AUD/USD extends losses to one-month lows sub-0.6400 with risk appetite subdued

• The Aussie Dollar trades lower on Monday with fears of a regional war in the Middle East gripping markets.
• The US Dollar holds gains as the market awaits Iran's response to the US attack.
• Positive Australian business activity data has failed to support the AUD.

The risk-sensitive Australian Dollar is one of the worst performers among major currencies on Monday. The pair extended its reversal from last week's highs at 0.6550 to one-month lows right below 0.6400, with investors holding their breath after the US attack to Iran.

The Aussie extended losses for the third consecutive day on Monday, with investors wary of risk, awaiting a potential response from Tehran to the massive bombings of key energy sites, which, according to US President Trump, have devastated Iran's nuclear program.

Tehran vowed a response, and a spokesperson from Iran's army promised severe consequences to the US. So far, however, US interest in the region has not been attacked, and Iran has limited its retaliation with new missile strikes at Israel.

Australian business activity improves

Earlier today, Australian Preliminary S&P Global PMI figures revealed that business activity improved in June, boosted mainly by the services sector. The impact on the AUD, however, was minimal, with geopolitical tensions getting all the focus.

In the US on Friday, Fed Governor Christopher Waller rattled markets and put the bank's wait-and-see stance into question as he campaigned for a rate cut in July. Chairman Powell will surely be questioned about this at his Monetary Policy Report to Congress, due on Tuesday and Wednesday.

The highlight today will be the US  preliminary S&P Global PMI, which is expected to show some slowdown in both the manufacturing and services sectors, but still at levels consistent with growth.