FX.co ★ Aussie Dollar Eases from 3-Week High

The Australian dollar slipped below $0.703, retreating from a three-week high as the collapse of US–Iran peace talks and heightened tensions in the Strait of Hormuz triggered a global risk-off shift and bolstered the US dollar. The decline followed US plans to tighten restrictions on shipping through the Strait after weekend negotiations with Iran broke down, pushing oil prices higher and amplifying global inflation concerns. Rising energy costs have strengthened expectations that central banks may delay interest rate cuts or even resume tightening. In Australia, the RBA has already raised rates twice this year to 4.10%, with markets pricing in another hike in May and a peak near 4.65% by year-end. Investor caution has increased ahead of this week’s labor market data, after unemployment unexpectedly climbed to a three-month high. Meanwhile, the Australian dollar’s year-long rally against the New Zealand dollar appears to be losing momentum after the RBNZ adopted a more hawkish tone. Traders now await comments from RBA Deputy Governor Hauser for guidance on whether Australian policy will remain as hawkish as that of other major central banks.