AUD/USD Pulls Back to 0.7450 Amid China’s COVID Fears, Firmer Bond Yields, Ukraine Crisis
First Up, then Down
The AUD/USD currency pair is offering a refreshing intraday low point in the vicinity of 0.7450 as the market is reassessing earlier optimism in the course of Wednesday’s Asian session. The pair which serves as a risk measure, renewed its highest level since last November in the course of the first set of advances, shortly before the recent downward trend to new daily lows.
AUD/USD price chart. Source TradingView
The escalating COVID cases in China and its spread to Europe that has caused new fears looks like it is underpinning the Australian dollar pair and its most recent pullback. Another factor posing a challenge to bulls is the possibly deeper hardship coming the way of Russia and its continued invasion of Ukraine.
The increase in the COVID cases in China on a daily basis has gone up by 2469 as against the initial 2432. There is news of a lockdown in the city of Tangshan which is weighing quite heavily on market sentiments and the AUD/USD pair. In the same basket are rumors that there is a fast spread of a new COVID variant that has been named BA2 in Europe. Again, news that China is set to cut rates this year is equally telling on the pair.
The Difficulties of Diplomacy
Whereas, President Volodymyr Zelenskyy of Ukraine has stated that it is difficult talking with Russia and it gets confrontational at times. But while at that, the war situation is escalating in Mariupol. It should be noted that Russia was able to pay off its Eurobond coupons in US dollars while it did not have a default for the second time in a row.
The Wall Street Journal has announced the possibility of stricter sanctions to come Russia’s way as the US is planning to sanction about 300 Russian lawmakers, as the Biden administration is expected to make known on Thursday.
The Japanese media outlet, Nikkei, reported a matter that could pose a challenge for China if the link between Beijing and Moscow is flagged as supportive of the Ukraine war. The news in reference stated that the North Atlantic Treaty Organization has started some coordination to show its concern over any cooperation going on between China and Russia in a statement that will be finalized during their emergency meeting on the 24th of March.
It stated further that if China is discovered to support Russia militarily and economically, then the war would gain new momentum and it would intensify conflict with the United States and Europe.