The Aussie Dollar rebounded to 0.6924 as WTI Oil tumbled nearly 4.50% on de-escalation hopes, though investors remain wary of Tuesday's US CPI print and an 82% probability of a December Fed rate hike.
Reports that US-Iran nuclear talks were revived, including a proposal allowing uranium enrichment up to 3.67%, and Trump calling new strikes on Iran 'highly unlikely' eased supply-risk fears, sending WTI down nearly 4.50% to $86.37. Further progress toward a deal would keep pressure on prices.
The pair jumped 0.88% to 0.6924 as the US Dollar weakened on reports Washington and Tehran may be close to a deal, which sank Oil and dampened Dollar strength. However, hawkish Fed speakers and December rate-hike odds at 82% argue against a sustained rally, and Tuesday's US CPI could reverse the move.
The Australian Dollar climbed 0.88% to 0.6924 on Monday, buoyed by a sharp decline in WTI Crude Oil prices to $86.37. The move follows unconfirmed reports of revived US-Iran nuclear talks and comments from President Trump downplaying the likelihood of new strikes. Markets remain cautious ahead of Tuesday's US CPI data, which is forecast to rise to 3.9% YoY, potentially fueling further Federal Reserve rate hike expectations.
Hopes for a US-Iran settlement, including a reported proposal allowing uranium enrichment up to 3.67% and Trump calling new strikes 'highly unlikely', reduced the risk of supply disruption, pushing WTI down to $86.37.
Not necessarily: the reports of revived US-Iran talks come from newswires not confirmed by major outlets, so a collapse in negotiations could quickly reverse the price decline.
It rose 0.88% against the US Dollar because reports of potential US-Iran peace talks pushed Oil prices down nearly 4.50%, which took steam out of the US Dollar ahead of Tuesday's US CPI release.
Tuesday's US CPI, expected to climb to 3.9% YoY, could reinforce expectations of a December Fed rate hike (now 82% per CME Fed Watch), supporting the Dollar again. The chart also shows resistance from moving averages near 0.7040.