Aussie Leads As Risk Optimism Builds, Strong Jobs Push AUD/USD Toward 0.72 Break

Aussie strength is telling the story of markets today. The currency has emerged as the top performer, driven by a combination of improving global risk sentiment and robust domestic labor data, with AUD/USD rising to its highest level since late 2022 and approaching the key 0.72 resistance. The move reflects growing confidence that US-Iran tensions are moving toward de-escalation, even as talks are pushed into the weekend, while strong full-time job gains at home reinforce expectations for further RBA tightening.

On the geopolitical front, optimism remains intact despite a slight delay in the second round of US-Iran talks. While President Donald Trump had initially suggested discussions could resume “over the next two days,” the timeline has shifted toward the weekend or early next week due to logistical constraints. Importantly, markets are treating this delay as procedural rather than political, with expectations for progress largely unchanged.

Diplomatic momentum is also broadening beyond the core US-Iran channel. Trump announced that leaders of Israel and Lebanon are set to speak directly, marking a rare high-level engagement after decades of indirect contact. The move is widely seen as an attempt to secure a localized ceasefire and reduce regional tensions, while also increasing pressure on Tehran ahead of the next round of negotiations.

There are also indications that back-channel or technical discussions are taking place ahead of the main talks, aimed at building a framework and avoiding another breakdown. This layered approach to diplomacy is reinforcing the view that negotiations are entering a more constructive phase, helping to sustain risk appetite across global markets.

Equity markets are reflecting this optimism, with major S&P 500 pushing to record highs and Japan’s Nikkei following suit. The rally suggests that markets are continuing to price a favorable outcome, even as the focus shifts from anticipation to delivery. Meanwhile, Dollar remains under pressure.

Against this backdrop, Australian Dollar is emerging as the clearest expression of the risk-on shift. As a currency highly sensitive to global growth and commodities, AUD is benefiting directly from easing geopolitical risks. The move higher in AUD/USD is not just a reflection of Dollar weakness, but also a signal of improving confidence in the global outlook.

Domestic factors are adding further support. Australia’s latest employment report showed solid gains in full-time jobs, offsetting a decline in part-time roles, while the unemployment rate held steady at 4.3%. The rise in hours worked reinforces the view that labor demand remains firm, pointing to underlying strength in the economy.

This combination of stable unemployment and stronger job quality strengthens the case for further tightening by the Reserve Bank of Australia. Markets were already pricing a roughly two-thirds chance of a rate hike in May, and the latest data helps solidify that expectation. With the labor market near full employment, policymakers have room to act without triggering a sharp rise in joblessness.

For now, the balance of risks appears skewed to the upside. As long as geopolitical tensions continue to ease and domestic data remains supportive, AUD is likely to stay bid. The next catalyst will be whether upcoming US-Iran talks can deliver tangible progress, turning current optimism into a more durable trend.

In the currency markets, overall for the week so far, Aussie is currently the best performer, followed by Kiwi, and then Swiss Franc. Dollar is the worst, followed by Yen, and then Euro. Sterling and Loonie are positioning in the middle.

In Asia, Nikkei closed up 2.64%. Hong Kong HSI is up 1.55%. China Shanghai SSE is up 0.60%. Singapore Strait Times is down -0.07%. Japan 10-year JGB yield is down -0.001 at 2.403. Overnight, DOW fell -0.15%. S&P 500 rose 0.80%. NASDAQ rose 1.59%. 10-year yield rose 0.026 to 4.282.

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AUD/USD Daily Report

Daily Pivots: (S1) 0.7131; (P) 0.7154; (R1) 0.7194; More…

AUD/USD’s break of 0.7187 high suggests that larger up trend is possibly resuming. Intraday bias stays on the upside for 61.8% projection of 0.6420 to 0.7187 from 0.6832 at 0.7306. Decisive break there could prompt upside acceleration to 100% projection at 0.7599. On the downside, below 0.7115 minor support will delay the bullish case and turn intraday bias neutral first.

In the bigger picture, rise from 0.5913 (2024 low) is still in progress. Decisive break of 61.8% retracement of 0.8006 to 0.5913 at 0.7206 will solidify the case that it’s already reversing the down trend from 0.8006 (2021 high). Further rally should then be seen to retest 0.8006. For now, outlook will remain bullish as long as 0.6832 support holds, in case of pullback.