AUD / USD recovers above 0.7750, capitalizing on the weakness of the US dollar

• AUD rises above 0.7750 in recent trading, despite news of Melbourne’s new lockdown.
• Aussie is the best performing G10 currency for the week.

The AUD/USD It has rallied from session lows at 0.7220 to return to higher and above 0.7750 on the last trading day of the week. At current levels at 0.7750, the pair is trading near weekly highs of just above 0.7770, set on Thursday.

The main factor driving AUD / USD higher on Friday has been US dollar flows, or rather, a broad reversal in the fortunes of the US dollar following its strong performance during the Asia Pacific and early Europe sessions.

Global stocks remain at or near cycle (or all-time) highs, commodities remain propped up (in fact, crude oil is skyrocketing to end the week in a flurry). This has not been a good environment for safe haven assets, which probably partly explains why the USD has not performed as well. The bonds have been selling on Friday in the US and Europe as a result of the lack of demand for safe havens and as a result of higher inflation expectations. Higher nominal returns have not helped the US dollar much, largely as real returns have not rallied as much (real returns are the real engine of the USD bond market).

AUD working fine

AUD currently ranks as the second best performing G-10 currency on the day and is the best performing G10 currency on the week, despite news that Melbourne has returned to a rapid lockdown for five days. The currency continues to be supported by the strong performance of base metals, iron ore and energy, as well as the pervasive risk in the market environment. Meanwhile, the Australian Finance Minister was upbeat about the economy earlier in the week, which also boosted confidence.

Technical Levels