- AUD/USD extends its recovery from Tuesday’s US session low0.7680s.
- Markets remain upbeat for a second day, supporting AUD.
- The December Aussie jobs report is out at 00:30GMT .
AUD/USD extends its recovery Tuesday’s US session low of 0.7680s. Aussie bulls eye the psychological level multi year high of 0.7800 level. However a move here would likely require an extension of US dollar losses, which seems unlikely on Wednesday given the Dollar Index’s strong recovery.
Risk appetite on the front foot
Markets remain upbeat for a second day; US equity markets opened in the green, European stocks trade higher. FX markets are more mixed European FX are seen underperforming (perhaps covid related), but risk-sensitive currencies such as AUD, NZD and CAD are all trading well versus the US dollar.
US Treasury Secretary nominee Janet Yellen urged Congress to act big with regards to fiscal stimulus and to worry about the debt later, which boosted risk appetite. Markets appear to like her stance of pandemic relief first and tax increases (primarily on the wealthy and corporations) later.
This is relevant to the AUD because more US government spending boosts US economic growth and inflation expectations. This lifts commodity prices, which in turn drives currencies of commodity export-dependent countries such as Australia’s AUD.
Australian official jobs number for December, the are due at 00:30GMT on Thursday. Expectations are for 50K jobs to have been added and for unemployment to drop slightly to 6.7%.