Australian Dollar holds ground as US Dollar remains subdued ahead of Nonfarm Payrolls

• The Australian Dollar appreciates as the RBA is widely expected to maintain its hawkish policy stance in November.
• The commodity-linked AUD receives support from stimulus measures in China, Australia’s largest trading partner.
• The risk-sensitive AUD/USD pair could struggle as US President Biden stated that Israel could strike Iran’s Oil infrastructure.

The Australian Dollar (AUD) gains ground due to the hawkish outlook surrounding the Reserve Bank of Australia (RBA). Recent data showed retail sales growth for August exceeding expectations, reducing the chances of an early rate cut from the RBA. Markets have nearly ruled out a rate cut in November. Furthermore, the AUD is benefiting from stimulus measures in China, Australia’s largest trading partner, which have lifted commodity prices.

The risk-sensitive AUD/USD pair could encounter headwinds as rising geopolitical tensions in the Middle East weigh on risk appetite. US President Joe Biden stated that the United States (US) is in discussions with Israel about potential strikes on Iran’s Oil infrastructure. Israeli Prime Minister Benjamin Netanyahu warned that Iran “will pay a heavy price” for Tuesday’s attack, which involved the firing of at least 180 ballistic missiles at Israel, according to the BBC.