AUD Receives Boost from Easing US-Iran Tensions

AUD

The Australian dollar opens higher against the majors over the weekend bar the NZD, as markets sharply reduced expectations for further rate hikes amid signs that earlier monetary tightening is beginning to filter through the economy. This comes after a softer-than-expected April inflation print and weaker consumer spending data earlier last week, as well as recent signs of cooling in the labour market which prompted investors to sharply cut the odds of a June rate hike to just 5%. Asian equities finished mixed on Friday, the Shenzhen -0.5%, Nikkei +2.5% and the Hang Seng +0.7%. Locally the ASX closed +1.6%. In Australia, ANZ-Indeed job ads for May will be released today. If these continue to fall, it will provide a further sign that the labour market is softening, with the Unemployment Rate likely to be gradually shifting higher. Labour market developments could play a particularly important role in RBA policy deliberations in the coming months. Looking at the week ahead the main event will be focused on GDP q/q which will be released this Wednesday. 

USD

AUDUSD opens higher this morning at 0.7178 despite dropping 0.5% over the month of May. Wall St. settled higher late in the day with the Dow Jones leading, +0.6%, the S&P 500 +0.2% and the Nasdaq +.1%. More Iran headlines in the early New York session claimed Trump to be meeting now to make his final determination on Iran, however optimism was quickly pushed back after Iran stressed that the reopening of the straight would be on its own terms. US ISM Manufacturing Index for May is also due tonight, with the headline reading expected to edge up from 52.7 to 53.2. This would mark the fifth consecutive expansionary reading, after the index spent most of 2025 in contraction territory. Looking at the week ahead, the main focus point will be late this Friday with US employment data set for release.

EUR

AUDEUR opens higher this morning at 0.6159 after Fridays Eurozone CPI's came through softer than forecasted. Eurozone equities closed mixed with the DAX flat, and the CAC -0.1%. It will be another busy day for the Eurozone with a myriad of manufacturing PMI which is not expected to move markets, however also releasing will be the Eurozone Unemployment Rate which is likely to have remained at 6.2% in April, although there are upside risks due to signs of weaker activity in the services sectors (particularly hospitality). 

GBP

AUDGBP opens higher this morning at 0.5339 off the back of BOE Bailey's commentary that the UK’s labour market is gradually softening and that higher inflation expectations are not coming through in wage expectations and settlements. Looking at UK equities the FTSE closed -0.2%. It will be a quiet week for the UK with the only events of note being this Wednesday and Friday as BOE Gov Bailey will be speaking on both days. On Wednesday he is due to testify before the House of Lords Economic Affairs Committee in London and on Friday will be speaking at the Investment Association Annual Conference which will also be held in London.

NZD

AUDNZD opens lower this morning at 1.2010 after the NZD rallied last week after the RBNZ came unexpectedly close to lifting interest rates. The Reserve Bank of New Zealand matched expectations by keeping the official cash rate at 2.25%, but the six-member board split down the middle on whether to hike in a surprisingly close call. Nothing from our Kiwi Neighbours today as they have a Bank Holiday, however looking at the week, the next piece of data will be released on Wednesday with the GDT Price Index.