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AUD creeps higher on promise of COVID19 Vaccine

AUD - Australian Dollar

The Australian dollar advanced through trade on Wednesday, extending moves above 0.69 US cents following a risk on move driven by news Pfizer and BioNtech’s early trial of a COVID19 vaccine has shown promising results. Having traded sideways for much of the domestic session the AUD struggled to mount any real upward momentum as concerns over new security laws in Hong Kong overshadowed a surprise uptick in Chinese manufacturing and services data. An increasing number of arrests in Hong Kong have fostered fears Beijing is pushing to end the One Country, Two systems model, promoting increased tensions within the region and dampening demand for risk. The AUD touched intraday lows at 0.6880 and look set to close the day lower before the last-minute risk on run. A surprise uptick in US manufacturing data helped fuel the risk on run as investors jumped on reports Pfizer and BioNtech could have a 100 million doses of the vaccine ready by the end of the year. Investors and analyst appeared to place greater stock in the vaccine news, choosing to ignore the increasingly worrying and largely unchecked spread across the US as plans to continue the broader economic re-opening are put on hold. Having touched session highs at 0.6937 the AUD crept lower into the close and currently buys 0.6916 US cents.

Attentions remain squarely affixed to Coronavirus headlines with the AUD entrenched within recent ranges. Having failed in its attempt to advance beyond 0.70 US cents the AUD is now bouncing between support at 0.68 and resistance at 0.70 amid the eb and flow of risk demand.

Key Movers

The Great British Pound was again the days top performer, advancing against major counterparts and extending Tuesday’s rally to push above 1.24 and 1.2450. While there were no obvious triggers for Sterling’s sustained uptick, the risk on run created by improved US macroeconomic data and the promise of a COVID19 vaccine before the end of the year have helped drive the currency higher. The Pound was one the worst performing major units throughout June plunging almost 5% and as such appears relatively cheap. There is a sense that the early quarter uptick is merely a correction in last months sell off and investors taking advantage of a reasonable buying opportunity.

Safe havens struggled again as the USD and broader dollar index both fell, while the JPY was forced lower on the back of the late risk on move. Currency ranges have become much more constrained following the volatility of March, April and May with fluctuations amid set ranges governed by the eb and flow of risk demand. With contrasting forces pulling in either direction the question is now which side will win out.

Expected Ranges

AUD/USD: 0.6830 - 0.6980 ▲

AUD/EUR: 0.6050 - 0.6180 ▲

GBP/AUD: 1.7850 - 1.8280 ▲

AUD/NZD: 1.0620 - 1.0720 ▼

AUD/CAD: 0.9320 - 0.9420 ▲