Geopolitics, Australian Wages Data Impacting AUD/USD

AUD/USD was unable to hold to the north of the 0.7200 level for a third successive trading session, despite solid jobs data earlier in the week keeping calls for RBA monetary tightening this year.

At current levels in the 0.7170s, AUD/USD is trading a touch lower on the day, though still looks on course to gain about 0.7% on the week, which would mark the pair’s third successive week.

Resilience in copper and gold prices has been largely negative, as far as the commodity-sensitive Australian dollar is concerned, by slightly lower oil and iron ore prices on the week.

Geopolitical tensions on Ukraine are still high as Russia continues to accumulate troops on Ukraine’s border, underpinning the US dollar on the final trading day of the week. That is the main reason why AUD/USD hasn’t been able to hold above the 0.7200 handle on Friday, or mount an attempt at testing last week’s high at 0.7250.

AUD’s resilience to the escalating geopolitical situation in Eastern Europe will be put to the test once more next week with a key face-to-face meeting between US Secretary of State Anthony Blinken and Russian Foreign Minister Sergey Lavrov in focus.

Any signs by the two sides to reach agreement to de-escalate tensions will help the pair rebound above monthly highs and back towards 2022 highs in the 0.7300 area.

Otherwise, the highlight of next week’s economic calendar will be Australian Q4 Wage Price Index data out on Wednesday.

An upside surprise could be the final piece in the puzzle for the RBA to formally signal rate hikes in 2022, as money markets continue betting that they will get started hiking sometime around the middle of the year. Elsewhere on the economic calendar, flash Australian dollar and US PMI survey results for February and the US January Core PCE inflation report could be market moving, while Fed speak will as ever be worth monitoring.