- After the opening gap, the bulls of AUD/USD regain control.
- The AUD/USD is recovering from the lows and is now higher each day.
Despite the risks associated with the Ukraine crisis, AUD/USD is still firm. Instead, AUD is benefiting both from the prospect of an inflationary environment as well as higher commodity currencies. At 0.7250, AUD/USD has risen by 0.2%. It was between 0.7157 and 0.7264 at the time of writing.
Looking around, it is a risk-off day in financial markets as the first round of peace talks concluded at the Ukraine-Belarus border on Monday without a ceasefire. Kharkiv, an east Ukrainian city, continues to be subject to some of the worst shelling in war so far. There have been reports of significant civilian casualties. The weekend headlines sent forex into a tailspin with big opening gaps due to the news of further, stringent sanctions on Russia from the West.
AUD/USD fell following reports that Vladimir Putin, Russia’s President, ordered that nuclear deterrents be placed on high alert. AUD lost 60 pips in its opening gap, but has since recovered them and has gained over 30 pips from Friday’s closing price.
Commodity-FX supported
Rabonak analysts explained that this conflict, including fears about the supply of commodities, means that the winners or losers in FX space are different from previous crises.
Analysts noted that this would ordinarily suppress demand and reduce risk appetite.
”Higher-risk currencies would tend to adjust lower in this environment and often this would include the currencies of commodity exporters. However, Russia’s status as a large commodity exporter means that the threat of supply disruptions of oil, gas and various agricultural commodities has been amplified. The news of the invasion has seen the NOK regain all its ground against the USD.
”AUD’, CAD, and NZD are also gaining ground against the powerful USD. The currencies of large oil exporters include the NOK (or CAD). Given its large coal exports, the AUD is often well correlated to oil. Australia also exports LNG. The current environment expects the commodities currencies to remain well supported.
