Australian Dollar underperforms as Iran pushes back hopes of peace talks
The Australian Dollar (AUD) trades lower against its major currency peers, trading 0.6% down to near 0.6760 during the Asian trading session on Tuesday. The antipodean has come under pressure as remarks from Iran that they are not involved in any peace talks with the United States (US), which were contrary to comments from President Donald Trump, have revived the risk-aversion mood.
On Monday, US President Trump announced that he has instructed the Department of War to pause military attacks on Iran’s power plants for five days, as we are having “very good and productive conversations” with Tehran regarding a complete and total resolution of our hostilities in the Middle East.
The revival of risk-off sentiment has offered support to the US Dollar, which declined significantly after US President Trump’s remarks. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.25% higher to near 99.40.
In addition to deteriorating market sentiment, weak preliminary Australian S&P Global Purchasing Managers’ Index (PMI) data for March has also weighed on the Australian Dollar. Earlier in the day, the data showed that the overall business activity swung to contraction due to a sharp decline in the services sector output.
The Composite PMI arrived at 47.0 against 52.4 in February. A figure below 50.0 is considered a contraction in the business activity.
Meanwhile, investors await the Australian Consumer Price Index (CPI) data for February, which will be released on Wednesday. However, the impact of the Feb inflation data is expected to be limited on the Reserve Bank of Australia’s (RBA) monetary policy outlook, as it would lack the impact of the recent surge in energy prices due to the Iran conflict.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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