AUDUSD Slips to 0.7136 as Hormuz Tensions Overshadow RBA's Hawkish 4.35% Hike

AUDUSD fell 0.4% to 0.7136 on May 5 as escalating Strait of Hormuz tensions and fading US-Iran talks drove risk-off flows in Asian markets, eclipsing the RBA's third consecutive 25bp rate hike to 4.35%. A light holiday-thinned calendar preceded strong March household spending at +1.6% m/m, fueling hawkish anticipation ahead of the 8-1 RBA decision that lifted inflation peaks to 4.8% (from 4.2%), core to 3.5% y/y, and trimmed GDP to 1.9% (2026) and 1.3% (2027). Governor Bullock urged preemptive action on inflation, while Services PMI rebounded to 50.7, but geopolitical shocks dominated.