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Australian dollar trades higher on vaccine clearance hopes

AUD - Australian Dollar

The Australian Dollar finished the week trading in a narrow range, failing to find momentum as it tried valiantly to push through the 73 US cent handle. Opening at 0.7295 on Friday, markets continue to ride the wave of vaccine news and soaring coronavirus cases.

Falling early during domestic trade to an intraday low of 0.7266, the Aussie was supported by a stronger than expected retail sales print as consumer spending rose 1.6% month on month during October. This comfortably beat the previous reading whereby sales shrunk 1.1% m/m and a sign that the economy is faring better than expected. A large reason for the stronger result was the state of Victoria opening up their doors again following an easing of lockdown restrictions.

AUD/USD jumped to a high of 0.7324 during North American trade as Pfizer and BioNTech applied for clearance of their coronavirus vaccine from the US Food and Drug Administration (FDA). Equities pushed higher on the news before a record number of coronavirus cases in America saw the Dow and S&P 500 close lower.

The Australian dollar opens at 0.7300 ahead of Flash Manufacturing and Services PMI due for release this morning. We expect support levels to hold on moves approaching 0.7250, while any upward push will likely meet resistance at 0.7340.

Key Movers

The US Dollar eased on Friday 0.11% with equities in the United States closing lower. A bid to safe haven currencies were seen as coronavirus numbers soared. Whipsawing trading against potential vaccine news looks to offset an increase in virus numbers.

President Donald Trump is still refusing to concede the US presidential elections as President-elect Joe Biden’s margin of victory grew to six million votes. A federal judge in Williamsport, Pennsylvania on Saturday dismissed a lawsuit by President Donald Trump’s campaign to overturn the likely loss. The delay threatens to hinder the world’s largest economy in its attempt to recover from a weak economic backdrop.

The latest G20 summit was held over video conference this weekend where leaders of the 20 biggest countries gathered to discuss the uncertainty of a global recovery. Given the deep recession COVID-19 has thrown the world into, talks for a swift economic rebound were firmly on the agenda. Leaders urged more money to be thrown at vaccine testing for development and distribution of vaccines following large testing at present.

Brexit discussions had to be halted between the UK and Europe as one of the negotiators tested positive for COVID-19. European head commissioner Michel Barnier leading the negotiations tweeted that members had suspended negotiations and have gone into isolation for a week in line with Belgian rules.

GBP/USD was slightly higher (0.21%) to 1.3283 on Friday following the better than expected Retail sales result rising 1.2% m/m in October as early Christmas shoppers boosted numbers for the sixth consecutive month.

Today is dominated by several Manufacturing and Service PMI releases in Europe today as Japan observes a bank holiday. A number of central bank minutes are due for release this week as market direction hangs in the balance waiting for COVID-19 vaccine approvals.

Expected Ranges

AUD/USD: 0.7250 - 0.7340 ▲

GBP/AUD: 1.8000 - 1.8300 ▼

AUD/NZD: 1.0500 - 1.0560 ▼

AUD/EUR: 0.6120 - 0.6180 ▲

AUD/CAD: 0.9500 - 0.9600 ▲