The AUD/USD pair advanced toward 0.7160 during the early Asian trading session on Monday, buoyed by reports that the United States and Iran are nearing an agreement to reopen the Strait of Hormuz. The prospect of a geopolitical de-escalation has lifted sentiment toward riskier assets, providing support for the Australian Dollar against the US Dollar.
Bloomberg reported on Sunday that Washington and Tehran have signaled progress in negotiations to end hostilities and restore shipping access through the strategically vital waterway. However, US President Donald Trump cautioned that he would not “rush” into any agreement, underscoring the fragile nature of the talks.
US officials noted that no formal deal is ready for signing, as both sides remain at odds over Tehran’s enriched uranium stockpile and the imposition of tolls on vessels transiting the Strait of Hormuz. Market participants will be watching closely for any further developments, as even incremental progress could lend underlying support to the Aussie in the near term.
Meanwhile, expectations for additional interest rate hikes from the Reserve Bank of Australia have diminished sharply following a disappointing jobs report. Australia’s unemployment rate rose to 4.5% in April from 4.3% in March, marking the highest reading in roughly four and a half years.
According to financial market pricing from Westpac, the probability of a rate increase at the next RBA meeting fell to just 3%, down from 13% prior to the employment data release.