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AUD steady as peace talks progress

Wednesday 30 March, 2022

Daily Currency Update

The AUD tracked sideways through much of Tuesday bouncing between 0.7460 and 0.7515 as the market adopted a more optimistic view of peace talks between Russia and Ukraine. Negotiators agreed Russia would scale back its military operations in and around Kyiv in a bid to create mutual trust and a platform to expand negotiations in the future. The next step is a meeting between President Zelensky and President Putin. The positive mood helped foster a risk on shift propping up the AUD despite a correction in Oil and commodity prices. While flat against the USD the AUD has fallen against the Euro slipping below 0.68 to touch lows at 0.6720 before consolidating back above 0.6750, while also giving up recent gains against the Yen falling below 93 as officials look to arrest the JPY fall following the Bank of Japan’s aggressive yield curve control policies. The Federal Budget offered little to spark a change in direction, while some policy measures are aimed to reduce the recent impacts of rising cost of living and could add some downward pressure on the recent uptick in inflation markets largely ignored the government’s offering. As a pre-election budget any price action will only come after the election when policies can be implemented. With little of note on today’s domestic economic ticket our attentions turn to US ADP employment data ahead of Friday's Non-farm payroll print while, bond prices, commodities and peace talks will continue to dominate the broader market narrative.

Key Movers

The positive mood sparked by peace talks between Ukraine and Russia has helped elevated the Euro through trade on Tuesday, while commentary for Japanese officials has helped arrest the Yen recent fall. Following peace talks in Istanbul Russia has announced it will scale back its military operations in and around Kyiv in a bid to create a level of mutual trust as Ukrainian negotiators agree sufficient progress has been made, allowing a meeting between President Zelensky and President Putin to take place. The positive outcome helped bolster European equities and allow the single currency to push back above 1.11. Having touched intraday highs at 1.1127 the currency has tracked lower into the open where it now buys 1.1085. The Yen is also stronger, having recouped some of the weeks' earlier losses after MoF officials addressed the recent “undesirable” FX movements and the possible impact of the JPY correction on the economy. The open discussion of JPY performance has helped add support to the currency as BoJ policymakers face mounting pressure on their yield curve control policy. Having touched highs at 124.25 the Yen fought back forcing the USD back toward 122 before finding a middle ground to trade at 1.2285 on open this morning. We anticipate volatility across currency markets will remain in play through the short term as our attentions remain on global rates, bond prices, commodities and the evolving Russia/Ukraine crisis.

Expected Ranges

  • AUD/USD: 0.7420 - 0.7550 ▼
  • AUD/EUR: 0.6720 - 0.6830 ▼
  • GBP/AUD: 1.7320 - 1.7620 ▼
  • AUD/NZD: 1.0780 - 1.0880 ▼
  • AUD/CAD: 0.9280 - 0.9420 ▲