AUD rebounds as markets look beyond Middle East conflict quickly restoring risk demand
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Daily Currency Update
The Australian dollar edged higher through trade on Monday as the initial shock and uncertainty surrounding the Israel/Iran conflict faded. Early fears the conflict would expand and draw in surrounding countries paled following reports Iranian officials were eager to resume nuclear talks and end the hostilities. Risk assets recovered and the AUD lurched back through US$0.65, recouping Friday’s losses to mark a fresh 2025 high just above US$0.6550.With little of note on the domestic ticket, attentions are on the Israel/Iran conflict, tariff headlines, the Bank of Japan policy meeting, and US sales data, to round out the macro ticket.
Key Movers
Price action through Monday was again dominated by the Israel/Iran conflict, however, the risk off mood that permeated markets following the strikes on Friday has since faded as early fears the conflict would expand have paled. Strikes through the weekend did not expand to include key oil infrastructure sites, and outside parties have not yet been drawn into hostilities. Iran has been at pains to relay to the US and Israel that it does not want to elevate tensions and is eager to return to the nuclear negotiating table. In this environment, market mood has shifted, with many investors adopting a more sanguine view of the conflict. Risk assets recovered Friday’s losses, with safe haven’s underperforming. The CHF and JPY are sharply lower, while the USD has forced the euro back below 1.16 and Sterling below 1.36.Our attentions remain with Middle East hostilities, as the Bank of Japan policy meeting and US sales data dominate the macro ticket.
Expected Ranges
- AUD/USD: 0.6470 - 0.6580 ▲
- AUD/EUR: 0.5600 - 0.5700 ▲
- GBP/AUD: 2.0620 - 2.0980 ▼
- AUD/NZD: 1.0720 - 1.0820 ▼
- AUD/CAD: 0.8800 - 0.8920 ▲