The Euro may remain vulnerable against the Australian Dollar as Russia’s attack on Ukraine pusses Europe to source goods from Australia. EUR/AUD is eyeing an Ascending Triangle. Get your market update from ddubrovskyFX here:
The Euro may remain vulnerable against the Australian Dollar throughout the second quarter as. Following Russia’s attack on Ukraine earlier this year, the European Union has been implementing steps to increasingly end its reliance on Russian fossil fuels. In the near-term, this may also drive up demand for non-renewable energy.
Outside of energy, the regional bloc also imports wheat and iron ore from Russia. This is where Australia comes into play. The latter is the world’s largest exporter of iron ore and coal briquettes. Australia is also the world’s sixth-largest shipper of wheat. As such, the EU could turn to Australia in the future to help source goods it tends to buy from Russia.
This can boost the Australian economy as it increases exports and generates capital inflows. That can translate into a more hawkish Reserve Bank of Australia down the road as the European Central Bank is forced to navigate around the tricky environment it faces. While RBA Governor Philip Lowe has mentioned that Ukraine is fueling uncertainty on the inflation outlook, the central bank has been adopting a more hawkish stance of late. Markets are now pricing in the first
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