AUD/USD bulls moving in as the hopes that diplomacy still might prevail By ross_burland AUDUSD Currencies RussianFederation DollarIndex
AUD/USD demand coming through in hopes of a diplomatic breakthrough in talks between the US and Russia. At 0.7197, AUD/USD is up 0.16% in the Asian session asreturns on what looks to be further signs of diplomacy shining through the cracks of fear of imminent war between NATO, and Ukraine vs. Russia.
Initially, the Aussie had been treading a more cautious path amid fears Russia was about to invade Ukraine. However, reports that the US Secretary of state Blinken has accepted an invitation to meet Russia's Lavrov late next week, according to a State Department spokesman, has calmed some nerves in Asia. Additionally, US president, Joe Biden, will host a meeting on Ukraine on Friday with leaders of Canada, France, Germany, Italy, Poland, Romania, Britain, EU and NATO.
On the other hand, the analysts added, ''markets sensitivity to Ukraine risk is likely to rise heading into February 20th, which marks the end of war games in Belarus, as the West monitors for signs that Russian troops will return to base in a strong sign of de-escalation. Conversely, their failure to do so would likely catalyze a substantial rise in Russia risk premium.''
''In turn, positions that benefit from a rise in Russia risk premium carry a substantial time decay, as traders need to be right about the direction of the risk and about its timing — axes for which most participants have little edge.''
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