The Australian dollar finally breached the key 0.6890/6900 support area late last week, and while downside momentum hasn’t accelerated meaningfully through this level, it is trading heavy. Four weeks of conflict are forcing a harder reckoning for global markets. US-Iran de-escalation looks increasingly distant, and markets are increasingly pricing in duration, not resolution. The Easter shortened week ahead calendars include the minutes from the RBA’s March meeting and US March payrolls. These releases likely have no more than a fleeting impact while war headlines dominate. The March final global PMIs and the March US ISM surveys are out too, and we should see some more glimpses of the energy supply disruption in these surveys.
The Australian dollar reckons with global energy disruption risks
The Australian dollar finally breached the key 0.6890/6900 support area late last week, and while downside momentum hasn’t accelerated meaningfully through this level, it is trading heavy. Four weeks of conflict are forcing a harder reckoning for global markets. US-Iran de-escalation looks increasingly distant, and markets are increasingly pricing in duration, not resolution. The Easter shortened week ahead calendars include the minutes from the RBA’s March meeting and US March payrolls. These releases likely have no more than a fleeting impact while war headlines dominate. The March final global PMIs and the March US ISM surveys are out too, and we should see some more glimpses of the energy supply disruption in these surveys.
The Australian dollar finally breached the key 0.6890–0.6900 support area late last week. While downside momentum has not yet accelerated meaningfully through this level, the currency is trading heavy, broadly in line with risk assets.
The Australian dollar initially absorbed the opening weeks of the US–Iran conflict in stride. An energy‑led terms‑of‑trade boost and a hawkish RBA backdrop even saw AUD/USD print a new 3½+ year high of 0.7187 on 11 March.
But four weeks into the conflict, global markets are being forced into a harder reckoning. De‑escalation now looks increasingly distant, and markets are shifting from pricing a short‑lived shock and eventual resolution, to pricing duration and extended disruption.
For the Australian dollar, the “front‑loaded” benefits from higher energy prices are beginning to fade, while the “back‑loaded” global growth risks are starting to dominate. That shift was evident in trading last week, with AUD/USD sliding from around 0.7000 at the start of the week to near 0.6850 early this week.
The weekend news flow was hardly reassuring. The Washington post is reporting that the US is preparing for weeks long ground operations in Iran, while Iran-backed Houthi forces have entered the conflict. While the US continues to amass forces in the region, it is clear that the Administration is also looking for off-ramps. President Trump extended the negotiating window twice last week. An initial 48-hour ultimatum was extended to five days Monday last week and again to eight days on Friday.
But each extension landed increasingly flat with markets. The Australian dollar bounced from lows just above 0.6900 Monday last week to around 0.7050 on the five-day extension, but only managed to rise from around 0.6875 to 0.6920 on Friday’s eight-day extension. Through it all, Iran’s posture has been consistent: dismissive, on its own terms and with no sign of convergence. Markets are clearly getting it – pricing duration, not resolution. A ground offensive would trigger a further risk-asset drawdown and tighter financial conditions.
While all this frames Australian dollar risks as a global growth story, there’s also Australia’s domestic fuels vulnerability to reckon with. Australia is broadly a net energy exporter, reflecting our deep endowments of coal and LNG, but we are heavy net importers of refined fuels. In 2025, more than 80% of Australia’s refined fuel consumption was imported, primarily from Asia, and the bulk of the upstream raw crude sources back to the Mideast. There are additional questions about Australia’s domestic buffers – 38 days of petrol, 32 days of diesel & 29 days of jet fuel. According to the Institute of Energy Economics and Financial Analysis Australia has the smallest stockpiles of all International Energy Agency (IEA) members.
To be sure, the Australian dollar still has a 2.7% year to date gain versus the US dollar to its name – bested in the G10 only by the Norwegian Krone. But it is beginning to cede ground on a range of crosses.
AUD/EUR hit a 16-month high of 0.6199 on 11 March, but momentum has since clearly turned. The AUD/EUR cross pair has now fallen for 9 consecutive trading sessions, and opens the week at 0.5965. AUD/JPY tells a similar story – from 36 year highs (!), just shy of 114.00 on 11 March, this pair has fallen back below 110.00. AUD/NZD gave back the 1.20-handle last week too, and trades at 1.1954 to start the week.
It’s all geopolitical & energy supply disruption risk for all markets right now
Brent crude has lurched and failed to clear $120/bbl twice since the US-Iran war started and starts the week on its third attempt. Energy supply disruption risks are of course keeping prices elevated with Brent Crude rising 3.3% on today’s open, following the Houthis joining the war. Further, as of Monday morning, WTI and Brent prices are up 53% and 59% MTD respectively.
Precious metals however, have not fared as well. Inflationary concerns around the energy supply shock have driven global rate expectations higher in recent weeks, in turn weighing on gold and silver prices with gold reaching a low of $4099/oz last Monday – a long way away from YTD highs of $5595/oz. Further, given gold’s impressive run higher in January, it seems investors have been realising gold gains to offset losses across other assets.
What was a choppy grind lower for equities in the early part of March, is giving way to more consistent downside momentum. The S&P500 is down almost 8% since the onset of the war, meanwhile the KOSPI index is down 12.9% MTD in line with broad market risk aversion.
Global bond yields have pushed higher across the board too. US 10-year bond yields have climbed +40bp over March up to 4.43% – with tariff induced good’s inflation already keeping inflation above the Fed’s target prior to the US-Iran war, this conflict has only exacerbated inflationary expectations with market’s no longer pricing in any Fed cuts for 2026.
More early glimpses of the US-Iran war in this week’s data?
Many markets will be closed this Friday and next Monday for the upcoming Easter long weekend. The global calendars are by headlined by March US nonfarm payrolls, February JOLTS data and retail sales. Final March global PMIs are also due, along with the RBA’s March MPC meeting minutes.
Resilient US labour market data will likely be downplayed, given the aggressive pullback in Fed rate cut expectations of late, while a weaker jobs print likely has a more meaningful impact.
Final March global PMIs will contain more respondants since the US-Iran war began so we should expect to see more glimpses of the war’s impact on pricing intentions and activity outlooks.
Local rates markets will focus on the RBA’s March Meeting Minutes. Any additional colour on the 5-4 split decision will be instructive. With nearly 3 hikes already priced-in by December 2026 it would take a lot to shift pricing even further in a hawkish direction, especially after Chris Kent’s speech last week was itself seen as relatively hawkish and potentially superceding the Minutes.
All that being said, any and all data this week will likely play second fiddle to geopolitics and war headlines.
Monday
- Fedspeak; Chair Powell & Williams
Tuesday
- Japan Mar Tokyo CPI
- RBA March MPB meeting minutes
- Australia Feb Private Sector Credit
- China Official Mar Manf. & Non-manf. PMI
- Eurozone Mar CPI (Prelim.)
- US Mar Conf. Board Consumer Confidence, Feb JOLTS Job Openings
- Fedspeak; Goolsbee, Barr & Bowman
Wednesday
- Australia Feb Building Approvals
- China Rating dog PMI
- Australia, Japan, Eurozone, UK, US Mar S&P Global Manf. PMI (Final)
- US Mar ISM Manf. PMI, ADP Employment, Feb Retail Sales
- Fedspeak; Musalem & Barr
Thursday
- Australia Feb Trade Bal.
- Fedspeak; Logan
Friday
- Good Friday Public Holiday
- China Mar Manf. & Non-manf. Ratingdog PMIs
- US Mar Unemployment, Non-farm Payrolls, S&P Global Services PMI (Final)
