The Australian Dollar (AUD) has declined by over 0.50% against the US Dollar on Thursday, falling from a daily high of 0.6888 amid rising fears that the Israel-Iran conflict could escalate further in the Middle East. This situation has led to increased demand for the US Dollar, which briefly surpassed 102.00 on the US Dollar Index (DXY), although mixed economic data from the US limited its gains. Currently, AUD/USD is trading at 0.6844.
The risk-off sentiment is putting pressure on the Aussie Dollar. Ongoing discussions between the US and Israel regarding potential retaliatory actions against Iran have dampened the appetite for riskier assets like the AUD. A report indicating that President Biden discussed possible strikes on Iran’s oil facilities has added to these concerns.
In terms of economic data, the US Department of Labor reported a higher-than-expected increase in unemployment benefit claims. However, the ISM's services sector activity data for September surpassed estimates, suggesting a resilient economy, which may reduce the likelihood of the Federal Reserve implementing another 50 basis points rate cut. On the Australian front, the Balance of Trade showed a surplus of A$5.64 billion in August, exceeding the forecast of A$5.5 billion. However, the Judo Bank Services PMI fell from 52.5 to 50.5 in September, indicating potential cooling in the economy and possibly influencing the Reserve Bank of Australia's approach. Looking ahead, the Australian economic calendar will include data on Home Loans and Investment Lending for Homes in August.
