AUD largely steady amid fluctuations in sentiment and commodity prices

Daily Currency Update

The Australian dollar found support through trade on Friday as markets sentiment improved considerably. Equities surged and the USD was broadly weaker as investors appeared confident that war would be contained to Ukraine, while new sanctions did little to impact key Russian exports, namely, oil and gas. Having tested 0.71 earlier in the week the AUD extended back above 0.72 marking intraday highs at 0.7236. The improvement in risk sentiment offset a correction across commodity prices with oil, gas, wheat and corn all tumbling into the weekly close. With gains spurred by the shift in sentiment the ability for the AUD to maintain any upward momentum will continue to be governed by fluctuations in the underlying risk narrative. Already on open the AUD has shifted back below 0.72 US cents, tracking between 0.7160 and 0.7190 to start the week. The escalation in fighting over the weekend and the increase in sanctions bodes ill for risk demand moving forward. With Russia being strategically removed from the SWIFT international payments network, NATO allies increasing the supply of lethal aid and Russia’s inability to roll through Ukraine thanks to stout resistance suggest this war will drag on for months. Putin has readied Russia nuclear deterrence forces, further evidence he and the Kremlin will stop at nothing to see this “special military operation” through. Our attentions remain affixed to ongoing developments.