AUD/USD traded near 0.6900 in early European dealing on Friday. Trading was expected to be light because of the Good Friday holiday.
The Australian Dollar was supported by a hawkish tone from the Reserve Bank of Australia. Markets were focused on the US March jobs report due later on Friday.
Rba Outlook And Aud Support
Expectations for the May RBA meeting leaned towards a possible further rate rise, linked to higher oil prices and a tight labour market. Westpac forecast 25 basis point increases in May, June and August 2026, taking the cash rate to 4.85%, last seen in November 2008.
Geopolitical risk in the Middle East also influenced sentiment, including reports of the effective closure of the Strait of Hormuz. Such developments can shift demand towards safe-haven currencies such as the US Dollar.
US President Donald Trump urged Iran to “make a deal” after a military strike destroyed a bridge near Tehran. Iran’s foreign minister Abbas Araghchi said strikes on civilian infrastructure would not lead Iran to back down.
Nonfarm Payrolls were forecast to rise by 60,000 in March. The Unemployment Rate was expected to remain at 4.4%.
Options Strategies For Managing Uncertainty
With the Australian dollar strengthening around the 0.6900 level, we see a clear divergence in market forces. The primary driver for Aussie strength is the expectation of more rate hikes from the Reserve Bank of Australia. Based on the stubborn inflation we saw in the final quarter of 2025, the market is pricing in rate increases for May, June, and August.
Today’s US jobs report is the immediate focus, with expectations for a soft 60,000 increase in payrolls. This would confirm a continued cooling of the US labor market, especially as the unemployment rate has crept up to 4.4% from the sub-4% levels we saw back in 2024. A weak report could further pressure the US dollar and push AUD/USD higher.
However, a major geopolitical risk is capping the Aussie’s potential gains. The escalating conflict in the Middle East and the potential closure of the Strait of Hormuz, a critical chokepoint for about 20% of global oil supply, is driving safe-haven demand for the US dollar. Any significant military development could quickly reverse the AUD/USD’s recent upward trend.
Given these conflicting signals, we should consider options strategies to manage the uncertainty over the coming weeks. For those leaning bullish on the Aussie due to the RBA’s path, buying AUD/USD call options offers a way to capture upside while defining risk if geopolitical tensions boil over. Alternatively, a long straddle, which involves buying both a call and a put option, could be effective to trade the potential for a large price swing in either direction following the jobs report or news from Iran.
