AUD/USD rallies for the second consecutive day and hits one-month highs above 0.7020.
Investors' optimism about a ceasefire in Iran is keeping the US Dollar under pressure.
Rising bets that the RBA might hike rates once more this year provide additional support to the Aussie.
The Australian Dollar (AUD) is showing one of the best performances among major currencies on Tuesday, appreciating to fresh one-month highs against the US Dollar, amid hopes of a ceasefire in Iran. The AUD/USD pair extends gains for the second consecutive day to reach levels above 0.7020 for the first time since mid-June.
A mild appetite for risk is supporting the Aussie’s recovery as investors cling to hopes of a ceasefire in Iran. A report by Axios released earlier on Tuesday revealed that the US administration is reviewing a peace proposal submitted by mediators and that the US president has urged Israel to avoid actions that might endanger a negotiating scenario.
The report, however, also says that the US military is preparing for an all-out war, in case the diplomatic way fails. This is keeping US Dollar dips limited so far.
The Australian and US economic calendars are thin this week, but rising bets that the Reserve Bank of Australia (RBA) might hike interest rates before the end of the year are providing moderate support for the Aussie. The RBA left rates on hold in June and is expected to stand pat in August as well, but the recent rally in oil prices has boosted hopes of another rate hike before the year-end.
In the US, on the other hand, the soft inflation data released last week dampened hopes of a rate hike in July and left investors split about one in September. This has blunted the US Dollar’s bullish edge this week.
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