FX.co ★ Aussie Pressured Near 2-Month Low

The Australian dollar hovered around $0.691, trading near the two-month low reached last week, weighed down by a stronger US dollar and broad risk-off sentiment amid the escalating conflict in the Middle East. Tensions in the Strait of Hormuz have intensified after President Trump imposed a renewed deadline and escalated threats against Iran’s power plants and civilian infrastructure, while Iran rejected the demands and continued strikes on regional energy assets.

The standoff has effectively constrained traffic through this key shipping corridor, heightening supply risks and bolstering safe-haven demand for the US dollar. In Australia, expectations of tighter monetary policy are firming, with markets leaning toward another rate hike at the May meeting, as elevated oil prices and a still-tight labor market continue to fuel inflationary pressures.

Analysts now expect the Reserve Bank of Australia could deliver up to three additional rate increases in 2026, potentially lifting the cash rate to 4.85%, a level last seen in late 2008.