AUD Climbs Higher on US-Iran Deal Optimism

AUD

The Aussie Dollar opens higher this morning as growing hopes for a U.S.-Iran deal to reopen the Strait of Hormuz have boosted investor confidence, while falling oil prices have eased fears about global inflation. Asian equities were mixed in trade yesterday with the Shenzhen +1.3%, Nikkei +0.3% and Hang Seng -0.6%. Locally the ASX 200 closed +1.4% as technology and healthcare sectors outperformed at +3.9% and +2.4%. The Aussie Dollar also saw some support from some strong economic news out yesterday with ANZ Job Advertisements m/m up 0.8% from a previous -0.1% and Household Spending m/m up 0.8% (exp 0.2%). The data indicates that the job market is showing some resilience and that consumer spending demand was holding up in the face of higher borrowing costs. No domestic data out today but later today will see the release of the Chinese RatingDog Services PMI, expected at 53.7 from a previous 54.1.

USD

AUDUSD opened higher at 0.7047 as the US dollar weakened on softer economic data and cooling geopolitical tension. Optimism grew after Qatar reported progress on a draft US-Iran proposal, with US Treasury Secretary Scott Bessent suggesting a deal to reopen the Strait of Hormuz could come soon. On Wall St, the Nasdaq closed +2.8%, the S&P 500 +2%, and the Dow Jones +1.9%. Meanwhile, US JOLTS Job Openings for June came in at 7.359M, down from 7.537M and below the 7.44 million forecast. Combined with falling oil prices, this pushed down the market’s expectations for a September Fed rate hike, now seen as 57% likely, down from 67% the day before. Attention now turns to Friday’s July jobs report for the next signal on Fed policy.

EUR

AUDEUR opened higher at 0.6111 as the Euro lost ground to a stronger Aussie Dollar. European markets closed higher across the board with the DAX +0.8% and the CAC up +0.6%. Oil falling below $80 a barrel has eased worries about energy-driven inflation in Europe. With that pressure reduced, markets now expect fewer near-term rate hikes from the European Central Bank. The Euro will keep taking its cues from global risk sentiment and upcoming economic data. Eurozone Final Services PMI out later this evening and is currently forecasted to show stagnant growth, matching last months reading of 51.6.

GBP

AUDGBP opens up at 0.5240 as the Pound softened against the Aussie. London’s FTSE 100 finished up +0.2%, lagging behind the rest of Europe. In the UK, budget pressures are in focus, with Prime Minister Andy Burnham and Chancellor John Healey asking ministers to cut department spending - a sign of tightening fiscal conditions that add pressure on the Pound. With less pressure to hike, the Pound remains guided by government budget news and broader market mood.

NZD

AUDNZD opened higher at 1.1994, bouncing back sharply off four-month lows as the Kiwi Dollar sold off on weak jobs data. New Zealand’s unemployment rate for Q2 unexpectedly jumped to 5.6%, well above the 5.4% forecast and marks an 11-year high. While the number of people employed still rose slightly (+0.5%), the sharp rise in overall unemployment points to growing strain in the economy. Markets will now weigh this data alongside broader global developments in shaping expectations for the RBNZ’s next move.