Australian Dollar loses ground below 0.7150 despite hawkish RBA stance
The AUD/USD pair loses momentum to around 0.7120 during the early European session on Friday. The Australian Dollar (AUD) softens against the US Dollar (USD) amid a cautious mood and ongoing conflict in the Middle East. The US May employment report will be in the spotlight later on Friday.
Iran’s Foreign Minister Abbas Araghchi said Wednesday that "no tangible progress" has been made in negotiations to end the Middle East war. Araghchi further stated that lines of communication with Washington were still open but warned that any attack by Israel on the Lebanese capital, Beirut, as part of its campaign against Hezbollah would trigger a "full-scale resumption" of the US-Iran conflict.
Traders will closely monitor the developments surrounding US-Iran peace negotiations. Uncertainty and any signs of rising tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the pair in the near term.
Reserve Bank of Australia (RBA) Governor Michele Bullock on Thursday maintained a hawkish tone. She emphasized that the central bank remains strictly focused on curbing inflation, following three interest rate hikes earlier this year that pushed the cash rate to 4.35%. Bullock added that inflation is too high, and the board will do what it considers necessary to achieve our mandate to deliver price stability and full employment.
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