AUD rises as US-Iran halt strikes, ahead of CPI data

Today’s headlines

What’s happening: The Australian dollar moved higher this morning after remaining range-bound for eight consecutive trading days.

What happened: Overall market sentiment improved after the US and Iran decided to pause military strikes, helping the AUD/USD forex pair move close to multi-week highs.

Investors await inflation data this week for further insights into the Reserve Bank of Australia’s monetary policy outlook.

Why it matters: The US halted strikes against Iran after two weeks of bombing, forcing Tehran to stop its retaliatory attacks. US Central Command Chief Admiral Brad Cooper hinted at dwindling interceptors at US military bases, while advising President Donald Trump that further strikes had limited military value.

Trump agreed to halt strikes, saying that the decision was to leave some room for negotiations. Meanwhile, Iran held talks with Oman over the Strait of Hormuz.

Ahead of Australia’s CPI data this week, investors widely expect the Reserve Bank of Australia to hike its cash rate by the end of this year. While some speculate a hike in August, markets have fully pricing in a rate hike by November.

Weakness in the US dollar lent further support to the AUD/USD pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 101.38 this morning.

The AUD/USD forex pair rose more than 0.3% to trade at 0.7003 this morning, moving back near multi-week high levels, while the S&P/ASX 200 jumped more than 1% to 8,862.70.

What to watch: Investors will keep an eye on the latest developments related to the US-Iran war.

Data on Australia’s inflation rate will be released on Wednesday. Analyst project core inflation to surge 0.9% in the quarter, lifting the annual inflation rate to 3.7% from the previous reading of 3.5%.

The markets today

European stocks in focus today ahead of a basket of major economic reports

Context: Equity markets in Europe closed higher on Friday as investors assessed the latest economic data.

Details: Data released on Friday showed that the S&P Global Eurozone services PMI surged to 51.6 in July from 49.4 in June. While services PMI jumped to the highest in five months, the figure also surpassed market estimates of 49.8. The latest reading signalled a return to growth in the services sector following three months of contraction, driven by renewed growth in business activity.

The S&P Global Eurozone manufacturing PMI also improved to 52.0 in July from 51.4 in the previous month, coming in higher than market estimates of 51.5. Composite PMI climbed to 51.9 in July from 50.0 in June. The latest reading came in above market estimates of 50.3, signalling the first growth in Eurozone’s business activity in four months.

Shares of SAP rose more than 9% on Friday after the company raised its adjusted profit outlook for 2026.

The STOXX Europe 600 Index gained 0.82% to close at 644.51 on Friday, while London’s FTSE 100 surged 0.91% to 10,736.23, Germany’s DAX 40 added 1.36% to reach 25,099.00 and France’s CAC 40 rose 0.88% to 8,372.28.

What to watch: Investors will keep an eye on the latest developments in the US-Iran conflict.

Data on Eurozone’s loans to companies (1200 UAE Time), loans to households (1200 UAE Time) and M3 money supply (1200 UAE Time) will be released today. Loans to the private sector in the Eurozone, which rose 4% year-over-year in May, are expected to surge by 4.1% in June. Bank lending to Eurozone households, which climbed 3.1% year-over-year to €7.21 trillion in May, is expected to rise by 3.2% in June. Analysts expect M3 money supply to rise by 3.2% year-over-year in June, the same pace as the previous month.

Other Markets: US trading indices closed mixed on Friday, with the Dow Jones index and S&P 500 up by 0.46% and 0.05%, respectively, and the Nasdaq 100 down by 1.15%.

The news shaping the markets

Russia launched another wave of ballistic missile attacks on Ukraine, targeting Kyiv’s capital city on Sunday. The news sent the USD/RUB pair lower in forex trading this morning.

Saudi Arabia’s trade surplus widened to SAR 26.0 billion in May from SAR 6.1 billion in the year-ago, exerting pressure on the USD/SAR forex pair.

Chile’s producer prices surged 19.7% year-over-year in June, after rising 20.5% in the previous month, which sent the USD/CLP pair higher in forex trading this morning.

Canada’s new housing prices declined 0.1% in June, after a 0.3% downturn in the previous month. The latest reading coming in lower than market estimates of a 0.2% decline exerted pressure on the USD/CAD forex pair.

Macau’s number of tourist arrivals dipped 3.1% year-over-year to 2.801 million in June. This being a substantial slowdown from the previous month’s 3.4% growth sent the USD/MOP pair higher in forex trading this morning.

What else to watch today

Germany’s Ifo business climate (1200 UAE Time), Ifo current conditions (1200 UAE Time) and Ifo expectations (1200 UAE Time), UK’s CBI distributive trades (1200 UAE Time), Brazil’s FGV consumer confidence (1500 UAE Time), Mexico’s balance of trade (1600 UAE Time), US durable goods orders (1630 UAE Time), non-defence goods orders (1630 UAE Time) and Dallas Fed manufacturing index (1830 UAE Time) as well as Bank of Canada’s market participants survey (1830 UAE Time).