- AUD/USD is supported by commodity prices as the Ukraine crisis continues to pressure.
- The RBA's Lowe speaks late in the week and US CPI will be eyed.
AUD/USD was up by some 0.6% by the close on Friday after rallying from a low of 0.7300 to a high of 0.7380 on the approach to 0.7400. Supporting the Aussie, commodities hit fresh highs, with the CRB index closing in on 300.00. At the same time, equities were lower across the board. The S&P 500 was ending down 0.8%, and the Nasdaq was off by 1.7%. European equities also fell heavily with the Euro Stoxx 50 down 5%, the FTSE off 3.5% and France’s CAC 40 down 5%.
The Ukraine crisis combined with stagflation fears is the driving force in markets. The reports of attacks around a Ukrainian nuclear power plant last week crippled risk appetite that only managed to correct touch on upbeat US economic data on Friday.
February Nonfarm Payrolls came in much stronger than expected at 678k. There were also revisions of some 92k. This comes ahead of the Federal Reserve this month whereby Chair Powell already confirmed a 25bp hike with the possibility of 50bp hikes later in the year.
Meanwhile, investors will keep an eye on any hints of a coordinated effort to limit dependency on Russian commodities:
-
Secretary of State Blinken: US is “looking” at banning Russian oil and gas, but need permission from EU
Key events ahead
Later in the week, the Reserve bank of Australia's Governor Phillip Lowe speaks at the AFR Business Summit and Banking Conference on the 9 & 11 Mar.
''We will be on the lookout for any sign the RBA is taking steps to gradually soften its dovish stance after nodding to inflation pressures driving other CBs to begin raising rates in its Mar Statement. Expect the Governor to reiterate Ukraine developments adding to uncertainty,'' analysts at TD Securities said.