AUD\/USD traded higher on Wednesday, near 0.7160, up 0.12%. The move followed improved risk sentiment after US President Donald Trump extended the ceasefire with Iran.<\/p>\n
Washington said it would keep the military truce in place while waiting for a \u201cunified proposal\u201d from Tehran to restart talks. The US also continued a maritime blockade on Iranian vessels in the Strait of Hormuz, a key route for global Oil trade, and sources said talks could happen as soon as Friday.<\/p>\n
The US Dollar found support from comments by Federal Reserve Chair nominee Kevin Warsh during a Senate hearing. He said monetary policy should remain independent and that he had made no commitments to the White House on interest rate cuts.<\/p>\n
A Reuters poll of economists indicated the Fed may keep rates in the 3.50%\u20133.75% range at least through September due to inflation pressures. The poll also found most economists still expect at least one rate cut before year-end.<\/p>\n
In Australia, tighter policy expectations supported the AUD after the RBA warned higher Oil prices could push inflation towards 6%. Markets priced nearly a 77% chance of a rate hike at the next meeting after Deputy Governor Andrew Hauser reiterated efforts to anchor inflation.<\/p>\n
Focus then shifted to preliminary S&P Global PMI releases for Australia and the US. The data may affect near-term monetary policy expectations.<\/p>\n
We recall how this time last year, monetary policy divergence was the main story, with the Reserve Bank of Australia sounding aggressive while the Federal Reserve was expected to ease. This narrative pushed the AUD\/USD pair well above the 0.7160 level through late 2025 as the RBA did indeed hike rates. The situation today, on April 22, 2026, has completely reversed.<\/p>\n
Australia’s latest quarterly inflation report showed the annual rate falling to 3.6%, a significant drop from the 6% level feared last year. This has led markets to price out any further RBA hikes, with swaps markets now suggesting a 40% chance of a rate cut by the end of the year. This shift has removed the primary support the Australian dollar enjoyed throughout 2025.<\/p>\n
Conversely, the United States is dealing with persistent price pressures, with the most recent monthly CPI data showing inflation remains sticky at 3.5%. Following a strong March jobs report that added 303,000 positions, Federal Reserve officials have pushed back strongly against imminent rate cuts. This hawkish stance is providing a strong tailwind for the US dollar.<\/p>\n
Given this renewed policy divergence favouring the US dollar, traders should consider buying AUD\/USD put options to position for further downside. For instance, puts with a July 2026 expiry and a strike price around 0.6400 could offer protection as the pair, now trading near 0.6550, may test lower levels. Implied volatility may increase ahead of the next central bank meetings, making now an opportune time to establish such positions.<\/p>\n
We must also watch the geopolitical situation, as the ceasefire with Iran from last year has largely held, contributing to lower oil prices and easing inflation. Any renewed tension in the Strait of Hormuz would complicate this outlook by causing an oil price spike. This remains a key risk factor that could disrupt the current trend.<\/p>\n","protected":false},"excerpt":{"rendered":"
AUD\/USD rises near 0.7160 as risk sentiment improves; Fed steady-rate outlook and RBA inflation fears support Aussie.<\/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-45633","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\/45633","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=45633"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45633\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45633"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45633"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}