A fragile two-week ceasefire between the United States and Iran has triggered renewed risk aversion across global financial markets, with the sustainability of the agreement increasingly in doubt due to ongoing regional tensions and violations cited by both sides [1][2][4]. The Australian Dollar (AUD) traded lower against its major peers, down 0.2% to near 0.7030 versus the US Dollar (USD) during the European session, reflecting heightened risk-off sentiment. The AUD was the weakest against the New Zealand Dollar, and broader currency heat maps show the USD losing ground against most majors this week, particularly the NZD and AUD [1][2]. Meanwhile, S&P 500 futures posted losses of 0.2% to near 6,770, and US stock index futures fell about 0.3% on the day, signaling a negative shift in risk sentiment [1][2].
Asian equities mirrored the cautious mood, with the Nikkei 225 tumbling 0.81% to 55,865, South Korea's KOSPI falling 1.73% to 5,770, Shanghai Composite slumping 0.88% to 3,960, Hong Kong Stock Exchange declining 0.27% to 25,822, India's Nifty50 down 0.55% to 23,850, and Taiwan's Taiex decreasing 0.20% to 34,700. Other Southeast Asian markets also traded lower [4]. The risk rally that followed the initial ceasefire announcement has lost momentum, as headlines from the region highlight continued Israeli aggression against Iran-backed groups in Lebanon, which Iranian officials claim violates the ceasefire terms. Iran has threatened to withdraw from the agreement and has shut down shipping traffic through the Strait of Hormuz in response to Israeli actions [2][3][4].
US President Donald Trump stated that all US ships, aircraft, and military personnel will remain in place around Iran until a real agreement is reached and fully complied with, warning of a stronger military response if the deal fails [2][3][4]. Iranian officials, including parliament speaker Mohammad Bagher Qalibaf, criticized the US for violating the first clause of the 10-point peace proposal, which called for an immediate ceasefire everywhere, including Lebanon [1][4]. Both the US and Iran have announced plans to send teams to Pakistan for the first round of talks regarding the peace proposal, scheduled to start on Saturday [1].
On the monetary policy front, traders see a 60% chance that the Reserve Bank of Australia (RBA) will raise its Official Cash Rate (OCR) again in the May policy meeting, driven by persistent high inflation in Australia [1]. In the US, investors await key macroeconomic data releases, including weekly Initial Jobless Claims, Personal Consumption Expenditures (PCE) Price Index for February, and the final revision to fourth-quarter Gross Domestic Product (GDP) growth figures. Minutes from the March FOMC meeting indicate policymakers expect one rate reduction by the end of the year and another in 2027, which has limited the USD's recovery from recent lows [3].
The NZD/USD pair has held gains for the fourth consecutive day, climbing to the 0.5835-0.5840 region, supported by dip-buying and capped by ongoing geopolitical uncertainties. Traders remain cautious, awaiting US macro data and CPI figures for further cues on the Fed's policy outlook [3].
CONCLUSION
Renewed uncertainty over the US-Iran ceasefire has triggered broad risk aversion, leading to declines in global equities and weakness in risk-sensitive currencies like the AUD. Market participants are closely watching geopolitical developments and upcoming US economic data for further direction. The fragile ceasefire and persistent regional tensions continue to weigh on investor sentiment, resulting in high market impact.