AUD/USD Movement and Economic Factors
The AUD/USD pair is showing some upward momentum, hovering around 0.7155 in early Thursday trading in Asia. This resurgence in risk appetite can be attributed to a recent decision by US President Donald Trump to extend the ceasefire with Iran, which is helping to bolster the Australian dollar against its American counterpart. Later today, we can expect the preliminary results of the S&P Global Purchasing Managers’ Index (PMI) to be released.
Trump announced on Tuesday that the ceasefire with Iran would be extended at the request of Pakistan, pending a proposal for unification from Iran. This eased some worries about potential escalations in conflicts that had previously pushed energy prices up.
Still, the situation remains tenuous. The Iranian government continues to exercise strict control over the Strait of Hormuz, which is vital for trade, yet has seen some disruptions. Mohammad Berger Ghalibaf, the speaker of Iran’s parliament and chief negotiator, stated that reopening the Strait of Hormuz is “impossible” due to what he perceives as blatant violations of the ceasefire by the US and Israel, including a naval blockade.
If the war in the Middle East appears to be prolonged, we might see safe-haven currencies like the US dollar strengthen, creating difficulties for the AUD/USD pair.
On a brighter note for Australia, data released today shows that the preliminary S&P Global Manufacturing PMI increased to 51.0 in April from 49.8 in March. Similarly, the S&P Global Services PMI climbed to 50.3 from 46.3, with the Composite PMI also rising to 50.1 from 46.6 in April.
