AUD/USD comes within whisker of November highs at 0.7407

AUD/USD has seen a pick up in recent trade, with the pair continuing its recovery from earlier lows to beyond the 0.7400 level. AUD/USD just missed out on taking out its year-to-date high at 0.7407. At present, the pair trades with gains of over 30 pips or nearly 0.5%.

AUD sentiment takes a turn for the better

AUD sentiment has taken a turn for the better in recent trade, with the Aussie now one of the best G10 currencies on the day. A few factors could be driving this. Firstly, prior to today, AUD was one of the worst-performing G10 currencies on the week despite USD weakness, so this could be some catch-up effect.

Moreover, the move could also be a delayed reaction to Wednesday’s Australian GDP numbers, which were stronger than expected; Australian Real GDP growth came in at 3.3% QoQ in Q3 2020, stronger than expectations for a rate of recovery of 2.6%. That meant that the Australian economy was only 3.8% smaller than in Q3 2019 (versus expectations it would be 4.4% smaller), a solid recovery from YoY losses of 6.4% in Q2).

Market commentators noted that the latest GDP numbers ought to take pressure off of the RBA to ease policy further. Indeed, prior to the data, RBA Governor Philip Lowe reiterated his opinion that negative rates are highly unlikely to be deployed in Australia; the latest GDP numbers ought to reduce this probability even further.

AUD/USD advancing higher within bullish trend channel

AUD/USD continues to advance higher within the confines of a bullish trend channel. The uptrend support links the 13, 19, 23 and 30 November lows, while the uptrend resistance links the 9 October and 9 and 27 November highs. Thus, the pair’s technical bias remains to the upside, meaning a test of the November high at 0.7407 is likely soon. Should this level go, that would open the door for a near-immediate test of the 0.7414 September and year-to-date high.

AUD/USD six-hour chart