Australian Dollar underperforms as Iran pushes back hopes of peace talks

The Australian Dollar underperforms across the board as risk-aversion revives after Iran dismisses peace talks with the US.
US President Trump announced on Monday that military attacks on Iran’s power plants have been postponed.
Weak Australian PMI data has also weighed on the Australian Dollar.

Sagar Dua FXStreet

The Australian Dollar (AUD) trades lower against its major currency peers, trading 0.6% down to near 0.6760 during the Asian trading session on Tuesday. The antipodean has come under pressure as remarks from Iran that they are not involved in any peace talks with the United States (US), which were contrary to comments from President Donald Trump, have revived the risk-aversion mood.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.21%	0.21%	0.14%	0.18%	0.53%	0.35%	0.26%
EUR	-0.21%		-0.02%	-0.07%	-0.03%	0.33%	0.14%	0.05%
GBP	-0.21%	0.02%		-0.04%	-0.02%	0.34%	0.16%	0.07%
JPY	-0.14%	0.07%	0.04%		0.05%	0.39%	0.21%	0.12%
CAD	-0.18%	0.03%	0.02%	-0.05%		0.34%	0.16%	0.08%
AUD	-0.53%	-0.33%	-0.34%	-0.39%	-0.34%		-0.17%	-0.29%
NZD	-0.35%	-0.14%	-0.16%	-0.21%	-0.16%	0.17%		-0.09%
CHF	-0.26%	-0.05%	-0.07%	-0.12%	-0.08%	0.29%	0.09%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

On Monday, US President Trump announced that he has instructed the Department of War to pause military attacks on Iran’s power plants for five days, as we are having “very good and productive conversations” with Tehran regarding a complete and total resolution of our hostilities in the Middle East.

The revival of risk-off sentiment has offered support to the US Dollar, which declined significantly after US President Trump’s remarks. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.25% higher to near 99.40.

In addition to deteriorating market sentiment, weak preliminary Australian S&P Global Purchasing Managers’ Index (PMI) data for March has also weighed on the Australian Dollar. Earlier in the day, the data showed that the overall business activity swung to contraction due to a sharp decline in the services sector output.

The Composite PMI arrived at 47.0 against 52.4 in February. A figure below 50.0 is considered a contraction in the business activity.

Meanwhile, investors await the Australian Consumer Price Index (CPI) data for February, which will be released on Wednesday. However, the impact of the Feb inflation data is expected to be limited on the Reserve Bank of Australia’s (RBA) monetary policy outlook, as it would lack the impact of the recent surge in energy prices due to the Iran conflict.

Economic Indicator

S&P Global Composite PMI

The Composite Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging private-business activity in Australia for both the manufacturing and services sectors. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the Australian private economy is generally expanding, a bullish sign for the Australian Dollar (AUD). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for AUD.

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