- AUD / USD is testing a new monthly high above 0.7250, although it is encountering some technical resistance.
- The pair has remained resilient this week to rising rates of Omicron (covid-19) infection in Australia.
The AUD/USD It is currently testing monthly highs in the 0.7260 area and is set for a second consecutive day of gains as the pair continues to gain support from buoyant risk appetite in global equity and commodity markets. For now, the pair appears to be meeting resistance in the form of its 50-day moving average at 0.7265 and has failed to break above an uptrend that has been limiting price action since late November.
AUD / USD did not see much reaction to the latest weekly US job application report which was stronger than expected. For reference, initial claims fell back below 200,000, continuing claims fall to a new post-pandemic low of 1.716 Million, bringing it back in line with pre-pandemic levels and the unemployment rate. Insured was reduced to 1.3% from 1.4%.
The Australian dollar has remained resilient this week to rising Covid-19 infection rates in Australia as the country’s high vaccination rate and new emphasis on living with the virus (as opposed to the previous strategy of zero Covid-19) makes new crashes unlikely. In fact, the Australian government is expected to lower the definition of “close contact” with a Covid-19 positive person to reduce the number of people who are forced to isolate themselves at any given time, according to the new guidelines in the US and elsewhere.
On the eve of New Year’s Eve, the Australian dollar seems set to close on a positive note, although it has been a rather difficult year. The Australian dollar has lost about 5.6% of its value against the US dollar this year, but is up about 2.0% this month. Risk appetite has recovered substantially in the latter parts of the month after a shaky start to the month, as concerns about the global economic impact of the Omicron variant have abated. Meanwhile, strong Australian economic data following the gradual end of the lockdowns in October, coupled with aggressive shifts at central banks elsewhere, have led market participants to bet that the RBA will pivot policy in an aggressive direction. in the coming months to put the RBA’s monetary policy tightening schedule is more in line with that of the Fed.
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