Australian Dollar softens as Middle East tensions, stronger jobs report boost US Dollar
The AUD/USD pair remains under selling pressure near 0.7035 during the early Asian session on Monday. The Australian Dollar (AUD) extends the decline against the US Dollar (USD) amid escalating tensions in the Middle East and stronger-than-expected US economic data.
Iran has fired multiple waves of missiles at northern Israel over the weekend. Iranian officials said that any attack from Israel against Lebanon or Iran would be met with a "crushing and comprehensive response.”
Meanwhile, US President Donald Trump said that he would call Israeli Prime Minister Benjamin Netanyahu and ask him not to retaliate because he was worried the attacks would "blow up" a deal between the three sides. Rising tensions in the Middle East and a fragile peace deal between the US and Iran could boost a safe-haven currency such as the Greenback and act as a headwind for the pair.
Furthermore, the US economy posted a third straight month of strong job gains in May, the Bureau of Labor Statistics reported Friday. US Nonfarm Payrolls (NFP) increased by 172,000 jobs in May, compared to 179,000 (revised from 115,000) in the previous reading, and the Unemployment Rate held at 4.3% during the same period. The upbeat jobs report contributes to the USD’s upside.
On the other hand, a hawkish tone from the Reserve Bank of Australia (RBA) might help limit the Aussie’s losses. RBA Governor Michele Bullock emphasized that the central bank remains strictly focused on curbing inflation, following three interest rate hikes earlier this year that pushed the cash rate to 4.35%.
Bullock added that inflation is too high, and the board will do what it considers necessary to achieve our mandate to deliver price stability and full employment.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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