AUD breaks 0.73 as commodity prices test record highs
Friday 4 March, 2022
Daily Currency UpdateVolatility continues to plague financial markets as the Russia-Ukraine war extends into a second week with fears “the worst is still to come”. A risk off move again enveloped investors through trade on Thursday forcing bond yields and equities lower, while another surge in key commodity prices overnight underpinned an AUD break above 0.73 US cents. Since the invasion, elevated commodity prices have fueled demand for the AUD as supply fears escalate. While oil prices suffered a modest downward correction, aluminum prices reached record highs, European gas futures hit an all time peak and nickel marked a decade high. Having toyed with a break above 0.73 for much of the domestic session, the AUD surged through resistance, marking intraday highs at 0.7350 before correcting lower into the daily close. The AUD currently buys 0.7320 US cents, 2 cents above its pre-war level. Our attentions remain affixed to developments in Ukraine and we expect the AUD will sustain support on the heels of higher commodity prices, with upside extending beyond AUD/USD to key major crosses. The euro has tested 18 month lows overnight allowing the AUD to surge through 0.66 euro cents, while the GBP softens opening the door for a break above 0.55 pence.
Key MoversUnsurprisingly the euro was the days big mover, marking fresh 18 month lows as fears the war in Ukraine will have ramifications that spillover into Europe and the European economy, dampening previous optimism surrounding the broader pandemic recovery and ECB outlook. Sanctions and the shock of elevated energy prices forced the single currency toward lows below 1.1040, while the Great British pound sunk below 1.3350 to intraday lows at 1.3320. The DXY dollar index rallied 0.35% on the day, buoyed by the softer euro and GBP. The USD remains flat against the JPY and CHF, fellow safe haven counterparts, and continues to relinquish ground to key major commodity led currencies. Our attentions remain affixed to developments in Ukraine as macro data takes a back seat as we move into the weekend.
- AUD/USD: 0.7170 - 0.7420 ▲
- AUD/EUR: 0.6550 - 0.6720 ▲
- GBP/AUD: 1.8080 - 1.8425 ▼
- AUD/NZD: 1.0750 - 1.0820 ▲
- AUD/CAD: 0.9190 - 0.9330 ▲