Contained

Some light USD strength has applied modest pressure to AUD/USD in early Sydney trade, with the cross last dealing 10 or so pips lower at ~$0.7310. This comes after Wednesday’s positive session for broader risk appetite (which most attributed to incremental increases in chances of a diplomatic solution when it comes to the Russia-Ukraine situation) allowed the rate to challenge the $0.7340 marker, which held firm. Increased optionality re: the RBA’s cash rate liftoff timing (via Governor Lowe’s Wednesday address) would have done the AUD no harm either.

• Fundamentally, Citi’s Australia terms of trade tracker continues to operate just shy of the recent all-time highs, with the well-documented rally in global commodity prices providing tailwinds for the Aussie in recent weeks.
• Ultimately, the cross remains comfortably within the recently observed range after the pullback from Monday’s multi-month highs, with Monday’s peak ($0.7441) providing the initial point of technical resistance after price action on that day formed a shooting star candle. Out technical analyst points to the potential for a deeper correction, with initial support layered in at the 20- & 50-day EMA’s.
• There is nothing of note on the Aussie docket during the remainder of the day, so it will be a case of headline watching and assessing swings in broader risk appetite.