Forex News: Australian Dollar Falls On US-Iran Peace Uncertainty

Australian Dollar Falls On US-Iran Peace Uncertainty

(RTTNews) - The Australian dollar weakened against other major currencies in the Asian session on Friday, as traders remain concerned about the economic impact of the expanding conflict in the Middle East, with crude oil prices spiking amid ongoing supply disruption. Losses are capped somewhat after U.S. President Donald Trump extended his pause on threats to strike Iran's energy infrastructure by another 10 days.

The U.S.-Iran standoff over the 15-point peace proposal deepens the Middle East conflict. Iran dismissed the U.S. plan to pause the war, insisting that it will only occur on Tehran's own terms and timeline.

The U.A.E., Kuwait, Bahrain, Saudi Arabia, Qatar and Jordan issued a joint statement condemning Iran's "criminal" attacks on their energy infrastructure. The Gulf countries reaffirmed their right to self-defense as well as their right to "take all necessary measures to safeguard our sovereignty, security, and stability."

Reports stated that the Pentagon is preparing to deliver one "final blow" to Iran, including sending up to 10,000 additional ground troops.

Regarding monetary policy, Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent said on Thursday that as energy costs rise, policymakers may need to take action to control inflation.

The board is nevertheless committed to attaining full employment and low, stable inflation, which could raise short-run neutral rates and call for stricter policy, Kent continued.

In the Asian trading today, the Australian dollar fell to a 2-month low of 0.6872 against the U.S. dollar, nearly a 4-week low of 109.63 against the yen and nearly a 1-1/2-month low of 1.6779 against the euro, from yesterday's closing quotes of 0.6886, 109.99 and 1.6750, respectively. If the aussie extends its downtrend, it is likely to find support around 0.67 against the greenback, 105.00 against the yen and 1.71 against the euro.

Against the Canada and the New Zealand dollars, the aussie dropped to a 4-day low of 0.9525 and a 3-day low of 1.1936 from Thursday's closing quotes of 0.9540 and 1.1955, respectively. The aussie may test support 0.93 against the loonie and 1.18 against the kiwi.

Looking ahead, Canada wholesale sales data for February, U.S University of Michigan's consumer sentiment for March and U.S. weekly Baker Hughes oil rig count data are slated for release in the New York session.

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