinforced expectations that policymakers will keep the cash rate unchanged at 4.35% on Tuesday. Investors also scaled back bets for an August rate hike, with the odds falling sharply from above 80% a month ago to around 35%. The May CPI report due on June 24, will be pivotal after an unexpectedly soft April inflation reading, as policymakers look for clearer evidence that price pressures remain strong. Meanwhile, global risk appetite improved after US President Trump said a deal with Iran could be reached as early as this weekend after postponing planned attacks against Iran.

The Australian dollar held around $0.70, staying at a nine-week low as persistent Middle East tensions weighed on global risk sentiment. The US continued to launch strikes on Iran, with President Trump accusing Tehran of delaying talks over an interim peace deal, a day after alleging it had downed a helicopter. The prolonged conflict and the near-closure of the Strait of Hormuz, continued to disrupt energy flows from the Persian Gulf, raising concerns over inflationary pressures. In Australia, consumer sentiment weakened further in June as inflation and higher fuel costs continued to weigh on household finances. Focus now turns to the Reserve Bank's upcoming policy decision next week, where rates are widely expected to remain unchanged. Governor Bullock reiterated last week that the RBA remains firmly focused on bringing inflation down following three rate hikes earlier this year. Meanwhile, economists have scaled back bets for an August move and now see the rate peaking at 4.35%.

The Australian dollar rose above $0.705, but stayed at a two-month low as investors assessed easing Middle East tensions while persistent cost-of-living pressures weighed on domestic sentiment. Household confidence deteriorated further into deep pessimism, with the Westpac–Melbourne Institute Consumer Sentiment Index falling about 3% to 80.6 in June, marking the fourth decline this year and among the weakest in decades. Households reported ongoing strain from elevated living costs, while a temporary fuel tax cut offered only limited and short-lived relief. Against this backdrop, investors are turning their attention to the upcoming policy decision from the Reserve Bank of Australia next week, where rates are widely expected to be held steady. Meanwhile, global risk sentiment got a minor lift after Iran and Israel announced a halt in fighting. However, the safe-haven US dollar remained stronger amid uncertainty over a US-Iran peace deal and hawkish Fed bets after a robust US jobs data.