The AUD/USD pair gains momentum, reaching approximately 0.7010 during early Asian trading on Wednesday. The Australian Dollar strengthens against the US Dollar as market participants increase their expectations for a potential interest rate hike by the Reserve Bank of Australia (RBA). Investors are closely watching upcoming Australian employment data for June, scheduled for release later on Thursday.
Following three consecutive 25 basis point increases earlier this year, the RBA maintained its Official Cash Rate at 4.35% during its June policy meeting. However, escalating tensions between the US and Iran have reignited concerns over energy-related inflation, leading to renewed speculation that the RBA may adopt a more restrictive monetary policy stance. Market sentiment has shifted accordingly, with traders now assigning nearly a 23% probability to an August rate hike and over 50% likelihood by December, according to financial analysts.
All eyes will turn to the Australian June employment report on Thursday. Economists forecast an addition of 15,000 jobs, with the unemployment rate expected to remain unchanged at 4.4% for a second consecutive month. Stronger-than-projected employment figures could provide additional support for the Australian Dollar against its US counterpart.
Meanwhile, the US military continues its 11th consecutive night of airstrikes targeting Iran, with reports of explosions in the northwestern Iranian city of Tabriz. In response, Iran’s top military command has threatened to expand its operations and target US interests throughout the region should American forces attack Iranian nuclear facilities, as reported by Xinhua News Agency. Escalating geopolitical tensions in the Middle East may drive increased demand for safe-haven assets like the US Dollar in the short term.
