Geopolitical Tensions & Oil Prices Weigh on AUD
Escalating tensions in the Middle East—particularly between Israel and Iran—effected global markets overnight. This renewed geopolitical risk pushed oil prices toward US$75/barrel, reinforcing a risk-off tone that pressured commodity-linked currencies like the Australian dollar.
The AUD fell to ~US$0.6472 but then recovered to .6505
Any further escalation in the Middle East could drive renewed safe-haven flows, putting fresh pressure on the AUD.
Middle East tensions typically cause oil prices to rise (around $75), leading to deteriorated risk sentiment and a drop in the AUD by approximately 0.8–0.9%. Meanwhile, stronger US data and a less dovish Fed outlook trigger a USD rebound, which in turn weakens the AUD.
Australia is a major commodity exporter. While higher oil prices can stoke inflation, they also trigger global risk aversion—typically a negative backdrop for the AUD.
