Diplomatic Resolutions in View

The AUD/USD currency pair, in the hours of Monday as the market opened for business, was displaying an open-drive bullish session where the pair initiated advances from the very first move of the trading session. The global expectation that there would be a ceasefire deal reached between Russia and Ukraine has highly increased following positive outcomes in the process of their latest negotiations as reported by negotiators.

AUD/USD price chart. Source TradingView

Dmytro Kuleba, the Foreign Minister of Ukraine, stated that negotiators from Russia are yet to agree through writing to the drafted documents but they gave verbal consent to all positions of Ukraine. Meanwhile, the head of Ukraine’s delegation at the peace talks, David Arakhamia confirmed that Russia has agreed to all Ukraine’s demands.

Whereas, President Vladimir Putin of Russia and President Volodymyr Zelenskyy of Ukraine are scheduled to meet when the special document with the ceasefire conditions has been fully drafted.

Aside from the elated feeling coming from the peace talks, the Australian dollar is doing well in the market on the back of increasing prices of commodities. As a large exporter of energy, iron ore, as well as various types of other commodities, Australia is benefitting greatly from the increased price of materials.

Dollar Index Reacts to Market Sentiment

In the United States of America on the other hand, the US dollar index is trading low on the increased risk-on market mood. Be it as it may, the percentage of market players expecting a 50 basis points interest rate increase by the Federal Reserve in its next two monetary policy meetings has increased sharply. The sharp increase came closely on the heels of the recent fall in the country’s unemployment rate.

The rate of unemployment at 3.6% all the way from January is showing that there is a number of full-time employment on a regular basis and this may in turn require an aggressive rise in interest rates by the US Federal Reserve.

Moving ahead, the decision on interest rates expected on Tuesday from the Reserve Bank of Australia is the biggest event of this week. It is speculated that the Reserve Bank of Australia might stay put on interest rates and adopt a policy to watch out for how events unfold until there is an increase in price pressure. 

The American docket is going to publish the minute from the Federal Open Market Committee meeting on Wednesday. It is expected to show the idea behind the policy decisions of the Federal Reserve policymakers.