The Australian Dollar tried to rise against the US Dollar but stalled just before 0.6920, then moved back towards 0.6900. Attention is on the US Nonfarm Payrolls report.
A cautious market mood supported the US Dollar as the Iran war continued and the Strait of Hormuz stayed closed. This added pressure to export-focused economies such as Australia.
Un Focus Turns To Hormuz Vote
The UN Security Council is expected to vote on a Bahraini proposal to force Iran to reopen Hormuz. The proposal has been softened after opposition from China and Russia, and Iran warned that “provocative action” would complicate the situation.
Australia’s Bureau of Statistics reported the trade surplus rose to 5,686 million in February from a downwardly revised 2,258 million the month before. This exceeded forecasts for a 2,500 million surplus.
US Nonfarm Payrolls expectations point to a 60K rise in jobs after a 92K fall in February, with unemployment steady at 4.4%. Good Friday holiday conditions have reduced trading volumes, which may increase price swings if the data surprises.
Employment affects currencies through its link to spending, growth, inflation, and central bank policy decisions. Wage growth is watched because it can feed into longer-lasting inflation, and central banks use labour data when setting policy.
Looking Back At April 2025
It is important to remember how last year, in April 2025, the Aussie dollar’s recovery was stopped just below 0.6920. At that time, significant risk aversion was present due to the Iran conflict and the closure of the Strait of Hormuz, which boosted the safe-haven US dollar. With the AUD/USD now trading around 0.6550, it is clear those geopolitical risks have left a lasting mark on the market.
The tense UN negotiations we watched in 2025 regarding the Hormuz Strait eventually resulted in a fragile shipping corridor agreement, but the situation remains delicate. Global shipping data shows that tanker traffic through the strait is still down nearly 15% from pre-conflict levels, and insurance costs remain elevated. This continued uncertainty provides a solid floor for the US dollar, suggesting any significant dips could be buying opportunities.
While we saw a very strong Australian trade surplus in early 2025, the RBA’s recent tone has been more cautious. The central bank has held its cash rate steady at 4.35% for its last three meetings, citing persistent inflation that is proving stickier than anticipated. Given this, derivative traders might consider selling out-of-the-money AUD call options, as the central bank’s stance limits the potential for strong upside rallies in the currency.
The market’s fear of a weak US jobs report in April 2025, with an expectation of only a 60K gain, proved to be a turning point. The US labor market has since shown remarkable strength, with job gains averaging over 210,000 per month for the last six months and the unemployment rate holding below 4%. This economic resilience gives the Federal Reserve flexibility to keep interest rates higher for longer, reinforcing the case for US dollar strength against the Aussie in the weeks ahead.
