AUDUSD Recovers As Geopolitical Tensions Ease

AUDUSD has given up some of its overnight gains over the morning session and is now trading around 0.6760, close to NY closing levels. The USD strengthened as geopolitical tensions escalated after a report of a Russian-made missile exploding in Poland but eased again after US President Biden said it wasn’t fired from Russia.

• AUDUSD reached an intra-session high of 0.6772 ahead of the Australian wage data but couldn’t maintain its break above the key resistance level of 0.6768. It then moderated on USD strength, despite wages growth pointing to another 25bp RBA hike in December, and reached a trough of 0.6732. It bounced on reduced NATO/Russia risk and news that China has approved 8 fixed asset projects.
• Equities are weaker in the region with the ASX off 0.3%, the Hang Seng -0.7% and the CSI -0.3%, as risk appetite deteriorated. US e-minis are down 0.15%.
• AUDJPY has recovered to around overnight highs as geopolitical risks abate. AUDNZD has been trading in a tight range but Aussie has lost some of its gains against the euro to be around 0.6510.
• Iron ore prices are trading slightly higher at $93/tonne. While oil prices are range trading around $86.60, slightly below the NY close.
• There is UK CPI data later followed by US retail sales for October. There are also a number of ECB speakers. Tomorrow Australian October employment data prints.