06.08.202602:27:40UTC+00Australian Dollar Remains Firm

The Australian dollar held above $0.705, hovering near a seven-week high, supported by a weaker US dollar and stronger-than-expected domestic trade data. Australia’s goods trade balance unexpectedly swung to a surplus of A$1.9 billion in June, following a revised deficit of A$2.4 billion in May. The turnaround was driven by a sharp rebound in gold and iron ore exports, while imports were broadly flat after a period of strong growth.

Market focus is now on next week’s Reserve Bank of Australia meeting. Investors see virtually no chance of another rate hike at this gathering, after three increases earlier in the year, though a further move in November remains roughly 60% priced in.

At the same time, the US dollar stayed under pressure as optimism over a potential Middle East agreement to partially reopen the Strait of Hormuz weighed on oil prices, easing inflation concerns and tempering expectations for more aggressive Federal Reserve tightening. Iran and Oman have agreed to establish a shipping corridor through the strait, bolstering hopes for improved energy supplies from the region.