- AUD/USD fell back under 0.7250 in recent trade as risk appetite deteriorates, having failed to test 0.7300.
- But the Aussie continues to perform well compared to most G10 peers given its exposure to rising commodity prices.
AUD/USD managed to eclipse last week’s highs in the 0.7280s in earlier trade, but was unable to mount a challenge of the 0.7300 level and has since reversed to trading back in the red on the day under 0.7250. At current levels the pair is now trading down about 0.2% on the day, the recent reversal in fitting with a broader downturn in the market’s appetite for risk amid surging commodity prices due to fears of Russia supply disruption.
While risk-off market conditions on Tuesday are primarily benefitting the likes of the US dollar and Japanese yen, commodity-sensitive currencies such as the Aussie, Kiwi and Canadian dollar are also performing well. Indeed, the Aussie is in third place in terms of G10 on-the-day performance, with market commentators noting upside in the likes of oil, LNG, coal, wheat, nickel, aluminium and iron ore as supportive.
Tuesday’s hardly even spoken/thought about RBA rate decision, though dovish leaning (the bank noted the Ukraine war and sanctions as a new risk), did not impact AUD/USD price action. Nor did better than expected Q4 Australian trade figures which analysts said led to them upping their Q4 GDP growth forecasts (the data is out on Wednesday).
For now, traders should prepare for ongoing choppiness in AUD/USD, though should expect the pair to do better than the likes of EUR/USD and GBP/USD, not least due to Australia’s geographical distance from the warzone and lesser trade ties with Russia. AUD/USD may not be ready to break above 0.7300 amid safe-haven US dollar demand, but is likely to remain well supported above last week’s 0.7100ish lows.