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- AUD/USD weakens as the Australian Dollar struggles amid fading optimism, with the Iran 10-point deal lacking full commitment.
- Markets now expect an RBA rate hike in May, with rates projected to reach 4.61% by year-end.
- Iran says recent actions violate the ceasefire, calling further talks with the US unreasonable.
AUD/USD snaps a three-day winning streak, trading near 0.7030 during the Asian hours on Thursday. The risk-sensitive pair weakens as the Australian Dollar (AUD) comes under pressure amid fading optimism, with reports suggesting the 10-point framework lacks full commitment from both sides, leaving the deal fragile and incomplete.
However, the Middle East conflict, now in its second month, has lifted energy prices and heightened inflation risks, reinforcing expectations that global central banks may keep policy tighter for longer.
The Reserve Bank of Australia (RBA) has already raised rates by 50 basis points to 4.10% amid persistently high inflation. Markets now anticipate another hike in May, with rates seen reaching 4.61% by year-end.
According to Reuters, Iranian officials said recent developments violate the terms of the less-than-day-old ceasefire, calling it “unreasonable” to proceed with talks for a permanent agreement with the United States (US).
The warning from Iran’s lead negotiator and parliament speaker, Mohammed Bager Qalibaf, underscores ongoing regional volatility. Iran’s Islamic Revolutionary Guard Corps (IRGC) also claimed that shipping through the Strait of Hormuz had halted after Israel expanded strikes in Lebanon.
Traders await the US Consumer Price Index (CPI) report for March, due Friday. Headline inflation is expected to rise 3.3% year-over-year (YoY), up from 2.4%, driven by higher oil prices amid the Middle East conflict.
