Four weeks since Russia’s invasion of Ukraine and the aussie is comfortably strongest. Persistent energy price strength means AUD/USD may test fresh multi-month highs around 0.7550, but it seems due for some consolidation in the week ahead, economists at Westpac report.

Hedge funds have slashed AUD shorts 

“As the tragic war has continued, the pressure on energy prices has been maintained, insulating AUD from its traditional vulnerability to equity jitters.” 

“AUD/USD above 0.75 this week is the area we were looking for but much earlier than expected. One factor helping short-term is the belated covering of hedge funds shorts.” 

“Admittedly the contrast between RBA and Fed rhetoric is not helping AUD, but the damage is limited by market eagerness to price in RBA hikes earlier than official commentary indicates.” 

“AUD/USD may probe fresh multi-month highs around 0.7550, but seems due for some consolidation in the week ahead.”