Australian Dollar on the slide as tensions rise in Ukraine/Russo war
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Daily Currency Update
The Australian dollar resumed its downturn on Wednesday, sliding back below US$0.65. With little of note on the domestic agenda, the AUD traded sideways for much of the local session, tracking between US$0.6520 and US$0.6540 before a risk off mood enveloped markets and drove the currency toward intraday lows at US$0.6487. Reports of military action between Ukraine and Russia targeting key military marks seems to have prompted a risk off run toward safe haven assets. The escalation has renewed concerns that nuclear weapons may be deployed. With the potential of a Russian response, many major embassies in Ukraine have temporarily closed, further elevating market concern. Reports from the US that Trump has appointed Howard Lutnick as his commerce secretary elevated concerns the US will aggressively push it strategic program of tariffs, come 2025. The CNY gave up ground, marking fresh highs not seen since mid-July, with losses spilling over into the AUD.Our attentions turn to RBA Governor, Michele Bullock, as she speaks at the Women in Payments conference. We don't expect major deviations from the RBA Governor, and instead anticipate US politics and global geopolitical tensions will continue to drive direction.
Key Movers
The USD resumed its uptrend on Wednesday, advancing against major counterparts amid another risk off shift. US equities weakened on the day, while US treasury yields maintained a narrow range, trading between 4.39% and 4.44%. UK CPI inflation for October was stronger than expected, with annual inflation jumping from 1.7% to 2.3% on the back of higher energy costs. The print reinforced calls for the Bank of England to leave rates on hold next month, while British fiscal policy will likely limit the opportunities for cuts through 2025. The GBP climbed back through 1.27 following the print before sliding back below 1.2650 amid a risk off shift. Reports of escalating tensions between Ukraine and Russia has renewed fears nuclear weapons may be deployed. The USD edged upward as markets sort haven assets and opens higher this morning.With little of note on the macroeconomic docket, our attentions remain with US politics and Russo/Ukraine tensions as key markers guiding risk sentiment.
Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▼
- AUD/EUR: 0.6100 - 0.6200 ▲
- GBP/AUD: 1.9300 - 1.9600 ▲
- AUD/NZD: 1.1020 - 1.1120 ▲
- AUD/CAD: 0.9050 - 0.9150 ▼