The Australian dollar remained under pressure below $0.72, though it continued to trade near four-year highs, as markets reacted to the collapse of plans for a second round of US–Iran peace talks. President Donald Trump moved to extend the ceasefire, but diplomatic momentum faded after Iran signaled it would not take part in further negotiations. Tehran also indicated it would keep the Strait of Hormuz closed as long as US naval interceptions continue, and suggested it may not fully honor the ceasefire.
The setback in diplomacy and rising tensions in the Middle East weighed on risk appetite, boosting the US dollar on safe-haven demand. On the domestic front, attention stayed fixed on policy after RBA Deputy Governor Andrew Hauser reaffirmed the central bank’s determination to anchor inflation expectations. His remarks bolstered expectations of additional tightening, with markets now pricing in a 77% probability of a rate hike next month and anticipating another increase by September. Investors are now awaiting upcoming PMI releases for clearer signals on the strength of economic momentum.