AUD/USD trades higher on vaccine clearance hopes

OzForex Research OzForex Foreign Exchange

AUD - Australian Dollar

The Australian Dollar finished the week trading in a narrow range, failing to find momentum as it tried valiantly to push through the 73 US cent handle. Opening at 0.7295 on Friday, markets continue to ride the wave of vaccine news and soaring coronavirus cases.

Falling early during domestic trade to an intraday low of 0.7266, the Aussie was supported by a stronger than expected retail sales print as consumer spending rose 1.6% month on month during October. This comfortably beat the previous reading whereby sales shrunk 1.1% m/m and a sign that the economy is faring better than expected. A large reason for the stronger result was the state of Victoria opening up their doors again following an easing of lockdown restrictions.

AUD/USD jumped to a high of 0.7324 during North American trade as Pfizer and BioNTech applied for clearance of their coronavirus vaccine from the US Food and Drug Administration (FDA). Equities pushed higher on the news before a record number of coronavirus cases in America saw the Dow and S&P 500 close lower.

The Australian dollar opens at 0.7300 ahead of Flash Manufacturing and Services PMI due for release this morning. We expect support levels to hold on moves approaching 0.7250, while any upward push will likely meet resistance at 0.7340.

Key Movers

The US Dollar eased on Friday 0.11% with equities in the United States closing lower. A bid to safe haven currencies were seen as coronavirus numbers soared. Whipsawing trading against potential vaccine news looks to offset an increase in virus numbers.

President Donald Trump is still refusing to concede the US presidential elections as President-elect Joe Biden’s margin of victory grew to six million votes. A federal judge in Williamsport, Pennsylvania on Saturday dismissed a lawsuit by President Donald Trump’s campaign to overturn the likely loss. The delay threatens to hinder the world’s largest economy in its attempt to recover from a weak economic backdrop.

The latest G20 summit was held over video conference this weekend where leaders of the 20 biggest countries gathered to discuss the uncertainty of a global recovery. Given the deep recession COVID-19 has thrown the world into, talks for a swift economic rebound were firmly on the agenda. Leaders urged more money to be thrown at vaccine testing for development and distribution of vaccines following large testing at present.

Brexit discussions had to be halted between the UK and Europe as one of the negotiators tested positive for COVID-19. European head commissioner Michel Barnier leading the negotiations tweeted that members had suspended negotiations and have gone into isolation for a week in line with Belgian rules.

GBP/USD was slightly higher (0.21%) to 1.3283 on Friday following the better than expected Retail sales result rising 1.2% m/m in October as early Christmas shoppers boosted numbers for the sixth consecutive month.

Today is dominated by several Manufacturing and Service PMI releases in Europe today as Japan observes a bank holiday. A number of central bank minutes are due for release this week as market direction hangs in the balance waiting for COVID-19 vaccine approvals.

Expected Ranges

AUD/USD: 0.7250 - 0.7340 ▲

GBP/AUD: 1.8000 - 1.8300 ▼

AUD/NZD: 1.0500 - 1.0560 ▼

AUD/EUR: 0.6120 - 0.6180 ▲

AUD/CAD: 0.9500 - 0.9600 ▲

Author

OzForex Research

OzForex Foreign Exchange

AUD/USD bulls seem hesitant near 0.6950

AUD/USD attracts some buyers for the second straight day, though it remains confined within Friday's broader range amid mixed cues. The US PCE data and the US NFP report released last week tempered October Fed hike bets, dragging US bond yields away from multi-year highs and keeping US Dollar bulls on the back foot. However, geopolitical uncertainty is a tailwind for the safe-haven buck, while the RBA's cautious outlook caps the Aussie.

USD/JPY remains confined in a range below 158.00

USD/JPY holds steady around 157.75 during the Asian session on Monday, trading within a one-week-old range. Against the backdrop of soft US PCE data, the US NFP report, released on Friday, tempers October Fed rate-hike bets and drags US bond yields away from multi-year highs. Furthermore, hawkish BoJ expectations amid looming intervention risks support the Japanese Yen, capping the pair. However, geopolitical uncertainty acts as a tailwind for the safe-haven buck and limits the downside.

Gold trades with positive bias around $4,150; upside seems capped

Gold attracts some dip-buyers at the start of a new week, though it remains confined in a familiar range held over the past week or so. Against the backdrop of soft US PCE data, Friday's weak US NFP report tempered bets of an October Fed rate hike. This, in turn, drags US bond yields away from multi-year highs and benefits the non-yielding bullion. The US Dollar, however, draws support from geopolitical uncertainties and could act as a headwind for the precious metal.

Week ahead: Fed minutes in the spotlight amid bond market rout

The first full week of October and the final quarter of the year get underway with little fanfare in terms of the economic agenda. But far from being short on excitement, the coming week will test market nerves, as government bond yields continue to soar on growing worries that the energy crisis will only get worse, fuelling inflation.

CFTC Report: Speculators turn more defensive as Oil exposure falls

The week in one sentence: During the week leading up to September 29, long positions in crude oil were significantly reduced, while short positions in the Canadian Dollar went up. In addition, the positioning of the Australian Dollar and the Japanese Yen declined, while Coffee buying stood out against a more general background of defensiveness.

The Euro is near a one-year low: Inflation could trigger its rebound, not its fall

EUR/USD has fallen to its lowest level since May 2025. The pair hit 1.1312 on Wednesday and trades well below the January peak of 1.2082. The decline reflects a powerful combination of US Dollar strength, geopolitical uncertainty and renewed concerns about Europe's exposure to higher energy prices.