- AUD sentiment has improved, perhaps as a late reaction to Wednesday’s strong GDP figures.
- AUD / USD was one step away from November highs at 0.7407.
The AUD/USD has seen a recovery in recent trading, and the pair continues to rally from previous lows to above 0.7400. AUD / USD simply missed breaking above the year-to-date high at 0.7407. Currently, the pair is trading with gains of more than 30 pips or almost 0.5%.
AUD sentiment takes a turn for the better
AUD sentiment has improved in recent trading, and the Aussie is now one of the best G10 currencies of the day. Some factors could be driving this. First of all, prior to today, the AUD was one of the worst performing G10 currencies for the week despite the weakness of the USD, so this could be a recovery effect.
Furthermore, the move could also be a delayed reaction to Wednesday’s Australian GDP figures, which were stronger than expected; Australian real GDP growth stood at 3.3% qoq in the third quarter of 2020, stronger than expectations for a 2.6% recovery rate. That meant the Australian economy was just 3.8% smaller than in Q3 2019 (against expectations, it would be 4.4% smaller – a solid recovery from year-on-year losses of 6.4% in Q2).
Market commentators noted that the latest GDP figures should ease pressure from the RBA to ease policy further. In fact, before the data, RBA Governor Philip Lowe reiterated his view that negative rates are highly unlikely to be implemented in Australia; the latest GDP figures should further reduce this probability.
AUD / USD moving higher within the uptrend channel
AUD / USD continues to move higher within the confines of an uptrend channel. The uptrend support links the lows of November 13, 19, 23 and 30, while the resistance of the uptrend links the highs of October 9 and November 9 and 27. Therefore, the technical bias of the pair remains to the upside, which means that a test of the November high at 0.7407 is likely soon. If this level disappears, that would open the door to an almost immediate test of September 0.7414 and the year-to-date high.
6 hour chart
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