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The AUD/USD pair has rebounded strongly following the November Reserve Bank of Australia (RBA) meeting and the US election. Offshore, concern remains about the shape of the growth path, as COVID-19 numbers grow. Despite the absence of a Blue Wave in the US, the easing in election uncertainty looks supportive of risk trades and therefore the aussie, per ANZ Bank.

Key quotes

“A strong growth outlook and potential supply-demand imbalances have placed a rocket under industrial commodities such as copper and iron ore. While we have already factored in a stronger growth environment, commodity outperformance adds another tailwind to the AUD, which has benefitted from an improved industrial cycle and central bank liquidity this year.” 

“Rising COVID-19 cases globally and associated mobility restrictions are putting pressure on short-term growth expectations.”

“In the near-term, AUD price action looks stretched. The same can be said for the industrial metals over the past few weeks, but a stretched RSI indicator there has done little to slow the rally. On net, the AUD is increasingly vulnerable to a turn in global growth sentiment, but stretched price action alone is unlikely to be enough to stop its rise.”