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  • AUD/USD broke above 0.7500 for the first time since June 2018 earlier on during Thursday’s session.  
  • Surging commodity prices seemed to help, as did a broad softening in USD.

AUD/USD has continued to surge to the upside since breaking above the 0.7500 earlier during Thursday’s session. The pair has recently printed highs in the 0.7530s and currently trades with on the day gains north of 90 pips or about 1.3%.

Commodity prices surge

Though not as strong as CAD’s, AUD also has a decent positive correlation with crude oil markets, so the more than 3% upside seen in WTI and Brent oil on Thursday is one factor helping AUD. No one specific catalyst appears behind upside seen in crude oil markets on Thursday, with traders seemingly front running positivity regarding vaccines (the Pfizer/BioNTech vaccine is hoped to get approval in the US this week) and US fiscal stimulus (talks continue, and House Speaker Nancy Pelosi said good progress is being made).

Meanwhile, AUD also has a strong positive correlation with industrial metals (Australia’s largest export is Iron Ore, while Copper is another important export); the Bloomberg Industrial Metals index surged from below 135 to above 137 over the last few hours and currently hold onto gains of nearly 1.8% on the day, helping to prop up AUD. Similar to crude oil markets, the rally in industrial metals did not seem to have any particular catalyst aside from the aforementioned optimism regarding vaccines and stimulus.

Strong data also helping

While recent gains in commodity prices is one factor assisting AUD, a string of much stronger than expected Australian data releases has also contributed to the build-up of optimism towards AUD. Already this week; the AIG Services Index (Nov) rose to 52.9 from 51.4, the House Price Index (QoQ for Q3) rose 0.8% versus expectations for a 1% drop, NAB Business Confidence rose to 12 from 5 and the Westpac Consumer Sentiment index rose 4.1% in December to 112 (its highest levels since October 2010).