In recent days, Forex Markets have seen a strong increase in activity, moving away from their earlier steady trends.
The confirmation of Kevin Warsh as the next Federal Reserve Chair added volatility, but today’s trading is mainly driven by a sharp drop in the US Dollar.
Before the recent moves in the US Dollar, Antipodean currencies like the New Zealand Dollar and especially the Australian Dollar were already among the top performers, thanks to optimism around the Iran peace talks.
Today, that positive trend gained further support after President Trump announced that a diplomatic deal between the US and Iran is close to completion, easing geopolitical concerns.
This breakthrough is easing pressure on global energy supply chains and causing oil prices to fall.
As a result, the US Dollar is weakening because the risk of war-driven inflation is fading. Lower energy costs are especially good news for oil-importing countries in the Asia-Pacific, which helps explain why the Australian Dollar is leading today’s forex gains.
The AUD/USD pair is also benefiting from renewed global risk appetite.
Looking ahead, the focus is rapidly shifting to the critical Australian jobs report scheduled for later this evening.
The market expects 17.5K new jobs, a slight slowdown from last month’s 17.9K.
Overall, this slower growth is what the Reserve Bank of Australia wants, after raising rates twice to cool the economy in recent meetings.
A gradual slowdown in the labor market gives the RBA more flexibility, but a miss could easily see a fast pace correction in the pair’s prior bounce.
The upcoming employment data will show if the Australian Dollar’s recent strength can continue.