I’ve recently noticed that the Australian dollar’s performance is quite interesting. Last month, as the US-Iran ceasefire agreement was announced, risk sentiment clearly improved, and safe-haven funds flowed out of the US dollar, causing the AUD to rise along with the tide. By mid-April, AUD/USD briefly broke above 0.7095, climbing for several consecutive days.

The logic behind this is actually quite straightforward. As a major commodity exporter, Australia benefits directly from easing war risks, which positively impacts the prices of coal, natural gas, and other commodities, boosting export revenues. Research from Westpac Bank indicates that just from this wave of commodity price increases, Australia could earn an unexpected windfall over the next five years. Gold is even more remarkable; in the first half of this year, it has become Australia’s second-largest export commodity, surpassing liquefied natural gas and coal.

But there’s a contradiction here. Rising commodity prices push up inflation, forcing the Reserve Bank of Australia to raise interest rates. This year, they’ve already increased rates twice, with the cash rate reaching 4.10%. The market previously expected a more than 60% chance of another rate hike in May. High interest rates are also bullish for the AUD, attracting international capital inflows.

From the central bank’s perspective, Westpac’s chief economist believes that if the ceasefire can be maintained, the downside risks to the economy will decrease. However, the rising costs will eventually transmit to other sectors, so the central bank may need to continue tightening policy. Currently, the market expects rates to approach 4.60% by the end of the year.

Considering all these factors, the future trend of the AUD still looks relatively strong. Bank of America, ANZ, and the Commonwealth Bank of Australia all forecast AUD/USD could reach 0.73. Of course, whether the ceasefire can be sustained is a key variable. If negotiations proceed smoothly, there’s still considerable room for the AUD to rise. Those interested can follow AUD-related trading pairs on Gate.