- AUD/USD has witnessed a corrective pullback near 0.7245 after a stalwart rally in March.
- S&P500 showed wild swings after a unilateral ban on imports of Russian oil by the US.
- The risk appetite of investors expanded as Ukraine meets Russia’s demand for NATO membership withdrawal.
The AUD/USD pair has witnessed a pullback towards 0.7245 after an outperformance in March despite the broad risk-aversion theme in the market. Antipodeans have a ball on rising commodity prices and risk appetite has been expanded by the market participants, especially for the aussie.
After a corrective pullback towards 0.7245, AUD/USD is forming a firm base and is likely to resume rallying higher after breaching 0.7280 backed by rolling back of risk appetite in the market. Ukraine President Volodymyr Zelensky has confirmed that he is no longer pressing for NATO membership by Ukraine. Moreover, he is prepared to ‘compromise’ on ‘independent’ recognized pro-Russian territories by Russian leader Vladimir Putin.
The positive headline after a Ukraine crisis indicates a ceasefire going forward, which has been cheered by the market participants, and a ray of hope has been recorded in the risk-sensitive assets. However, the US commitment to cripple the Russian economy is still active and the former has banned the oil imports from Russia in the US. In response to that, the Kremlin counterpart promised retaliation, which brought wild swings in the S&P500 index on Tuesday.
Meanwhile, the US dollar index (DXY) has turned volatile as investors are facing a dilemma whether to stick with a risk-aversion theme on banning Russian oil by the US or to shift to risk appetite on ceasefire expectations.
Apart from the more positive headlines from the Russia-Ukraine negotiations, investors are focusing on Reserve Bank of Australia (RBA)’s Governor Philip Lowe’s speech on Wednesday, which is likely to dictate the next monetary policy action. In addition to that, the Australian Westpac Consumer Confidence will be reported by the University of Melbourne in the early Tokyo session. The Australian Westpac Consumer Confidence is likely to print at -1.1% against the previous print of -1.3%.
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