The Australian Dollar rose towards 0.6920 against the US Dollar but eased back to near 0.6900 on Friday, ahead of the US Nonfarm Payrolls report. The move came as the pair trimmed earlier gains.
The US Dollar stayed supported as risk appetite weakened during the Iran war and the continued closure of the Strait of Hormuz. The closure added pressure to export-focused economies, including Australia.
Risk Appetite And Strait Of Hormuz
The UN Security Council is expected to vote on a Bahraini proposal aimed at forcing Iran to reopen the Strait of Hormuz. The proposal was softened after opposition from China and Russia, and Iran said “provocative action” would make the situation more complex.
Australia’s Bureau of Statistics reported the trade surplus widened to 5,686 million in February from a downwardly revised 2,258 million the month before. This was above expectations for a 2,500 million surplus and followed the latest Reserve Bank of Australia meeting minutes.
Markets expect US payrolls to rise by 60K after a 92K fall in February, with unemployment steady at 4.4%. Trading volumes were low due to the Good Friday holiday, which could add volatility if the data surprises.
Looking back to early 2025, we saw the Australian dollar’s rally fail just below the 0.6920 mark against the US dollar. The market was tense, awaiting the US Nonfarm Payrolls (NFP) report amid significant geopolitical risk. This period highlighted the Aussie’s vulnerability to global risk aversion, a theme that remains relevant for us today.
The geopolitical pressure at that time, centered on the Strait of Hormuz closure, provided a strong tailwind for the safe-haven US dollar. As we saw through March and April of 2025, continued uncertainty in the Middle East kept oil prices volatile and weighed on currencies of exporting nations like Australia. That tension eventually eased, but it established a clear pattern of USD strength during global stress events.
Policy Divergence And Trade Strategy
That pivotal NFP report in April 2025 ultimately came in much stronger than the expected 60,000, showing a net gain of over 180,000 jobs and keeping the unemployment rate at a low 4.4%. This beat confirmed the US economy’s resilience and solidified the Federal Reserve’s hawkish stance for the remainder of the year. The AUD/USD pair subsequently broke below 0.6850 and never seriously challenged the 0.6900 level again in 2025.
Domestically, Australia’s strong trade surplus data in early 2025, which showed a widening to over 5,600 million, initially supported a hawkish view from the Reserve Bank of Australia (RBA). However, the RBA ultimately could not match the Fed’s aggressive policy in the face of a strengthening dollar and global headwinds. This divergence in central bank policy became the dominant driver for the pair throughout the past year.
Now, in April 2026, with the AUD/USD trading near 0.6650, this dynamic is still in play. Recent US inflation data for the first quarter of 2026 came in at a stubborn 3.1%, well above the Fed’s target, diminishing hopes for rate cuts in the near term. Meanwhile, Australian inflation has cooled to 3.4%, giving the RBA more room to stay patient or even consider easing later this year.
Given this persistent policy divergence and renewed strength in the US dollar index, which is up 2.5% since February, traders should consider positioning for further Aussie weakness. We should look to buy AUD/USD put options with strike prices below 0.6600 to hedge against or profit from a drop. Selling call spreads with a ceiling around the 0.6720 resistance level could also be an effective strategy to capitalize on the pair’s limited upside potential in the coming weeks.
