AUD/USD clings to gains near 0

AUD/USD clings to gains near 0.7700 mark, highest since April 2018

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  • AUD/USD gains traction for the third consecutive session on Thursday amid sustained USD selling.
  • The risk-on mood undermined the safe-haven buck and benefitted the perceived riskier aussie.
  • Year-end thin trading volumes might hold traders from placing fresh bullish bets and cap gains.

The AUD/USD pair edged higher through the Asian session and reclaimed the 0.7700 mark for the first time since April 2018.

The pair built on the previous day’s strong breakout momentum and gained some follow-through traction on the last trading day of the year. The underlying bullish sentiment around the global equity markets continued undermining the safe-haven US dollar and benefitted the perceived riskier aussie.

Despite an effective rejection of a measure to raise the direct payments to most US households to $2,000, investors remain convinced about the likelihood of additional US financial aid. This, along with hopes for a strong global recovery in 2021, remained supportive of the upbeat market mood.

The already stronger global risk sentiment got an additional boost after UK regulators approved the use of AstraZeneca/Oxford coronavirus vaccine. Apart from this, expectations that the Fed will keep interest rates lower for a long time further contributed to the prevalent USD selling pressure.

Meanwhile, bulls seemed rather unaffected by growing market worries about a surge in cases infected by the new coronavirus strain and the imposition of stricter lockdown measures in the UK. That said, typical year-end thin trading volumes might keep a lid on any further gains for the AUD/USD pair.

Thursday’s US economic docket highlights the only release of the usual Initial Weekly Jobless Claims. However, developments surrounding the coronavirus saga might influence the risk sentiment. This might influence the USD price dynamics and produce some trading opportunities around the AUD/USD pair.

Credit: FX Street

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