Turmoil in commodity markets see AUD/USD fall 0.54%

Daily Currency Update

The Australian dollar fell sharply through intraday trade yesterday, recording a 0.54% drop to open this morning at 0.7273. The war in Ukraine continued to be the predominate driving force in financial markets, with turmoil in commodity markets in particular guiding the AUD.

There were a number of developments overnight that had a meaningful impact on currency markets. The US and UK have both agreed to ban the import of Russian oil and gas, with the US going one step further and banning Russian LNG and coal as well. Brent Crude immediately jumped 3% to trade at 127 USD per barrel. Other commodities however were less straightforward, with nickel seeing a short squeeze drive its price above 100,000 USD yesterday. The London Metal Exchange suspended trading and even cancelled transactions to avoid a larger fallout. Other commodities took a breather, with wheat falling 6% while corn and copper erased their gains. Despite oil remaining well-supported, most commodity prices have come off the boil, which saw the AUD weaken.

Moving into Wednesday, all eyes will continue to follow developments in Ukraine, with attentions only briefly shifting when RBA Governor Lowe speaks later this morning.