On Thursday, the US Dollar (USD) rebounded after a period of weakness, impacting both the Australian Dollar (AUD) and Gold (XAU/USD) prices. The AUD/USD pair slipped to around 0.7155, snapping a four-day winning streak after briefly approaching the 0.7200 level, last seen in June 2022, following the release of Australian employment data [1]. Meanwhile, Gold edged lower to $4,784, down 0.13%, as the US Dollar Index (DXY) rose 0.21% to 98.25, erasing some of its previous losses [2]. The DXY also snapped an eight-day losing streak, trading near 98.20 after rebounding from an intraday low of 97.83 [1][2].
The market's focus remains on geopolitical developments in the Middle East. Negotiations between the US and Iran are ongoing, with both sides reportedly scaling back ambitions for a comprehensive peace agreement and instead pursuing a temporary memorandum to prevent renewed escalation [1][2]. Gulf and European officials estimate that a US-Iran deal could take up to six months to finalize and are urging an extension of the current ceasefire and reopening of the Strait of Hormuz to restore energy flows [1]. Tehran is seeking the unfreezing of Iranian funds in exchange for allowing ships to sail through the strait via Omani waters, while a Western diplomat noted that the nuclear issue remains a core obstacle [2]. US President Donald Trump announced that Israel and Lebanon agreed to a 10-day ceasefire starting at 5:00 PM EST (21:00 GMT), pausing the conflict between Israel and Hezbollah amid the ongoing war with Iran [2]. Trump also stated that the next meeting with Iran could take place over the weekend and that he would consider extending the ceasefire if necessary, warning that fighting will resume if no deal is reached [1].
Elevated oil prices, despite easing from recent highs, continue to pose inflation risks and reduce the scope for near-term Federal Reserve (Fed) rate cuts [1]. New York Fed President John Williams commented that the Middle East conflict is already lifting inflation and expects it to rise to around 2.75%-3% this year, while maintaining that policy is "well positioned" [1][2]. Governor Stephen Miran expressed a dovish outlook, expecting three rather than four interest rate cuts due to "less favorable" inflation developments [2].
In Australia, employment data showed the economy added 17.9K jobs in March, slightly below expectations of 20K and down from the previous 49.7K gain, while the unemployment rate held steady at 4.3% for a second consecutive month, supporting the Reserve Bank of Australia's (RBA) hawkish stance [1]. In the US, Initial Jobless Claims fell to 207K for the week ending April 11, below the expected 215K and prior week's 218K, while Industrial Production decreased from 0.7% to -0.5% MoM in March, indicating an economic slowdown [2].
Market reactions included Wall Street's three largest indices posting gains amid speculation for a US-Iran deal [2]. Gold's safe-haven appeal diminished as truce hopes increased, but analysts noted that if crude prices fall, it could ease inflationary pressures and justify further Fed easing, potentially supporting precious metals in a low-interest rate environment [2].
CONCLUSION
The US Dollar's rebound, driven by easing Middle East tensions and ongoing ceasefire negotiations, pressured both the Australian Dollar and Gold. While oil prices and inflation risks remain elevated, Fed officials signaled a cautious approach to rate cuts. Market sentiment is cautiously optimistic, with Wall Street posting gains and Gold's safe-haven appeal waning amid truce hopes.