AUD steady as threat of war subsides
Daily Currency UpdateThe AUD crept higher through trade on Tuesday, testing resistance at 0.7150 amid renewed demand for risk. Fears Russia and Ukraine will be thrust into war have subsided in recent days as Russia pulls troops back from attack positions and President Putin reiterated his wish to resolve this latest dispute through “negotiations and peaceful means”. Easing tensions helped drive demand for risk assets, propping up equities and helping push the AUD toward the upper end of recent ranges. Having touched intraday highs at 0.7155 the AUD struggled to extend toward 0.72 tracking sideways through much of the overnight session.
Our attentions turn now to a stacked economic calendar with inflation data points due for China, UK and Canada with key US retail sales data dominating the direction. We anticipate inflation levels in the UK and Canada will remain near historical highs, while US retails sales should show a bounce back from a softer than anticipated December print.
Key MoversPrice action across the majors was largely muted through trade on Tuesday, with most units presenting only modest moves. The euro was the clear outlier, advancing 0.5% on the day, buoyed by a de-escalation in fears Russia and Ukraine will be thrust into war. Pushing back above 1.13 the euro touched intraday highs at 1.1370 finding added support in commentary from ECB officials. Comments suggest policymakers are preparing to end asset purchases before Q4, with a view to then begin moving on interest rates. The market has already priced in an earlier amendment to interest rates and with the ECB now seemingly acknowledging the need to adjust monetary policy settings, investors are unlikely to move off current rate expectations.
- AUD/USD: 0.7070 - 0.7220 ▲
- AUD/EUR: 0.6250 - 0.6350 ▼
- GBP/AUD: 1.8820 - 1.9150 ▼
- AUD/NZD: 1.0680 - 1.0790 ▼
- AUD/CAD: 0.9020 - 0.9150 ▲