More positive vaccine news spurs AUD gains
Thursday 19 November, 2020
Daily Currency UpdateAUD - Australian DollarMore positive vaccine headlines helped spur risk demand overnight, propelling the AUD back through 0.73 US cents. Pfizer released a more comprehensive review of the results from its phase 3 trial, showing an improvement in the vaccine's overall effectiveness across all demographics. The vaccine is said to work well across a variety of ethnic groups and ages. With no safety concerns reported, hopes for a mass roll out before Christmas prompted modest risk on gains. The AUD tested resistance at 0.7325 breaking higher to touch 0.7330 before retracing gains and edging lower into this morning’s open. Attentions today turn to domestic labour force numbers with unemployment expected to tick above 7%. With Victoria still entrenched within the lockdown through much of October there is little hope for a surprise uptick as focus turns to December and Q1 2021 as key markers for labour market health. Risk continues to drive direction, and we expect the AUD will continue to find support amid hopes vaccines will allow the global economy to return to normal in 2021. With resistance intact at 0.7325/30 upside gains may be hard won as near-term headwinds offset forward dated optimism.
Key MoversThe US dollar fell across the board and remains under pressure as an improving risk backdrop sees investors shift away from safe havens and look toward equities, emerging market and commodity currencies. The Dollar index, which measure the USD against a basket of major counterparts, fell 0.2%, a relatively muted response given the scale of the risk on shift and most likely supported by broad based euro softness. The single currency struggled to extend gains against the USD edging only marginally higher as concerns surrounding the ratification of the €750billion Euro recovery fund emerge. Hungary and Poland have so far refused to ratify the agreement in protest or opposition to the rule of law condition, claiming each country should be able to distribute funds as they see fit. Fears internal disagreements will derail the planned January release of funds have weighed on the combined currency and could grow if a compromise cannot be found in the coming weeks. Attentions today remain affixed to the broader risk narrative.
- AUD/USD: 0.7220 - 0.7340 ▲
- AUD/EUR: 0.6080 - 0.6190 ▲
- GBP/AUD: 1.7980 - 1.8320 ▼
- AUD/NZD: 1.0520 - 1.0630 ▼
- AUD/CAD: 0.9520 - 0.9590 ▲