SYDNEY, 6 March 2026 – The Australian and New Zealand dollars struggled to stabilise as global financial markets were rattled by geopolitical tensions and investor risk aversion, even though domestic economic data from Australia showed resilience.
The Australian dollar (AUD) slipped about 0.3% to around US$0.7010, after a volatile session that saw it fall as low as US$0.6945 before recovering part of the losses. Meanwhile, the New Zealand dollar (NZD) hovered near US$0.5878, having earlier dropped about 0.9% to US$0.5837.
Geopolitical Turmoil Weighs on Risk-Sensitive Currencies
Currency traders said the declines were largely driven by global market instability linked to the escalating conflict in the Middle East, which has unsettled investors and triggered a shift toward safer assets such as the US dollar.
The Australian and New Zealand dollars are considered risk-sensitive currencies, meaning they tend to weaken during periods of global uncertainty when investors move away from higher-yielding assets.
Dealers also noted that some investors unwound profitable positions in the Australian dollar to raise liquidity and cover losses in other leveraged trades, adding further downward pressure on the currency.
Strong Australian Data Offers Limited Support
Domestic economic indicators offered only limited support for the Australian currency.
Recent data showed that the Australian economy expanded by about 0.8% in the December quarter, indicating solid growth momentum despite global uncertainty. However, the positive data failed to offset the broader risk-off sentiment dominating global markets.
Risk of Further Declines
Currency strategists warn that the outlook for both currencies will depend heavily on how the geopolitical situation evolves.
Analysts said the Australian dollar could fall below US$0.68, while the New Zealand dollar might slip under US$0.57 if the Middle East conflict intensifies and investors downgrade expectations for global economic growth.
While Australia’s status as a major energy exporter has previously helped support the currency during periods of rising oil prices, prolonged geopolitical turmoil could still weaken the Australian and New Zealand dollars if it undermines confidence in the global economic outlook.
For now, currency markets remain highly sensitive to geopolitical developments, with traders closely watching the trajectory of the Middle East conflict and its potential impact on energy markets and global growth.
