AUD/USD consolidates near multi-month tops

3 December, 2020

A combination of supporting factors assisted AUD/USD to reverse a dip to sub-0.7400 levels. Upbeat aussie trade balance data for October extended some support to the Australian dollar. COVID-19 vaccine optimism, hopes for more US fiscal stimulus undermined the safe-haven USD.

The AUD/USD pair managed to reverse an Asian session dip to sub-0.7400 level, albeit lacked any follow-through and remained below the overnight swing highs. The pair was last seen trading around the 0.7410 region, nearly unchanged for the day.

The pair witnessed a modest pullback during the early part of the trading action on Thursday and moved away from the highest level since August 2018, set in the previous day. The downtick lacked any obvious fundamental catalyst and was quickly bought into amid sustained US dollar selling bias.

The global risk sentiment remained well supported by the latest optimism over the first approval of a COVID-19 vaccine. The UK on Wednesday became the first country to approve a vaccine jointly developed by Pfizer and BioNTech and said to start inoculation of those most as risk early next week.

This, along with the possibility of more US fiscal stimulus measures, further boosted investors' confidence and was seen as a key factor that undermined the safe-haven greenback. Investors remained optimistic that the US Congress will reach an agreement to support the economy.

The aussie was further supported by upbeat domestic trade balance data, which showed that surplus increased to A$7.456 billion in October from A$4.84 billion previous. The reading was well above the A$5.8 billion anticipated and was led by a 5.4% MoM jump in exports.

That said, a cautious mood around the equity markets failed to provide any additional boost to the perceived riskier Australian dollar. This, in turn, might act as the only factor capping gains for the AUD/USD pair, warranting some caution before positioning for any further appreciating move.

Market participants now look forward to the US economic docket, featuring the releases of Initial Weekly Jobless Claims and ISM Non-Manufacturing PMI. The data, along with the broader market risk sentiment, will influence the USD price dynamics and provide some impetus to the AUD/USD pair.


Source   Presented by OctaFX
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