Currency Analyst since 2010

Westpac about FX risks from Ukraine

Strategists at Westpac speak about the impact of the Ukrainian crisis on the Forex market: “Overall, it is understandable that G10 and Asian markets are not pricing in a large impact from Ukraine as the base case. But the risks to this view are skewed heavily towards the negative side, given there is no easy political solution, with Putin having staked immense political capital in the Crimea occupation and being well aware of the West’s reluctance to challenge him directly.”

According to Westpac, “the best case scenario of a sudden surprise compromise seems no better than neutral for AUD, so risks are obviously skewed to the downside. In the event of a further deterioration in the situation in coming days or weeks such as significant military clashes in the Crimea and/or commodity supply disruptions, we are likely to see weakness in the likes of EUR/CHF, EUR/JPY and spillover damage to AUD and NZD. AUD/USD is already in vulnerable territory, struggling to benefit from a fairly positive domestic macro story.”

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