• AUD/USD gains traction to around 0.7160 in Wednesday’s early Asian session. 
• Trump said the US is extending the ceasefire with Iran at Pakistan’s request. 
• Markets expect the RBA to further raise the rate due to rising fuel costs and inflation. 

The AUD/USD pair trades in positive territory near 0.7160 during the Asian trading hours on Wednesday. However, the potential upside for the pair might be limited amid uncertainty regarding Iran’s participation in further peace talks. 

US President Donald Trump said on Tuesday that he is extending the ceasefire with Iran while awaiting a “unified proposal” from Tehran. Trump also stated that he would maintain a blockade over ships coming to and from Iran in the Strait of Hormuz, and he was extending the ceasefire until Iran submitted a new proposal, “and discussions are concluded, one way or the other.”

Comments from Federal Reserve (Fed) Chair nominee Kevin Warsh regarding independent monetary policy contribute to the USD’s upside. Warsh said on Tuesday he had made no promises to Trump about cutting interest rates, as he tried to assure US senators mulling his confirmation to lead the Fed that he would act independently of the White House while pursuing broad reforms.

The Reserve Bank of Australia (RBA) warned that the Middle East has caused oil price spikes that threaten to push inflation toward 6%. Markets are now pricing in nearly a 77% probability of an RBA rate hike next month as Deputy Governor Andrew Hauser reinforced a commitment to anchoring inflation.

Traders will keep an eye on the preliminary readings of the S&P Global Purchasing Managers’ Index (PMI) from Australia and the US, which are due on Thursday. 

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