- Aussie bulls are fighting to keep the pair above the 0.7600 level for the third time on Friday.
- The pair is a little lower as USD licks its wound from this week’s hefty losses.
AUD/USD is again fighting to keep its head above the 0.7600 level, having already dipped as lows as 0.7580 during late Asia Pacific trade and then back to the 0.7590s in early European trade. On the day, the pair trades with losses of around 0.2% or 15 pips, as USD embarks on a broad, mild recovery that has seen the Dollar Index lift back above the 90.00 level from Thursday’s lows in the 89.70s.
Nothing, in particular, has changed for the US dollar fundamentally speaking (markets still expect a dovish Fed and fiscal stimulus in the new year), so Friday’s move is most likely a result of shorts taking profit/position adjustment on the final day of the week, which, incidentally is the final trading day of the calendar year for many (lucky) market participants who will be taking the rest of the year off to enjoy Christmas with their families.
Aussie shrugs off Sydney Covid-19 outbreak concerns
A stay-at-home until Monday order has been issued in Sydney’s North Beaches area, affecting hundreds of thousands of residents following a new localised outbreak of Covid-19 that ended a two-week streak of zero cases being reported. 28 new cases have been reported across the region. The New South Wales state government has urged all residents to wear face masks in public and to remain on high alert, while residents of the state are now facing restrictions travelling to other states, such as Victoria to the south.
An outbreak in Victoria over the summer months (or winter months in Australia) weighed on economic activity in Q3 and also weighed on AUD. The fast-growing risk that history may repeat itself in New South Wales seems not to have triggered much concerns amongst AUD traders; the Aussie is marginally outperforming its most immediately comparable G10 counterparts NZD and CAD on Friday. This will of course be an important story to watch over the coming days/weeks, with any risk of a serious escalation in this Sydney based outbreak posing downside risks to AUD.
Share
