AUD/USD slips but remains near 4-year highs

Today’s headlines

What’s happening: The Australian dollar edged lower versus the US dollar this morning, but remained above the key $0.71 level.

What happened: Improvement in risk sentiment amid prospects of a de-escalation in the US-Iran war helped the Australian dollar remain close to its strongest level since May 2022.

Strength in the US dollar weighed on the AUD/USD forex pair this morning.

Why it matters: The Australian dollar is on course to recording gains for the third week in a row amid hopes of a deal being reached between the US and Iran.

US President Donald Trump continued to indicate progress toward an agreement with Iran, while the details of any deal remain unconfirmed. Israel and Lebanon also agreed to a 10-day ceasefire. The Strait of Hormuz continues facing disruptions, resulting in volatility of energy prices.

Amid rising optimism of peace in the Middle East, the Australian dollar has been gaining strength against the greenback and is up more than 5% from the late-March lows.

Meanwhile, the country’s labour market remained resilient through March, sparking speculations of the Reserve Bank of Australia continuing with its monetary policy tightening.

Employment in Australia surged 17,900 to a record of 14.76 million in March, compared to a 49,600 gain in the previous month. Australia’s unemployment rate came in unchanged from the previous month at 4.3% in March, in-line with market estimates.

With rising energy prices, consumer inflation expectations rose to 5.9% in April from 5.2% in the previous month, reaching the highest level since November 2022.

Market sentiment has also been supported by strong economic growth in China during the first quarter, lifting expectations of higher demand for Australian commodities.

Strength in the US dollar exerted pressure on the AUD/USD pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose around 0.1% to 98.27.

The AUD/USD forex pair edged lower to 0.7162, while the S&P/ASX 200 fell 0.38% to 8,921.10 this morning.

What to watch: Investors will keep an eye on the developments related to the US-Iran war and economic growth in China, Australia’s largest trading partner.

Data in S&P Global manufacturing PMI, S&P Global services PMI and S&P Global composite PMI will be released next week on Thursday. The S&P Global Australia manufacturing PMI, which fell to 49.8 in March from 51.0 in the previous month, is expected to decline further to 49 in April. Analysts expect the S&P Global services PMI business activity index to decline to 46 in April from 46.3 in March, while the composite PMI is projected to fall to 46 in April from 46.6 in the previous month.

The markets today

Netflix in focus today following the release of quarterly results

Context: Shares of Netflix dipped in after-hours trading on Thursday despite the company reported better-than-expected earnings for the first quarter.

Details: Revenues jumped 16% year-over-year to $12.25 billion in the first quarter, topping consensus estimates of $12.18 billion. Earnings came in at $1.23 per share, beating Wall Street expectations of 76 cents per share.

The surge in revenues was driven mainly by strong membership growth, price hikes and elevated ad revenues.

Netflix’s co-CEO Greg Peters said that the company ended last year ⁠with over 325 million paid members. The company further said in a statement that it sees a “long runway for growth.”

Netflix reported that its Chairman Reed Hastings plans to quit the company and not stand for re-election in June.

The company’s stock came under pressure after it issued a weak sales and earnings outlook for the second quarter.

Management guided for revenues of $12.57 billion for the second quarter, lower than market estimates of $12.63 billion. They projected earnings of 78 cents per share, below expectations of 84 cents per share.

Netflix affirmed its 2026 revenue guidance forecast of $50.7-$51.7 billion.

How shares responded: Netflix’s shares tanked 9.6% to $97.44 in extended trading hours following the release of quarterly results on Thursday. The stock has jumped more than 13% over the past month.

What to watch: Investors will continue monitoring growth in the company’s subscriber numbers.

Other Markets: US trading indices closed higher on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.24%, 0.26% and 0.49%, respectively.

The news shaping the markets

The European Union is expected to begin releasing a fresh loan of €90 billion to Ukraine in the second quarter. The news sent the USD/RUB pair higher in forex trading this morning.

New Zealand’s electronic card transactions rose 0.7% in March. This marking a significant easing from 1.4% growth in the previous month exerted pressure on the NZD/USD forex pair.

Brazil’s IBC-Br economic activity index climbed 0.6% in February, topping market estimates of 0.5%, which sent the USD/BRL pair higher in forex trading this morning.

The Eurozone’s annual inflation rate came in at 2.6% in March, higher than the preliminary reading of 2.5%. Inflation surging to the highest level since July 2024 exerted pressure on the EUR/USD forex pair.

The UK reported a trade deficit of £0.72 billion in February versus a surplus of £3.02 billion in January, which sent the GBP/USD pair lower in forex trading this morning.

What else to watch today

Eurozone’s current account (1200 UAE Time) and balance of trade (1300 UAE Time), Italy’s balance of trade (1200 UAE Time) and current account (1200 UAE Time), Canada’s CFIB business barometer (1500 UAE Time), housing starts (1615 UAE Time) and foreign securities purchases (1630 UAE Time), India’s bank loan growth (1530 UAE Time) and deposit growth (1530 UAE Time), as well as US Baker Hughes oil rig count (2100 UAE Time) and Baker Hughes total rigs count (2100 UAE Time).