The Australian dollar remains resilient due to multiple supports, but is expected to decline on a weekly basis.

The Australian dollar is expected to record its first weekly decline in eight weeks, mainly due to economic concerns triggered by the Middle East conflict. Barclays stated that the Australian dollar is supported by long-term trends and has relatively low exposure to energy risks. Australia is a net exporter of liquefied natural gas and coal. Although it imports petroleum products, its energy security is superior to that of Europe and Japan. Recently, crude oil prices have surged by $6 per barrel due to tensions in the Gulf, but the impact on Australia is relatively manageable. The Middle East conflict has pushed up inflation expectations and caused U.S. Treasury yields to soar, cooling market expectations for Federal Reserve easing. The Australian swap market shows a 33% probability of an interest rate hike by the Reserve Bank of Australia this month, with a May rate hike fully priced in and possibly another hike before the end of the year. Expectations of high yields are supporting the Australian dollar.