- Vaccine optimism is a big boost for risk assets.
- Global sentiments favour risk-bulls.
- Australian GDP supports strength in the currency.
- RBI policy awaited.
The AUD/USD continued to rise as broad-based US dollar selling reflected vaccine-driven enthusiasm across global equity markets.
The US equities traded higher yesterday with the Dow Jones Industrial Average rising by 0.29 Percent and the tech-concentrated Nasdaq 100 putting a comparatively sedate show of 0.09 Percent gain. At the same time, the volatility index spiked to 21.4 – the highest level since November 30.
The rise in volatility could be the sign of a short-term top in the US equities as traders hedge their equity positions.
On the currency front, the greenback continued to drop despite the rise in volatility as global optimism surrounding economic recovery is strong, supported by the vaccine developments. It is important to remember that the UK went ahead with the Covid-19 vaccine approval this week, before other western countries.
Today’s Asia-Pacific trading is favouring the risk-bulls to close the first week of December on a firm footing.
India’s central bank might keep its interest rates steady at the current four Percent, later today.
The Australian dollar had risen above its 2020 high earlier this week egged-on by GDP numbers. In Australia, finalised retail sales October numbers will be released today, and no other major economic release is due today.
AUD/USD price action is likely to be more technically driven as the data-front is quiet today, and the market sentiments will have a hangover from the US session if there are no surprises on the vaccine front.
The pair is likely to push towards higher levels even though it is near overbought territory with the RSI kissing 70 mark. Any reversal in global sentiments can alter the picture for AUD/USD; nevertheless, the pair would quickly reverse any fall.
