AUD tumbles as tension in Middle East escalates
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Daily Currency Update
The Australian dollar gave up its 2025 high Tuesday, falling back below US$0.65 as tensions rise in the Middle East. Risk sentiment faded amid building concern the US will become involved in the Israel/Iran conflict. President Trump left the G7 conference early, returning to Washington so as to focus on escalating hostilities. In a Truth Social post the President announced, “everyone should evacuate Tehran”. The post sparked fears the US is preparing to join Israel’s offensive. The USD surged and risk assets outperformed with the AUD among the weakest of the majors falling to an intraday low at US$0.6465. With markets concerned about the chance of the US entering the fray risk sentiment will likely remain subdued until tensions de-escalate. Having tested 2025 highs near US$0.6550 during overnight trade Monday and the domestic session Tuesday the AUD will find it hard to extend back toward and through these levels in the current environment and we are closely attuned to the evolving conflict as a key driver of sentiment and underlying direction.Key Movers
The US dollar is broadly stronger this morning as markets moved toward haven assets overnight amid rising tensions in the Middle East and growing fears the US will elevate its involvement in the Israel/Iran conflict. President trump left the G7 leader summit early to focus on “what’s going on in the Middle East” further sparking fears the US is preparing to join Israel’s aerial attacks on Iran by issuing a series of Truth Social posts warning Iranian’s to evacuate Tehran and taunting the Supreme leader Ayatollah Ali Khamenei. Most majors are sitting lower this morning with the GBP the weakest falling below 1.35 and 1.3450 while the euro gave up 1.1550 and 1.15, falling to session lows at 1.1470 before finding support.Our attentions remain affixed to the evolving conflict while the June Fed Policy meeting headlines the macro ticket. While Inflation has printed below expectations the unemployment rate has been steady and we expect the Fed will leave rates on hold, affording itself time to assess the impact of President Trump’s tariff agenda. Policy makers will want to keep options open and we expect they will look to loosen policy conditions only when the data supports it.
Expected Ranges
- AUD/USD: 0.6400 - 0.6550 ▼
- AUD/EUR: 0.5600 - 0.5700 ▼
- GBP/AUD: 2.0650 - 2.0850 ▼
- AUD/NZD: 1.0720 - 1.0820 ▼
- AUD/CAD: 0.8820 - 0.8920 ▲