Australian Dollar Strongest as Markets Favor Riskier Currencies

The Australian dollar was the strongest currency on the Forex market today as the sentiment was favoring riskier currencies. Domestic macroeconomic data was supportive of Australia’s currency.
The Westpac-Melbourne Institute Index of Consumer Sentiment rose by 4.1% in December from November. The index edged up by 2.5% in the previous month. The report commented on the positive result:

The surge in the Index continues. It is now 48% above the low in April and has reached its highest level since October 2010 – marking a ten year high. After only eight months the evidence seems clear that sentiment has fully recovered from the COVID recession.

Market analysts speculated that Wednesday’s positive sentiment was a result of hopes for fiscal stimulus in the United States, which outweighed worries about the surge of new coronavirus cases in the USA. Hopes for COVID-19 vaccines being available soon also added to the optimistic mood of investors.
As for factors affecting the Aussie in the future, no particularly important macro releases are scheduled for the rest of the week. Next week, there will be released monetary policy minutes from the Reserve Bank of Australia and, perhaps even more important, employment data for November.
AUD/USD jumped from 0.7409 to 0.7481 as of 13:30 GMT today. EUR/AUD slumped from 1.6324 to about 1.6186. AUD/JPY gained from 77.18 to 77.88.
If you have any questions, comments, or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

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