The Australian dollar rose above $0.70, approaching its strongest level in seven weeks as broad weakness in the US dollar and hopes of diplomatic talks in the Middle East offset fading expectations of domestic interest rate hikes.
Markets imply next to no chance the Reserve Bank of Australia will hike at its August meeting and see only even odds of a move by December after softer-than-expected second-quarter inflation data reduced the need for further policy tightening.
Still, the RBA governor recently warned that another rate hike may still be needed to bring inflation back to target.
Meanwhile, Japan’s confirmation of coordinated yen-buying operations with the US Treasury last week broadly weakened the greenback, boosting support for the Aussie.
Elsewhere, US President Donald Trump said peace talks with Iran will resume today after key Middle Eastern allies urged a diplomatic solution and the reopening of the Strait of Hormuz, easing supply concerns and pushing oil prices lower.