The Australian Dollar (AUD) fell by more than 0.50% against the US Dollar on Thursday, declining after reaching a daily high of 0.6888 due to worries that the Israel-Iran conflict could escalate further in the Middle East. This situation led to increased demand for the Greenback, which briefly surpassed 102.00 on the US Dollar Index (DXY), although mixed US economic data limited its gains. Currently, the AUD/USD is trading at 0.6844.
A risk-off sentiment is impacting the Aussie Dollar negatively. Ongoing discussions between the US and Israel regarding potential retaliatory actions against Iran have added to the uncertainty. A report indicating that US President Joe Biden discussed a possible attack on Iran's oil facilities has dampened the appeal of riskier assets like the AUD.
US Department of Labor data showed an increase in the number of individuals filing for unemployment benefits, surpassing expectations. Conversely, the business activity data in the services sector released by the Institute for Supply Management (ISM) exceeded forecasts for September, indicating a strong economy, which might diminish the likelihood of further 50 basis points (bps) rate cuts by the Federal Reserve (Fed).
Additionally, Australia reported a trade surplus for August that exceeded expectations, coming in at A$5.64 billion, up from July’s A$5.636 billion and above the forecast of A$5.5 billion.
On another note, Australia’s Judo Bank Services Purchasing Managers Index (PMI) decreased from 52.5 to 50.5 in September. This decline may prevent the Reserve Bank of Australia (RBA) from adopting a more aggressive monetary policy stance amid concerns of a cooling economy.
