Sunday, January 24

AUD/USD ticks higher as US FDA provides clarity on coronavirus vaccines

  • The risk-sensitive AUD gains as US FDA reports 95% effectiveness of coronavirus vaccines. 
  • Democratic sweep in Georgia elections could pave the way for bigger fiscal stimulus, according to Goldman Sachs.

AUD/USD is gaining ground with markets offering US dollars on positive coronavirus vaccine results and expectations for a Democrat-controlled US Senate and more significant fiscal stimulus.

The pair is trading near 0.7680 at press time, representing a more than 0.25% gain on the day, having hit a low of 0.7642 on Monday.

Positive vaccine news

“Two different mRNA vaccines have now shown remarkable effectiveness of about 95% in preventing Covid-19 infection in adults,” the US Food and Drug Administration (FDA) said early today, adding that the talk of changes to the schedules of these vaccines is premature and not rooted solidly in the available evidence.

FDA’s comments likely revived the dollar sell-off, which had stalled during Monday’s European trading hours.

Goldman Sachs’ prediction of additional fiscal stimulus under a Democrat-controlled Senate could be weighing over the dollar. “We expect around $600 billion more on top of the recently enacted $900 billion,” analysts at Goldman Sachs said while taking note of encouraging signs for Democrats in the Senate runoffs.

While the AUD/USD pair is drawing bids on Tuesday, it has only erased half of Monday’s decline and is yet to clear resistance around 0.7740. That level proved a tough nut to crack in the previous two trading days.

Credit: FX Street

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