Australian Dollar Rises Amid Risk-On Mood

(RTTNews) - The Australian dollar strengthened against other major currencies in the European session on Tuesday amid increased risk-on sentiment by the investors, as U.S. President Donald Trump confirmed ongoing U.S.-Iran talks and said he had persuaded Israel and Hezbollah to dial back fighting.

Meanwhile, a European Parliament committee has approved removing most EU duties on U.S. goods to honor last year's trade deal and prevent a tariff escalation.

In economic releases, Eurozone inflation rose from 3.0 percent to 3.2 percent in May and the core inflation exceeded forecasts, reinforcing expectations that the European Central Bank will hike interest rates by 25 basis points when it meets next week.

In other economic news, data from the Australian Bureau of Statistics showed that the total number of building approvals issued in Australia was down a seasonally adjusted 3.4 percent on month in April, coming in at 16,710. Approvals for private sector houses dipped 1.0 percent on month to 10,088, while approvals for private sector dwellings excluding houses lost 3.6 percent to 6,403.

On a yearly basis, total approvals were up 10.2 percent, private sector houses rose 7.0 percent and private sector dwellings excluding houses surged 20.5 percent.

Australia posted a seasonally adjusted current account deficit of A$27.1 billion in the first quarter of 2026. That missed forecasts for a shortfall of A$23.1 billion following the downwardly revised A$23.0 billion deficit in the previous three months (originally -A$21.1 billion).

The capital and financial account surplus was A$18.6 billion, a decrease of A$1.9 billion on the December quarter 2025 surplus.

On Wednesday, RBA Governor Bullock and Deputy Governor Kent will testify before a Senate Committee. The markets will be watching for any change in the tone about inflation and the outlook for policy.

In the European trading today, the Australian dollar rose to a 36-year high of 114.77 against the yen, nearly a 3-week high of 0.9949 against the Canadian dollar and a 5-day high of 1.2120 against the NZ dollar, from early lows of 114.24, 0.9905 and 1.2064, respectively. If the aussie extends its uptrend, it is likely to find resistance around 116.00 against the yen, 1.00 against the loonie and 1.23 against the kiwi.

Against the U.S. dollar and the euro, the aussie edged up to 0.7187 and 1.6208 from early lows of 0.7187 and 1.6208 from early lows of 0.7153 and 1.6259, respectively. The aussie may test resistance around 0.72 against the greenback and 1.61 against the euro.

Looking ahead, U.S. Redbook report and U.S. RCM/TIPP economic optimism index for June are slated for release in the New York session.