FX.co ★ Australian Dollar Rises to 1-Month High

The Australian dollar climbed to around $0.70, reaching its highest level in more than four weeks as the ongoing US-Iran conflict heightened the risk of energy-driven inflation and strengthened expectations of another interest rate hike by the Reserve Bank of Australia (RBA). US strikes on Iran have entered a tenth consecutive day, while Iran-backed Houthi militants have declared a maritime embargo against Saudi Arabia, amplifying concerns about broader disruptions to global energy supplies.

The resulting spike in oil prices has reinforced market expectations that the RBA may tighten policy further after lifting the cash rate three times to 4.35%. Futures markets now imply a 76% probability of another increase by December. At the same time, investors are closely watching Australia’s June labor force report due Thursday, with consensus forecasts pointing to a 15,000 increase in employment and an unchanged unemployment rate of 4.4%. Any downside surprise in the labor data could lead traders to pare back expectations for further monetary tightening.