FX.co ★ Australian Dollar Gains Ground

The Australian dollar appreciated to approximately $0.649 on Wednesday, recovering some of the losses incurred during the previous session. This uptick was largely attributed to rising oil prices, fueled by escalating geopolitical tensions, which bolstered demand for currencies linked to commodities. Market concerns intensified as the conflict between Israel and Iran entered its sixth day, with President Trump demanding Iran's unconditional capitulation and alluding to potential U.S. involvement. Consequently, oil prices continued their ascent, offering support to the AUD due to its strong correlation with commodity markets. However, the Australian dollar may struggle to sustain these gains amidst a heightened risk-averse atmosphere, as hostilities between Israel and Iran persist. Meanwhile, recent data revealed that Australia's Leading Economic Index dipped by 0.1% in May, pointing to a fragile economic recovery amid increasing domestic pressures and muted demand. The focus now shifts to Thursday's labor market data, which could inject fresh momentum into the economy and shape expectations for the Reserve Bank of Australia's policy direction.