The Australian Dollar is resuming its advance on Monday, after losing ground across the previous week. The Australian Dollar US Dollar exchange rate slumped -1.7% last week, closing the week out at US$0.6415, snapping a 5-week winning streak.
At 15:00 UTC, AUD/USD is trading 1.1% higher at US$0.6485. This is towards the upper end of the daily traded range of US$0.6412 – US$0.6504.
AUD: Moderna Inc’s Initial Trials Are Promising
The perceived riskier Australian Dollar is pushing higher on Monday as risk sentiment improves. News that Moderna Inc’s vaccine trials have seen encouraging results in humans in early trials is increasing investors appetite for riskier assets and currencies such as the Aussie Dollar, whilst dragging on demand for the safe haven US Dollar.
US biotechnology firm Moderna Inc’s experimental vaccine is showing signs that it can create an immune response to fend off the coronavirus. The news offers tentative hopes that a drug to combat the pandemic will be found. The results are from a small sample, first study on humans and should therefore be viewed cautiously. However, given that a vaccine or cure for coronavirus could be the only way for a full global economic recovery, investors are getting excited.
Vaccine optimism is overshadowing souring US – Sino relations. President Trump has ramped up pressure on China once more by cutting Huawei off from access to American technology. The US Commerce department called it part of putting America first. However, the fact that it comes as Trump continues in his efforts to pin the blame of coronavirus outbreak on China raises questions.
USD: Oil Prices Recover Lifting Risk Appetite
With risk sentiment rising, demand for the safe haven US Dollar is dropping. Adding to the buoyant mood, oil has pushed back over $30 amid continued signs of recovery in demand. As economies across the globe slowly start to reopen, demand for fuel is rising.
Risk sentiment has been closely tied to the price of oil over the past month after the oil future price went negative last month. West Texas Intermediate has rallied from -$30 per barrel to +$35 per barrel in 4 short weeks.
There is no high impacting US data due today. Investors will look ahead to US housing data tomorrow and a testimony by Jerome Powell.
