AUD/USD gains amid renewed US-Iran concerns

Today’s headlines

What’s happening: The Australian dollar traded higher this morning as investors assessed the latest economic reports.

What happened: Renewed tensions between the US and Iran weighed on global investor risk sentiment.

However, strength in the US dollar limited the overall gains for the Australian dollar this morning.

Why it matters: Data released this morning showed that Australia’s dwelling approvals declined 1.1% to a four-month low of 17,019 units in May. Despite the decline, it marked an improvement from April’s 0.2% contraction and was in-line with expectations.

Private house approvals in Australia gained 2.8% to 10,537 units in May, compared to a 0.4% decline in the previous month. This marked the best monthly gain since September 2025.

Meanwhile, the Reserve Bank of Australia’s assistant governor Sarah Hunter said that the latest surge in oil price had weighed on consumer and business confidence, but Australia’s economy remained resilient.

She also mentioned that the RBA would take actions as required to return inflation levels to target, while maintaining sustainable full employment.

Investors continue to widely expect the central bank to leave its cash rate unchanged during the August meeting after announcing three interest rate hikes so far this year.

Crude oil prices moved higher after the US announced strikes against Iran, while also revoking a license to allow the country to sell crude oil due to attacks on vessels in the Strait of Hormuz. The reignition of tensions sparked support for the safe-haven US dollar.

Strength in the US dollar weighed on the AUD/USD forex pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.1% to reach 101.17.

The AUD/USD forex pair rose more than 0.1% to 0.6937, while the S&P/ASX 200 declined 1.07% to trade at 8,710.00 this morning.

What to watch: Investors will keep an eye on the tensions at the Strait of Hormuz.
Data on Westpac consumer confidence and NAB business confidence will be released next week. Australia’s Westpac–Melbourne Institute consumer sentiment index, which fell 3.5% to 80.6 in June, is expected to rise to 82.6 in July. Analysts expect Australia’s NAB business confidence index to improve to -12 in June from -14 in May.

The markets today

US stocks in focus today ahead of some key economic reports

Context: Equity markets in the US settled lower on Tuesday amid a decline in chip stocks.

Details: Investors rotated out of AI stocks amid growing concerns over elevated spending on infrastructure for this novel technology.

Although Samsung reported a 19-fold jump in profits for the latest quarter, it failed to lift the broader market sentiment. While shares of chipmakers fell, a part of this was due to profit taking.

Shares of Micron Technology fell 4.71%, while the stock has surged almost 200% year to date. Marvell Technology lost 7.45%, after gaining almost 160% so far this year. Shares of Advanced Micro Devices shed 6.51%, but it still up 130% year to date.

Meanwhile, oil prices rose following renewed tensions between the US and Iran after an attack on a Qatari tanker near the Strait of Hormuz.

Data released Tuesday showed US median inflation expectations for one year ahead surged by 0.2 percentage points to 3.7% in June, reaching the highest level since September 2023.

The US trade deficit widened to $77.6 billion in May from $54.6 billion in April. However, the figure was better than market expectations of a $78.5 billion deficit. US exports fell 3.2% to $317.7 billion in May, while imports rose by 3.3% to $395.3 billion.

Industrials, information technology and materials were among the biggest losers on Tuesday, while energy and healthcare stocks recorded gains.

The Dow Jones index fell by 130.76 points, or 0.25%, to close at 52,925.15, while the S&P 500 declined 0.45% to 7,503.85 on Tuesday. The Nasdaq 100 dipped 1.77% to close at 29,173.02.

What to watch: Investors will continue monitoring further developments in the US-Iran negotiations.

Markets also await the release of minutes from the latest FOMC meeting (2200 UAE Time) to get further insights into the Federal Reserve’s monetary policy outlook. Data on US wholesale inventories (1800 UAE Time) and consumer credit change (2300 UAE Time) will also be released today. Analysts expect US wholesale inventories to rise by 0.3% to $943.9 billion in May compared to a 0.7% gain in April. Total US consumer credit, which surged by $20.7 billion in April, is expected to rise by $17.1 billion in May.

Other Markets: European indices closed mostly lower on Tuesday, with the DAX 40, CAC 40 and STOXX Europe 600 Index down by 1.37%, 0.51% and 0.65%, respectively, and the FTSE 100 up by 0.13%.

The news shaping the markets

US President Donald Trump said a peace deal between Russia and Ukraine is “much closer than people realise” after separate calls with Vladimir Putin and Volodymyr Zelenskyy. The news sent the USD/RUB pair higher in forex trading this morning.

The Philippines’ unemployment rate rose to 4.8% in May from 4.7% in the previous month, which lent support to the USD/PHP forex pair.

The Reserve Bank of New Zealand increased its official cash rate by 25 bps to 2.50%, in-line with market estimates, which sent the NZD/USD pair higher in forex trading this morning.

Japan’s current account surplus widened to ¥3,968.3 billion in May from ¥3,320.5 billion in the year-ago month. However, the latest reading coming in short of market estimates of ¥4,121 billion lent support to the USD/JPY forex pair.

South Korea’s current account surplus widened to $38.61 billion in May from $28.29 billion in the previous month. The current account surplus reaching a record high sent the USD/KRW pair lower in forex trading this morning.

What else to watch today

US MBA mortgage applications (1500 UAE Time), used car prices (1700 UAE Time), EIA crude oil stockpiles change (1830 UAE Time), EIA gasoline stockpiles change (1830 UAE Time) and EIA Cushing crude oil stocks change (1830 UAE Time), Brazil’s retail sales (1600 UAE Time) as well as Argentina’s industrial production (2300 UAE Time).