AUD\/USD rose slightly after a gap-down open but stayed lower, trading near 0.7010 in Asian hours on Monday. It weakened as risk aversion increased after 21 hours of talks in Islamabad ended without a peace agreement between Washington and Tehran.<\/p>\n
US Vice President JD Vance said negotiations did not deliver a mutually acceptable deal and called for firm assurances that Iran will not pursue nuclear weapons. US President Donald Trump said the US would begin \u201cblockading\u201d all ships entering or leaving the Strait of Hormuz.<\/p>\n
Iran\u2019s Parliament Speaker Mohammad Bagher Ghalibaf said the US did not secure the Iranian delegation\u2019s trust, despite \u201cconstructive initiatives\u201d, and said the next steps rest with Washington. The comments added to uncertainty in markets.<\/p>\n
Higher energy costs raised inflation concerns in Australia, with the monthly inflation gauge at a record 1.3% in March. This points to renewed price pressure since late 2025.<\/p>\n
The Reserve Bank of Australia has raised rates by 50 basis points to 4.10%, and markets expect another rise in May. On April 10, the ASX 30 Day Interbank Cash Rate Futures May 2026 contract was 95.765, implying a 64% probability of a hike to 4.35% at the next RBA meeting.<\/p>\n
Given the failure of US-Iran talks, we see a classic flight to safety underway, strengthening the US dollar. The market’s fear gauge, the VIX, has already jumped over 25, signaling high uncertainty for the weeks ahead. This environment makes risk-sensitive currencies like the Australian dollar particularly vulnerable.<\/p>\n
The threat to blockade the Strait of Hormuz, through which over 20% of global oil passes, is a major catalyst. Brent crude has already surged past $120 a barrel, amplifying the inflation concerns that we saw building in late 2025. This energy shock complicates the RBA\u2019s next move, as it will have to fight inflation while global growth is threatened.<\/p>\n
While the market is pricing in another RBA rate hike, this is now being overshadowed by the global risk-off sentiment. Recent data from last week showed China’s manufacturing PMI unexpectedly contracting, which suggests weakening demand for Australian exports. This puts a second layer of pressure on the AUD, beyond just the strong US dollar.<\/p>\n
For derivative traders, this sharp rise in volatility makes buying AUD\/USD put options an attractive way to position for further downside. The increased premium on these options reflects the heightened risk, but it provides a defined-risk strategy if tensions escalate further. We should be prepared for the pair to test the 0.6900 level soon.<\/p>\n
Another strategy is to look at currency crosses that amplify this risk-off dynamic, such as going short AUD\/JPY. The Japanese Yen typically strengthens even more than the USD during geopolitical crises. This trade removes the direct influence of RBA rate hike expectations and focuses purely on the flight to safety.<\/p>\n
Traders should also look at the energy markets, as the primary source of this instability. Buying call options on oil futures or energy-sector ETFs offers direct exposure to the upside risk in crude prices. These positions would benefit directly from any further escalation in the Strait of Hormuz.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/USD hovered near 0.7010 as Iran-US tensions and rising Australian inflation stoked risk aversion, boosting rate-hike bets.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-44712","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44712","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=44712"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44712\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=44712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=44712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=44712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}