AUD/USD is at risk of a big selloff amid weakening Australia's data, more hawkish Fed

⦿ Executive Snapshot

What: AUD/USD faces potential selloff risks due to weakening Australian economic data and a more hawkish stance from the Fed.
Who: Key players include the Federal Reserve, the Reserve Bank of Australia (RBA), and Fed's Waller.
Why it matters: This situation could influence global currency markets and impact monetary policy decisions in both the US and Australia.

The US dollar has experienced some pressure following reports of a potential US-Iran agreement, though no confirmation has been received.
The RBA's recent rate hike brought the cash rate to 4.35%, but there are indications of a potential pause in further hikes due to rising unemployment.
Australia's unemployment rate unexpectedly jumped to 4.5%, the highest since late 2021, causing traders to adjust expectations for future rate hikes to just one in 2026.

The Fed is moving away from an easing bias as policymakers discuss the need to keep options open for potential rate hikes, indicating a shift in monetary policy direction.
The RBA's softening tone follows previous hikes, reflecting a cautious approach as they assess the economic impacts on growth and inflation.

A hawkish shift from the Fed could strengthen the USD, putting further pressure on AUD/USD and potentially leading to a significant selloff.
Long-term, persistent economic weakness in Australia could hinder the RBA's ability to raise rates, affecting the AUD's competitiveness.

The geopolitical situation surrounding the US-Iran negotiations could create volatility in currency markets, impacting the USD.
Australia's economic data could lead to unexpected shifts in market sentiment, complicating the RBA's decision-making process on rate hikes.

Monitor Fed's Waller's speech on Economic Outlook for signals regarding future monetary policy direction.
Watch for any economic data releases from Australia that could further influence market expectations regarding the RBA's rate decisions.