AUD/USD DROPS BACK TOWARDS 0.7250 AS RUSSIA RE-IGNITES RISK-AVERSION

• AUD/USD is looking to extend the pullback after rejection just shy of 0.7300.
• Risk sentiment takes a big hit after Russia says will continue operations in Ukraine until it achieves its goal.
• Dovish RBA adds to the weight on the aussie while Chinese PMIs improve.

AUD/USD is feeling the pull of gravity once again after facing rejection just below the 0.7300 level, as the US dollar springs back to lift amid a renewed wave of risk-aversion across the financial market.

Comments from the Russian official re-ignited the risk-off trades, with the S&P 500 futures accelerating declines towards 4,378, down 0.75% on the day.

Russian Defence Minister Sergei Shoigu said that Russia “will continue operation in Ukraine until it achieves its goals, per Interfax. Adding to it, Russia’s Foreign Minister Sergey Lavrov said that Ukraine still has soviet nuclear technology,” adding that Moscow “cannot fail to respond to this danger.”

The high beta AUD retreated further in tandem with the risk sentiment, as investors scurried for safety in the US dollar. The US dollar index jumped to retest 97.00, up 0.15% on the day.

Earlier in the day, the Reserve Bank of Australia (RBA) left the key interest rates unchanged at 0.10% but said that the board is prepared to be patient, given the Russia-Ukraine war uncertainty.

Markets have also shrugged off the upbeat Chinese Manufacturing PMIs, as the sentiment around the Russia-Ukraine war dominates and will continue doing so ahead of the US ISM Manufacturing PMI.