AUD Holds Steady as Mideast Risks Lift USD Before NFP

Key Moments

Consolidation in AUD/USD Ahead of Key US Jobs Data

The AUD/USD pair is stabilizing around the 0.7030-0.7025 zone during the Asian session on Friday, as market participants refrain from taking strong positions before the release of closely watched US monthly employment figures. The pair has paused its pullback from the prior session’s peak, which was the highest level since June 17, and is currently on course to close the week with little net change amid conflicting drivers.

Geopolitics and Safe-Haven Flows Support the US Dollar

Previous optimism around a possible US-Iran agreement has faded following reports that Iran is considering a plan to bar US and Israeli vessels from the Strait of Hormuz. According to an initial draft reported by Iranian state news agency Fars on Thursday, other countries deemed to have harmed Iran would also be blocked from transit until compensation is provided.

These developments have prompted markets to reprice geopolitical risk, driving demand for the safe-haven US Dollar and restricting upside in AUD/USD.

Energy Route Risks Reinforce Fed Hike Expectations

At the same time, Iran’s Houthi allies in Yemen have attacked a Saudi tanker in the Red Sea, intensifying concerns about possible disruptions to energy shipments along another critical route. The incident triggered an overnight jump in crude oil prices and rekindled worries about inflation, reinforcing expectations for another interest rate increase by the US Federal Reserve.

This backdrop remains consistent with elevated US Treasury yields, providing additional support for the Greenback and keeping AUD/USD under pressure for a second straight session.

Markets Turn to US NFP and Upcoming RBA Meeting

Despite the supportive environment for the US Dollar, USD buyers are showing some caution and are awaiting the US Nonfarm Payrolls report for direction on the Fed’s policy outlook. The data is expected to be pivotal for near-term USD pricing and could inject fresh momentum into AUD/USD.

After the labor market release, attention is set to move toward the Reserve Bank of Australia policy decision next week. In parallel, traders will continue to monitor developments in the Middle East, which are likely to remain a key determinant of short-term moves in the currency pair.

Standard Chartered Outlook on RBA Policy

Analysts at Standard Chartered anticipate that the RBA will keep the cash rate unchanged at 4.35% at its 11 August meeting, highlighting that “Q2 trimmed mean inflation held steady at 0.8% q/q – as we had expected – and below the RBA’s prior forecast (0.9%).” They further note that this result, “together with the recent retracement in oil prices, should take the pressure off the RBA to tighten policy further in the near term.”

Within this framework, Standard Chartered states that “our base case remains that the RBA is done with rate hikes in the foreseeable future,” while also warning that “the risk to our view is skewed towards another RBA rate hike in Q4, if the central bank remains unconvinced that demand is slowing sufficiently to contain underlying price pressures.”

Technical Picture: Range-Bound Bias Dominates

From a technical standpoint, AUD/USD is consolidating between key daily moving averages. The pair is trading above the 200-day Simple Moving Average (SMA) at 0.6923 while remaining constrained by the 100-day SMA at 0.7052. This configuration points to a neutral short-term bias and favors a range-trading environment rather than an imminent directional breakout.