- AUD/USD attracted fresh buying near the 0.7160 area and reversed the initial bearish gap opening.
- Upbeat domestic data, bets for an eventual RBA rate hike in 2020 extended support to the aussie.
- A recovery in the risk sentiment undermined the safe-haven USD and contributed to the move up.
The AUD/USD pair built on its steady intraday move up and climbed to a fresh daily high, around the 0.7220-0.7225 region heading into the North American session.
Following a bearish gap opening on Monday, the AUD/USD pair attracted some dip-buying in the vicinity of mid-0.7100s and was supported by a combination of factors. The early uptick followed the upbeat release of the Australian Retail Sales data, which reaffirmed market bets for an eventual interest rate hike by the Reserve Bank of Australia in 2022. Apart from this, a recovery in the equity markets prompted some intraday selling around the safe-haven US dollar and further benefitted the perceived riskier aussie.
The initial reaction to the weekend developments surrounding the Ukraine crisis seemed short-lived, which was evident from an intraday bounce across the global equity markets. It is worth recalling that Western nations ramped up efforts to punish Russia for its invasion of Ukraine and imposed tough new sanctions, including cutting some of its banks off from the SWIFT financial network. Moreover, Russian President Vladimir Putin upped the ante on Sunday and put the country’s strategic nuclear forces on high alert.
The market nervousness, however, eased after the Russian negotiator said that they are interested in reaching an agreement with Ukraine as soon as possible. Adding to this, reports indicated that the Ukraine-Russia dialogue has already started in Belarus and Russian media is coining this as 'peace talks', raising expectations for some de-escalation of tensions. This, in turn, helped the risk sentiment to stabilize a bit and provided a modest lift to the AUD/USD pair amid some repositioning trade ahead of the RBA on Tuesday.
That said, any optimistic move in the markets is likely to remain capped as the focus remains glued to fresh developments surrounding the Russia-Ukraine saga. Hence, it will be prudent to wait for some follow-through buying, possibly beyond the 100-day SMA hurdle, before positioning for any further gains amid absent relevant market moving economic releases.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD turns negative near 1.0760
The sudden bout of strength in the Greenback sponsored the resurgence of the selling pressure in the risk complex, dragging EUR/USD to the area of daily lows near 1.0760.
GBP/USD comes under pressure and challenges 1.2500
GBP/USD now rapidly loses momentum and gives away initial gains, returning to the 1.2500 region on the back of the strong comeback of the US Dollar.
Gold retreats from highs on stronger Dollar, yields
XAU/USD trims part of its initial advance in response to the jump in the Dollar's buying interest and the re-emergence of the upside pressure in US yields.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.