Geopolitics is the main focus for the pair next Wednesday, but Aussie Q4 wage data also will be important.
Despite solid job data earlier in week, AUD/USD did not hold at the north of 0.7200 for a third consecutive session. However, calls for RBA monetary tightening this year in H2 were still alive. The AUD/USD pair is currently trading at 0.7170s. However, it still appears to be on track for a 0.7% gain on the week. This would make this the third consecutive week. The commodity-sensitive Aussie has seen a decrease in resilience in copper and gold prices, which was largely due to slightly lower iron ore and oil prices.
As Russia continues to build troops along Ukraine’s border, and violence between government forces and separatist forces in Eastern Ukraine escalates, geopolitical tensions remain high between Russia and NATO. This has led to the US Dollar falling on the last trading day of the week. This is the most likely reason why AUD/USD has not been able to hold above 0.7200 on Friday or attempt to test last week’s high of 0.7250.
The resilience of AUD to the escalating geopolitical situations in Eastern Europe will once again be tested next week when a crucial face-to-face meeting between US Secretary Anthony Blinken (Russia) and Russian Foreign Minister Sergey Lavrov (US) will be the focus. Any sign that the two sides reach an agreement to de-escalate could propel them back to monthly highs and towards the 2022 highs of the 0.7300 region.
The Australian Q4 Wage Price Index data will be the main event of next week’s economic calendar. The RBA could signal rate increases in 2022. Money markets are still betting that they will start hiking in the middle of next year. This is an upside surprise. Flash Aussie PMI survey results February and January Core PCE inflation reports could also be market-moving. Fed talk will continue to be worth watching.
