Home Daily Commentaries AUD edged higher as Middle East fears ease and Fed leaves rates on hold

AUD edged higher as Middle East fears ease and Fed leaves rates on hold

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Thursday 19 June, 2025

Daily Currency Update

The Australian dollar crept upward through trade on Wednesday, edging back above US$0.65 amid receding fears the US will be drawn into the Israel-Iran conflict. President Trump confirmed Iran has reached out and wanted to negotiate, helping to ease fears the conflict will escalate. Risk sentiment improved and the AUD edged toward session highs just short of US$0.6525 ahead of the Federal Reserve policy update. FOMC left rates on hold, an anticipated decision, in line with market pricing. Policymakers are seeking further clarity as to the impacts of the Trump administration's policies on inflation and growth. Fed Chairman Powell, noted that inflation remains elevated and that there is a high level of uncertainty meaning the board needs to be well-placed to respond. Market pricing for two, 25-point rate cuts through the end of the year firmed after the meeting, and treasury yields fell. Despite the fall in US yields, the AUD edged back below US$0.65 touching US$0.6499 before edging higher into this morning’s open.

Our attentions turn to domestic employment prints. We expect the unemployment rate to remain steady at 4.1% while jobs growth should slow. Offshore, the Bank of England policy meeting headlines the macro docket, while geopolitical developments will shape and drive underlying risk demand.

Key Movers

Price action among major currencies was well contained on Wednesday as the Fed left rates on hold and tensions in the Middle East seemingly eased. President Trump confirmed Iran had reached out to negotiate, helping alleviate fears the US would be drawn into the conflict. Equities traded higher amid improved risk sentiment, and the US dollar index continued to trade within its narrow range overnight. The euro opens this morning marginally lower, slipping back below 1.15 while the GBP slid below 1.3450. In other news, the Swedish kroner underperformed after the Riksbank cut rates by 25 basis points. The move was expected, yet policymakers hinted toward further cuts, a dovish stance that surprised markets.

Today, our attentions turn to the Bank of England policy meeting. We expect the Monetary Policy Committee (MPC) will leave rates on hold. Norway’s Norges Bank is also expected to leave rates on hold, while Switzerland’s SNB is expected to cut rates by 25 basis points. With little else of note on the macro ticket, geopolitical headlines will continue to drive direction and sentiment.

Expected Ranges

  • AUD/USD: 0.6450 - 0.6550 ▲
  • AUD/EUR: 0.5600 - 0.5700 ▲
  • GBP/AUD: 2.0400 - 2.0800 ▼
  • AUD/NZD: 1.0750 - 1.0820 ▲
  • AUD/CAD: 0.8850 - 0.8950 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.