Australian Dollar Falls As Risk-off Sentiment Increases On Middle East War

(RTTNews) - The Australian dollar weakened against other major currencies in the Asian session on Thursday amid increasing risk-off sentiment by the investors, as the joint U.S.-Israeli strikes against Iran continue unabated, leading to a fresh surge in crude oil price that reinforced global inflationary concerns. Reports of Iran seeking to mine the Strait of Hormuz have also added to concerns about shipping through the vital waterway.

Tanker traffic through the Strait of Hormuz has dropped to two per day from an earlier average of 138 vessels per day. Nearly 150 tankers are anchoring in open gulf waters while nearly 147 container ships are trapped inside the Persian Gulf, struggling to find a way out. Around 20% of the world's oil and energy transit takes place through the Strait of Hormuz.

The blockade has resulted in "production pauses" by the largest oil producers in the Middle East, amounting to more than 5 million barrels per day of reduction.

In economic news, data released by the Melbourne Institute showed that Australia's consumer inflation expectations rose to 5.2 percent in March 2026 from 5.0 percent in the February 2026, marking the highest level since July 2023, ahead of the Reserve Bank of Australia's policy meeting on March 17.

The institute noted that inflation expectations, which were below 5 percent for an extended period, have now risen above 5 percent for the second straight month.

In the Asian trading today, the Australian dollar fell to a 2-day low of 0.7111 against the U.S. dollar, from yesterday's closing value of 0.7152. The aussie may test support near the 0.69 region.

Against the yen and the euro, the aussie slipped to 113.12 and 1.6236 from Wednesday's closing quotes of 113.68 and 1.6173, respectively. On the downside, 108.00 against the yen and 1.70 against the euro are seen as the next support levels for the aussie.

Against the Canada and the New Zealand dollars, the aussie slid to 0.9665 and 1.2060 from yesterday's closing quotes of 0.9722 and 1.2095, respectively. If the aussie extends its downtrend, it is likely to find support around 0.94 against the loonie and 1.17 against the kiwi.

Looking ahead, Canada and U.S. trade data and building permits for January and U.S. weekly jobless claims data are slated for release in the New York session.