AUD Losing Traction With Geopolitical Tensions High

AUD

The AUD regained positive traction to trade at weekly highs across most of the majors on the Friday close, before trading marginally lower this morning. Asian Equities were largely mixed on the close with the Nikkei down -0.4% while the Shanghai Comp was up 0.7%. Australian Shares edged lower on Friday, the ASX 200 dipped 1% to 7,221 points with all sectors trading lower. Commodities were largely mixed with Copper and Gold having next-to-no movement while Iron Ore dipped -0.7%. There was a lack of local data headed into the weekend with geopolitical tension taking the wheel. AUD’s resilience to the escalating situation in Eastern Europe will be put the to the test this week with a key face-to-face meeting between US Secretary of State Anthony Blinken and Russian Foreign Minister Sergey Lavrov. Any signs of the two sides coming to some sort of agreement or de-escalating could propel the riskier AUD to new highs. It’s a quieter day on the data front with Flash Manufacturing & Service PMI’s being the only data of note.
 

USD

The AUDUSD was down this morning, trading at a rate of 0.7171 at the time of writing. On Friday the AUD failed to hold above the 0.72 handle as geopolitical angst underpinned further US dollar demand. US Equities traded lower into the weekend as tensions with the Eastern Europe continued to simmer, the Nasdaq fell -1.2% while both the S&P 500 and Dow Jones dipped -0.7%. US 10-year yields ticked 4bps lower to 1.92% while oil was flat at $91.70 a barrel. Ukraine headlines continued to hit the wires into the weekend with separatist leaders in eastern Ukraine announcing that residents would be evacuated to Russia with reports of loud sirens in the area shortly afterwards. The US reported that Russian forces near the border could number as many as 190,000 with other reports saying Russia was ready and action could come at any time. A lack of local data this week as the US observes Presidents Day today followed by US PMIs on Tuesday evening.

EUR

The AUDEUR was mixed in performance on the Friday close with the pair trading as high as 0.6352 before coming back to trade at a rate of 0.6334 this morning. European Equities were largely down on Friday with the DAX declining -1.5% while the CAC dipped -0.2%. In Early EU data, France’s January EU-harmonised CPI rose 0.2% m/m, beating a preliminary reading of 0.1%. ECB’s Kazimir backs an end to QE in August, saying there is no doubt the Eurozone is heading toward monetary tightening. Also released and EU Consumer Confidence for February fell to -8.8, worse than expectations of -8.0. Little reaction to the data. This week, attention still remains on the Ukrainian-Russian border as world leaders still anticipate an impeding war. In macroeconomics, there’s a flurry of Euro data among the releases with the EU PMI’s being of note.

GBP

The AUDGBP had a mixed performance in trade with the pair trading at a marginal difference to Friday, trading at a rate of 0.5273 this morning. London stocks stuck close to a flat line on Friday as geopolitical tension continued to weigh on the UK index. FTSE 100 index dipped -0.32% to 7,536 points. In the event on Friday, U.K. retail sales rebounded in January as concerns about the effect of the omicron variant of COVID-19 eased. Sales volumes rose 1.9% from a month earlier, the Office for National Statistics said. Little in the way of local data with Flash UK PMIs and US Inflation data for January making up the highlights for this week.

NZD

The AUDNZD dipped lower into the weekend with the pair trading at a rate of 1.07146 this morning. Geopolitical headlines have loomed over financial markets this week with riskier currencies taking a hit and traders likely opting for relative safe-haven currencies. Wednesday's RBNZ meeting will be the next major influencing factor here, markets expecting a further rate hike from across the ditch...