Russia’s invasion of Ukraine sent the aussie soaring against the euro. Short-term, the AUD should chop higher, back towards EUR/AUD 1.47, though Westpac’s end-June forecast is at 1.51/1.52.

Euro still fragile as war rages

“The war is on the eurozone’s doorstep and some eurozone members are the most directly exposed to energy supply disruptions and soaring prices. Australia in contrast is a net energy exporter and an exporter of metals whose prices have also surged. So Australia’s terms of trade have soared, just as the eurozone’s have slumped.”

“The RBA continues to push back on the idea of any change in policy settings near-term though it notes growing inflation risks and is upbeat on Australia’s growth prospects.” 

“Short-term, EUR/AUD should chop lower, back towards 1.47, though our end-June forecast is 1.51/1.52, so long as Europe eventually finds some relief from energy prices.”