Australian Dollar comes under pressure as US Dollar snaps two-day decline

The Australian Dollar faced pressure on Thursday as the US Dollar regained some strength following two days of decline. The pair was trading near 0.7036, down approximately 0.32% for the day. Positive US labor-market data, with Initial Jobless Claims remaining slightly above expectations at 199K, provided some support to the Greenback.

Attention remains focused on developments surrounding the Strait of Hormuz, where Iran and Oman are reportedly nearing an agreement to establish a temporary shipping route. Despite this potential improvement in near-term market sentiment, the overall situation remains uncertain, maintaining some defensive demand for the US Dollar.

Meanwhile, traders await confirmation of the Iran-Oman agreement and further details on its potential impact on the Strait. Oil prices edged higher, which helped ease energy-driven inflation concerns and reduced pressure on major central banks to raise interest rates. With Friday's US Nonfarm Payrolls report expected, markets will closely watch it for insights into Fed rate expectations.

On the Australian side, China's Trade Balance data is closely observed due to the strong economic relationship between the two countries. The Reserve Bank of Australia (RBA) is expected to keep the cash rate at 4.35% at its meeting on August 11, noting that Q2 trimmed mean inflation remained stable at 0.8% quarter-over-quarter, below the RBA's initial forecast of 0.9%.

Analysts believe that this outcome, along with recent oil price declines, could prevent further tightening of monetary policy in the near term.